Protect The Minority Shareholder's Right To Share Profits In Limited Liability Company

There are two reasons to select"Research on Protection of Profit Distribution Right of Limited Company"as the theme of the master's thesis of the author. The first reason is that the author's research during postgraduate period is mainly focusing on Commercial Law and especially Company law in which the author enjoys the most interest. The second reason is that the author acted as a representative for a shareholder of a limited company to request profit distribution from the company in a lawsuit. During the period of litigation, the author read massive amount of relevant materials, judicial precedent and judgment, and discovered that results of judgment made by the people's courts at different levels across different regions came out with huge difference according to the same Company Law as legal basis and similar situation. This aroused the author's enormous enthusiasm and interest to write this thesis with deliberate preparation under tutor's instruction.This thesis includes three sections namely abstract, main text and conclusion and the main text can be divided into four chapters. Chapter one takes on general analysis regarding these cases. Both of the two cases cited by the author had gone through the second trial procedure, and came out with three different judgments from four people's courts. The author summarizes comprehensively these three different judgments and other judgments on similar cases and protracts"graph one"."Graph one"demonstrates different understanding held by people's courts across different regions towards protection of profit distribution right, and uncovers predicament of judicial trial over the disputes concerning profit distribution right, and fetches out the main object that the thesis elaborates.Chapter two mainly elaborates on the main object of the thesis namely profit distribution right. The author makes comprehensive introduction about profit distribution right from four aspects including preconditions to request profit distribution right, its nature and category, qualifications for subjects of profit distribution right and situations in which profit distribution right suffers violation. According to the author's belief, profit distribution right is referred to as shareholder's beneficial right from investments. Shareholders'ownership of this right derives from their investment, and the right changes due to variation of shareholders'status. After corporate taxation, profit shall be made up for recovery of preceding annual loss, extraction of profit for compulsory accumulation fund and the selective accumulation fund. If there's still remaining, it can be distributed to shareholders after shareholders'meeting approves the distribution plan by complying with legal procedure. According to the item six of the 38th clause of Company Law, it is not a compulsory stipulation for shareholders'meeting to deliberate and approve profit distribution plan, and it is a right entrusted by law rather than a duty. It is because of this point that majority shareholders can take advantage of it to violate minority shareholders'rights by using majority capital rules.Chapter three brings introduction about various relief measures against violation of profit distribution right and corresponding insufficiency. The author demonstrates enormous insufficiency on current protection mechanism on minority shareholders'rights and interests by putting forward three main relief measures including equity transfer, buy-back request held by shareholders with opposite opinion and filing a lawsuit. Meanwhile, the author proposes ways to change and improve current relief measures.Chapter four is the most important as well as the central part of this thesis. This chapter mainly proposes suggestions to improve shareholders'profit distribution right. It proposes that emphasis must be laid onto the role of corporate articles of association in corporate governance, regulation of shareholders'relationship and protection of shareholders'interests. To those items where disputes often arise (for instance: shareholders'meeting shall deliberate profit distribution plan every year), author suggests that relevant regulation shall be made concretely per the articles of association. Simultaneously, the author suggests that shareholders may be asked to sign the risk instruction memorandum, when the company is established. Through this way, possible legal risks and especially return risks of investment which shareholders care about the most can be instructed to minority shareholders in advance and it may play an important role to educate investors. As to compulsory regulation of profit distribution, the author owns the opinion that its usage must be stipulated strictly to avoid excessive interference of judicial power with corporate governance.This thesis has two innovative points. The first one lies in the third section of chapter one. The author protracts"graph one"after deliberate collection of massive materials (people's courts made different judgments on the requests held by shareholders for company on profit distribution), and"graph one"can bring convenience for readers to review, categorize and analyze these judgments. The second innovative point lies in the first section of chapter four. The author creatively proposes that shareholders shall be alerted on investment risk promptly during establishment of company in order that protection measures can be carried out in advance before profit distribution right suffers violation.There also exists deficiency in this thesis. Firstly, no reference to relevant legislation in other countries has been taken in this thesis. Secondly, because of the author's limited academic capability, personal experience and length of this thesis, the point that"the excessive portion of equity in transferring over the cost of shares shall be taken as transfer of request for profit distribution right"in chapter three can not be demonstrated extensively, and the lawsuit regarding compulsory distribution of dividend can not be analyzed thoroughly either. Thirdly, the thesis's innovation isn't so much perfect. The author sincerely hopes that all of you who read this thesis will propose suggestion on its revision and this thesis will be able to provoke thoughts of others to carry out extensive study on this subject, and articles on this subject will make complementary remarks and elaboration to its insufficiency and omission in order to reduce regret of the author for existing deficiency.