On The Corporate Deadlock

Current world is the world of corporate, corporate has been a key word of modern social development. The operation of corporate is complex which involves multiple interests. There are some obstacles difficult to be resolved in the operation of corporate, one of which is corporate deadlock. Now, corporate deadlock has been a hot spot of legal study of corporate that should be solved. So the dissertation about corporate deadlock has its theoretical value and practical significance. Based on the existing academic achievements, this article adopted the method of value analysis, comparative analysis, semantic analysis and typification analysis to discuss the problems of corporate deadlock to supply some resolutions systematically. This article consists of five chapters which make up of the understanding of corporate deadlock:The first chapter is"The definition of the corporate deadlock". Though domestic scholars have given many definitions of the corporate deadlock which are sometimes inconsistent, it is right for them to emphasize the result of corporate paralysis. This article starts from the semantic of deadlock whose meaning is sitting on the fence, analyzes the some circumstances of forming the deadlocks, and defines the corporate deadlock as the follows: the status of sitting on the fence which makes the board of shareholders or directors unable to operate or make resolutions that break the dynamic balance of them and make the whole operation breakdown. This definition means that, corporate deadlock should have three legal characters: the first is confronting each other between the shareholders or directors; the second is stagnancy of corporate operation; the third is the seriousness of outcome. According to the different standards, corporate deadlock has different types, which are board of shareholders and board of directors deadlock, equity deadlock and non-equity deadlock, business divergence deadlock and other divergence deadlock respectively.The second chapter is"The formation of the corporate deadlock". The chapter is made up of three parts, which are the formation foundation, midwifery mechanism and realistic factors of the corporate deadlock. The corporate autonomy, capital democracy and equity of shareholder are ideas of modern company law, these ideas have shortcomings necessarily that supply the background of formation of the corporate deadlock. The corporate deadlock is prominent in the limited liability corporate whose realistic characters are small quantities of shareholders, concentration of equity stake, the indispensability of trust and cooperation; and short of effective exit mechanism, the closeness of limited liability corporate increases the incentive of formation of the corporate deadlock. In practice, the direct cause is the interest conflict of the shareholders and directors and lack of effective preventive mechanism of the corporate deadlock. The above three aspects form the origins of the corporate deadlock which are the stage of further analysis.The third chapter is"the non-judicial remedies of the corporate deadlock". The system of resolving the corporate deadlock includes two parts which are non-judicial and judicial approach. The non-judicial approach is made up of three forms that are the self-remedies by corporation by-laws, social remedies including mediation and arbitration. Corporation by-law is the constitution of corporate which supplies the prevention mechanism to resolve the corporate deadlock, the shortcoming of this mechanism is that the party are optimistic overly and can't conclude this agreement. Mediation can fit with the distinct of businessman autonomy, sustain the relation of cooperation and cost little, while its flaws are the little feasibility and the resolution of mediation can't be enforced. Arbitration is one of the most important ways of resolving the commercial disputes, but arbitration can't satisfy the needs of commercial practice in our country. Though we think it better for arbitration to be an independent system to resolve the corporate deadlock, there are some problems, such as the difficulty of concluding the effective arbitration agreement, lack of legal mechanism which includes the adequacy of express provisions, the ossification of ways and uncertainty of effective results. So, the law hasn't supply the effective non-judicial approaches to solve the corporate deadlock.The fourth chapter is"The justification of judicial remedies of the corporate deadlock". This chapter consists of three parts, which are the theoretical foundation, realistic basis, and fundamental limits of judicial intervention in the corporate deadlock. The theories of corporate autonomy, fiduicary duty and corporate social responsibility have justified the necessity of judicial remedies of the corporate deadlock in some spheres. The party in the corporate deadlock has the natural right to resort to litigation, while to resolve the deadlock is the function of judicatory whose purpose is to overcome the limits of the corporate autonomy. Of course, judicialremedies of the corporate deadlock has its limits of which are the principles of endless of internal remedies, differential treatment, and maximization of stakeholder interests. These principles contribute to the resolution of the corporate deadlock properly.The fifth chapter is"The concrete problems of judicial remedies of the corporate deadlock". The fourth chapter is the precondition of this chapter. These problems consist of three sections. The first part is the lodge of the corporate deadlock litigation which includes the problems of how to confirm the qualified plaintiff, defendant and third party, and competent court. This article thinks that the plaintiff should be shareholder who has some qualifications. The second part is the register and inquisition of case. In register of case, court can make initiative examination on the precondition of filing litigation. The party also can apply for property attachment prior to lawsuit. The third part is the concrete measures of resolving the corporate deadlocks that include the judicial dissolution and other alternative measures, such as mandatory tender offers, the third party's involvement.The corporate deadlock challenges the corporate law which hasn't response properly, and academics and judicial practice haven't supply the adequate countermeasure. Bur we are confident that we can meet the challenge!...