A Research On The Repurchase Rights For Dissent Shareholders

Repurchase right of dissent shareholders, also called appraisal right of minority shareholders or repurchase right of minority shareholders, refers to the right of a shareholder to ask the company to buy his or share with payment of fair value when resolutions like company merger, dissolution, business transfer get passed at shareholders' meeting despite of his or her objection. This rule originated from case law of the United States of America and originally worked as a protection instrument for dissent shareholders, later it became applicable for company actions like business transfer, share exchange and amendment to articles of incorporation. Repurchase right of dissent shareholders, which gets established in China's basic law for the first time, marks a great progress in China's corporation law legislation, and caries great significance for protection of legal interests of minority shareholders. As China's new corporation law provides, repurchase right of dissent shareholders is applicable to three cases, i.e., the company keeping not allotting dividends to shareholders for five consecutive years, company merger or division, selling its majors assets, or amendment of articles of incorporation. In real practice, issues like how to determine the fair value of shares of dissent shareholders? how does a dissent shareholder seek judicial remedy? to which litigation proceeding does it apply? the new corporation law or other pertinent laws and regulations give no answer, nor has the Supreme Court given any judicial explanation, leaving it to be resolved and perfected in judicial practice. Currently, what lies in the core of this issue is how to determine the fair value of shares of dissent shareholders. Only when a fair value-determining mechanism gets established, can equilibrium of internal interests be reached and legal rights of dissent shareholders be well protected. Litigation mechanism provides strong support for the exercise of repurchase right, especially for settlement of disputes arising from repurchase of shares and determination of share value, litigation proceeding will play an indispensable role. Providing systematic safeguard for dissent shareholders by designing a scientific litigation procedure and establishing a fair value determination mechanism will strengthen protection for the legal interests.