Protection Of Minority Shareholder's Rights In Limited Liability Company

As one of the two types of company structure based on the Company Law ofChina, the limited liability company, compared with the public company, is oftensmall in size and numbers of shareholders. Hence it has never caught enoughattention of researchers and scholars. However, in China, there are many limitedliability companies with a huge number of shareholders, and the protection ofshareholders' rights remains to be a big issue. The protection of their rights in thelimited liability companies is not only significant to the improvement of institutionbuilding of Company Law of China, but also meaningful to social economicdevelopment.From mid-1990s, scholars and researchers have conducted a lot of research onthe protection of shareholders' rights in the stock limited companies. This made agreat contribution to the legislation of company law and progress in sectormanagement and development. However, rights protection of the minorityshareholders in the limited liability companies does not catch sufficient attention ofthe legislation bodies and researchers, leading to an unfit between theoretical research,judicial judgment and the practical needs and giving rise to the failure to handle themany cases of tort to minority shareholders because of the absence of legislativeoutputs and legal bases. As a result of such defects of the Company Law of China, itis very difficult for minority shareholders who suffer damages to get legal assistancefrom the designated organizations, and even if the tort is claimed to a court, samecases may get different judgment, causing embarrassment in the real world.Precisely because of these defects and embarrassment of the Company Law, themajority shareholders are given the room to abuse their rights. They use the defect ofthe organization of the limited liability company to infringe the right and interest ofminority shareholders for their own interests. A lot of minority shareholders aretrapped when they invest in some companies: no way to use stockholder rights, noprofit sharing, no access to management information and no way to quit. Such defectsof the Company Law push the minority shareholders into abyss of despair. Theenthusiasm of investors will cool down and the social economic development will beslowed down. As there is no hope to get assistance from government and justice,some minority shareholders use illegal means to solve their problems, such askidnapping, assaulting, terrifying and so on, inevitably leading various social issuesand criminal cases.As the limited liability company system is an imported product, together with ourunique law history background, we did not have plenty of experiences to refer towhen drafting the Company Law. Inadequate considerations and theory base gave riseto the absence of a good minority shareholders protection institution in the CompanyLaw of China, which can effectively protect the minority shareholders from interesttort by the majority shareholders. In this thesis, I adopt comparative analysis todiscuss the defects of minority shareholders protection system in the Company Lawof China, and come up with some insights on how to develop a better one. I wishthat it will do some good for making a better minority shareholders protection systemin the Company Law of China and improving the current rights and interestsprotection of the minority shareholders.