Studies On Compulsive Equity Purchase System Of Limited Liability Company

This article focuses on the studies on compulsive equity purchase system, one of the remedies for deadlock of limited liability company. Company deadlock is one of the problems faced by limited liability companies. When the system design of modern companies, on the basis of the principle of capital majority determination, encounters the characteristic of closure of limited liability companies, this unique problem arises. With the development of China's market economy, deadlock frequently happens in limited liability companies and has attracted great attention from the public. Company deadlock brings stasis to the normal operation of the company, causes concerns to the company's future and harms the interests of shareholders. Therefore, pursuant of solutions to company deadlock is a pragmatic issue of company law.The newly amended Company Law has come into force as of January 1 of this year. The new company law sees great improvement in the integrity of its content, the harmonization of its system and its maneuverability. Breakthroughs have been found in many system designs especially in protection of shareholder interests. These systems are of help to the prevention and settlement of company deadlock. What should be noticed is, however, that the new company has merely opened a door for the settlement of company deadlock. There is no further basis available for its good settlement in current law. Therefore, studies on relevant systems should continue. In recent years, there have been quite a lot of studies on the issue of company deadlock. Also, helpful fruits have been achieved. Yet, studies on company deadlock, especially on its remedies, are still on a starting phase. This article focuses on compulsive equity purchase system. In this article, introduction of foreign legislation and value consideration play a basic role. Hopefully this article will be helpful to the solution of company deadlock.This article contains four parts:The first part introduces the background of the design of compulsive equity purchase system. The necessities of studies on compulsive equity purchase system are obvious. First, company deadlock exists in practice and is obviously harmful. Second, whether in legislation and judiciary, or in theory and practice, our countermeasures to company deadlock are insufficient. We are still short of a type of remedy, which can effectively tackle the problem of company deadlock and reasonably consider the interests of all parties. By compare compulsive equity purchase system with other remedies, this part reaches the conclusion that compulsive equity purchase system has its unique values and its functions are irreplaceable by other remedies.The second part deals with the theoretical frame of compulsive equity purchase system. The main purpose of this part is to review relevant foreign legislations and provide more realistic basis for the design of compulsive equity purchase system. Remedy in American law, compulsive equity replacement system, and remedy in German law, shareholder exit right and dismissal right are the main objects of our review. The reason these two systems are chosen is that they are similar to each other in terms of their values and functions as remedies for company deadlock, and are even considered different editions in different countries of the same system. This part is not a mere introduction of foreign legislations but also a comparative study in order to find there useful elements.Part three proposes the frame of China's compulsive equity purchase system. Being the key part of this article, part three serves as the ultimate aim of this article. To achieve this aim, balance between and understanding of specific measures are equally indispensable. The part covers the requirements and procedural problems for applications of compulsive equity purchase system, the determination of equity price, and the integration with company law, which discusses the relationship with capital maintenance principle and the problem of unitary shareholder. All these have involved the basic theoretic issues on compulsive equity purchase system, making our studies on compulsive equity purchase system almost completed.This article focuses on the studies on compulsive equity purchase system. Under the principle of balance of interests, by adoption of comparative analysis and introduction of foreign legislation experience, considering the amended company law, it intends to establish a more suitable system handling company deadlock.