Remedy And Prevention Of Company's Deadlock

The company's management is mainly dependent upon the operating of the shareholder's meeting and board of directors. When the shareholders conflict with the directors, and the shareholder's meeting and board of directors can't convene the meeting or are unable to pass effective resolutions, the company will run into corporate deadlock, which will do harm not only to the company and shareholders but also the company's creditors and the social economic order. Article 183 in the new Company Law recently revised in 2005 gives the shareholders the right to dissolve the company through judicial channels under the situation of corporate deadlock. It not only provides direct legal basis for judicial relievable path in the situation of the corporate deadlock but also perfects the mechanism of the company. The second judicial interpretation of new Company Law gives detailed description for the judicial dissolution of company, but its provisions are comparatively simple and hard to handle, and the cost of judicial dissolution is also too high. Thus, the author elaborates the concept, causes and countermeasures of corporate deadlock in this thesis through the analyses of the article 183 of the new Company Law and its judicial interpretation.The thesis is made up of four parts. The first part introduces the concept, characteristics and classification of the corporate deadlock. The second part analyses the causes and harms to the company and shareholders of corporate deadlock through the angel of view of closed characteristic of LLM and institutions of the fixed capital and resolution mechanism according to shareholders representing the majority of the voting rights. The third part discusses practically conditions of the judicial dissolution, the institutions of exhaustion of internal remedies and maintenance of corporate body referring to measures adopted by the U.S. and Germany, elaborates the results such as high cost and waste of social resources from the judicial dissolution, probes into the compulsory purchase shares in theory and practice and puts forward other practical alternative remedies on corporate deadlock such as split of company, in order that parties can make requests practically and the court could employ the remedies mentioned above elastically to deal with the case in occurrence of corporate deadlock and to safeguard legal rights of corporation, shareholders and creditors and to maintain regular economic order. The fourth part proposes precautions for corporate deadlock such as agreeing to the company's articles of association in advance.