Study On Shareholders Withdrawal System Of Limited Liability Companies

Company law has revised many times to pursue perfection. It has great function to promote company and social economy development as well as foreign investment. Yet, there are still many problems and shortages in practice. Take Limited Liability Company as an example, due to traditional company law theories, the company capital is its outward reputation and the establishment foundation, which guarantees creditor's benefits. Thus shareholders are not allowed to withdraw capitals from company. What's more, when major shareholders abuse rights, the small shareholders can't protect their rights by dismissing the company, as there are so many obstacles in capital transfer. This undoubtedly obstructs the company and social economy development. The revised law in 2005 gives limited liability company shareholders withdrawal right under particular situations. However, compared to the actual circumstances, the shareholders' withdrawal rights are still restricted in a small scope, lacking feasibility.According to above-mentioned, I put forward shareholders withdrawal system of limited liability companies by analyzing foreign company law theories and its successful experience from practical angle to study the differences between the legislation purposes and the actual redemption.The article contains four chapters:In Chapter one, we discuss the concept and features of shareholder withdrawal system, which is, limited liability company shareholder can withdraw investment under particular conditions according to the law. This results its absolute lose of shareholder right in company. It aims at protecting shareholders rights and privileges, so shareholders can use it alone. There are many differences among withdraw rights, transmit rights, share repurchase and capital reduce. It is inevitable to build up shareholder withdrawal system. There are three typical types, withdrawal with strict limits, withdrawal freely, withdrawal investment under particular conditions.In Chapter Two, the author inquires into the entity problems about shareholder withdraw right. Shareholders can take withdraw right under following situations: merging with other company, changing article, pocketing or abusing company's property, sale or buy of assets, depriving the shareholder's right of management. Certainly, the right also needs to be limited. Besides, we need to build up regulations to protect other shareholders and creditor's benefits, such as duty of disclosure, creditor objection system etc.The author focuses on procedure problems about shareholders withdraw right in Chapter Three. This can be divided into general procedure and dissenting shareholders' appraisal right procedure. To appraise the price of shares seems to be vital; I think we should adopt comprehensive method.In Chapter four, we remark on the shortage of shareholder withdrawal system. Shareholder withdraw right is too narrow, the procedure is unpractical. Thus we can use judicatory explanation method to perfect the company law for better protection of the small shareholders' rights. The shareholder withdraws system should match with other company law systems, especially one-man company, including capital system, manage structure etc.