Study Of Establishment Of The Appraisal Rights Of The Dissenters In China Corporate Law

The appraisal rights of the dissenters originated from common law, the purpose of this system is that, when a corporate transaction fundamentally affects share rights, the dissenting shareholders are to be entitled to dissent from such a transaction and receive rational payment of the appraised fair value of their shares, and then secede from the corporate which has fundamentally changed. All though this system has not been established in China Corporate Law, there are some similar actions in practice, furthermore, lots of scholars have discussed the appraisal rights in their papers which are discussed to amend China Corporate Law. However, there are few in-depth discussions on the beginning, development and running in practice in extant literature. Whereas being the active corporation actions in practice and requirement of protecting the minority shareholders' interests, it is strongly suggested that the appraisal rights should be set up in Corporate Law. Therefore, it is necessary to deeply understand the system and deal with the practice throughout discussing it.The paper divides into six parts. The theoretical framework is as following:Preface: In this part, I expound that the origin of the appraisal rights which can strongly protect minorities' interests is the development of the corporation law and the freedom and fair which law pursues. Absence of the system is the instinct cause for me to choose it as the thesis of the paper. And establishing the appraisal rights in China Corporate Law is the ultimate intent of the paper.Part I: In this part, I introduce the historical evolution of the appraisal rights and analyze the functional variance of the system in the development of corporation law. I point out that the appraisal rights created in equitable law evolved from a confluence of contract principles and business exigencies, and is a balance between the corporate expanding freedom and protecting the minorities' interests. The appraisal remedy has two functions: to provide a fair cash exit and to monitor conflict-of-interest transactions.Part II: In this part, I expatiate the running of the appraisal rights in practice, according with the same system of USA, Canada, Korea, Japan and Taiwan. I discuss the mode of the system in practice on the aspect of trigger events, corporate sort, shareholder kind and the procedure of claim rights.Part III: In this part, I pay attention to the core of the appraisal remedy— what is "fair value" and how courts determine the fair value. This part stresses to analyze such factors relation to fair value as market value of share, minority discounts and marketability discounts and interest of share. The paper thinks that the fair value of the shares cannot base only on market value, that the shares of minority and lack of liquidity should be discounted, that the fair value of the shares should include interests. As far as the method of appraising the shares concerned, the paper introduces four methods in judicial practice in USA. And the paper considers that the confirmation of the method should not copy the foreign rules but be seasoned with the domestic money market and judicial practice.Part IV: This part is the end-result that making suggestions on the establishment of the appraisal rights in China Corporate Law for me to write this paper. The paper analyzes the necessity and feasibility of the establishment of the appraisal rights, and makes some suggestions.Epilogue: In this part, I think that it should be a long term to appraise a system, and that the appraisal rights is not the exception. Because the appraisal remedy is just one measure to protect the minorities, China should use mature legislations of all the countries for reference and perfects the system of protecting the minorities' interests.