Appraisal Right Of Dissent Shareholder In Limited Liability Company

The conflict interest among shareholders of a corporation and the conflict interest between a corporation and its creditor are eternal issues for the development of legislation of company law. As the request of a resolution made by a corporation is transformed from approval by all the shareholders to approval by major shareholders who own a majority proportion of shares of a corporation, the dispute caused by different interest became more acute among shareholders. Conflict interest between majority shareholders and minor shareholders become the major problem within a corporation. The majority shareholder enjoys the utmost control of a corporation according to the"Majority Rules". The minor shareholder is easily to become a prisoner of a corporation while the majority shareholders ignore the rights of minors or the majorities abuse the control power of a corporation for its owns interest. If that had happened, the minors would be harm in two ways: firstly, the minors would not gain any interest from the corporation he invested, due to the controlling power of the corporation is hold by the majorities who could easily prohibit the minors from do so; secondly, the minors would found that it's hard to transfer the shares of the corporation he invested to others, because no one would take such shares. For the purpose of balance the fiercely conflict interest between the majorities and the minors, the appraisal right of dissent shareholders became a idea remedy and the rules of the appraisal right was widely accepted by countries around the world very soon. The special function of the appraisal right of dissenter, which could enhance the liquidity of shares, make it important to limited liability company whose share is lack of liquidity, due to the nature of a limited liability company is personal and closed-held. While the conflict interest in a limited liability company became severe, the best way for the minors to exit the company to away from continued harm is by utilize the appraisal right. The appraisal right of dissent shareholder which incorporates in the new 2005 company law of china has a very important statue in protecting minor shareholder of a company. Due to various causes, the legislation of the system hereby is still in a rude situation currently. For the reason above, the appraisal right is not good enough for the minor shareholder to use for the purpose of protecting their interest and also the appraisal right which is set-up recently has defect in regulating the protection of the creditor's interest while a dissent shareholder is approved to utilize the appraisal right to gain cash from the company. the defection of such rules reflects as follow: the matter which would trigger the appraisal right is not proper, the scope of shareholder who would enjoys the appraisal right is too narrow, the lack of specific procedure of realize the appraisal right, the lack of rules that protecting interest of creditors. For the reason mentioned above, this thesis try to make a perfection suggestion to our legislation by analyze the system of appraisal remedy in the way that exploring its meaning to the protection of minor shareholder of a company and state its affection in the interest of shareholders and creditors on the basic of the idea of both forward interest protection and interest balance which contain in the system of appraisal remedy.