On The Appraisal Right Of Dissenters

In the contemporary company law, a shareholder is regarded as an owner of a company, the basis of the existence of a company, and the most important interested person in a company as well. Therefore, the protection of a shareholder's interests is a basic task of the company law, and if the interests of the small shareholders are subject to serious intimidation during the application of the principles of the substantial shareholders in a company, it is necessary for the company law to adjust the unbalanced structure of interests between the substantial and small shareholders, by properly limiting the rights of the substantial shareholders on one hand, and on the other hand, giving the small shareholders more special legal rights, in order to coordinate and balance the structure of interests between shareholders, and it is under this background that the appraisal right of dissenters occurs.The appraisal right of dissenters, the same as the company system, originates from the countries under the common law system. As the society continually developed, at the end of the 19th century, the development of companies showed an all-time prosperous situation, and as the number of shareholders unceasingly increased, the shares of a company become more scattered, the scale of a company became larger, a company could implement merger or consolidation, and the volition of the majority shareholders could be promoted as the corporate volition through the corporate decision-making process, and since then, the principle of capital majority decision was established. However, the legislation of the company law should not only maintain the vigor and activeness of the majority shareholders, in order to consolidate the basic position of the corporate capital majority decision principle, but also limit the abuse of the majority shareholders'rights, in order to prevent them from infringing the interests of the minority shareholders, and serving as the balance of both parties'interests, the appraisal right of dissenters was established. The appraisal right of dissenters refers to such a right owned by the minority dissenters to request that the company should evaluate the value of their shares, and purchase the shares at a fair price, when the corporate general meeting of shareholders, based on the majority decision, makes decisions on such vial affairs in the company as corporate consolidation, division, sale of major assets, plan of share exchange, and amendment of corporate articles, the minority dissenters. The law endues a shareholder with the right of evaluating value and the right of buyout is to balance the interests of the substantial shareholders who hope to undertake special transactions and the small shareholders who do not hope to put themselves in a such position that is different from the place when they purchased the corporate shares due to this type of transactions. The appraisal right of dissenters is an effective tool for a company to realize its final aim----the value of a shareholder's rights and the quality of rights.Form the definitions above, we can see that the appraisal right of dissenters possesses such characteristics:Firstly, the appraisal right of dissenters is a type of self-interested right.Secondly, the appraisal right of dissenters is a kind of intrinsic right.Thirdly, the appraisal right of dissenters is a sort of formation right.Fourthly, the appraisal right of dissenters is an independent right of a shareholder.As for the theoretical basis of the appraisal right of dissenters, for hundreds of years, scholars have always owned different views, and the relatively classical theories include: the theory of expectant right, the theory of balance, the theory of corporate dissolution property, and the theory of economical analysis.The contemporary company law gradually develops during the game among various interest subjects such as corporate operators. It endues the middle and small shareholders with the quit mechanism when being unfair infringement, i.e. to apply for the right of claiming company's compulsory dismissal and the appraisal right of dissenters; however, the remedy for the compulsory dismissal of a company is mainly applied to some companies characteristic of partnership, but not universally applied to joint ventures, and furthermore, the conditions regulated by this remedy are too high, and violate the rules of economic development. Compared with the compulsory dismissal system that is a quit system as well, the appraisal right of dissenters, serving as a kind of alternative measure of legal remedy, has distinct functions, which are mainly represented as the function of liquid compensation and the function of supervision and protection before the event.The countries hold a relatively great controversy over whether the appraisal right of dissenters is applied to a listed company, and there are such two types of legislation as affirmation and negation, which are classically represented by Korea and America respectively. The contemporary company law is gradually inclined to protect the minority shareholders'interests, and in the author's opinions, the appraisal right of dissenters should be applied to both listed and non-listed companies.The appraisal right of dissents is not applied to all transaction behaviors conducted by a company, and this appraisal right need to take place in the dramatic changes of the corporate organizing structure. The dramatic changes of the corporate organizing structure include the change of corporate articles, i.e. the change of the corporate internal organizing structure, and the corporate reorganization and reconstruction, i.e. the change of the corporate external organizing structure. The American company law regulates that both registered shareholders and beneficiary shareholders execute the appraisal right of dissenters.The procedures of executing the appraisal right of dissenters in the company law of different countries are similar, mainly including the following content: 1. the company informs the shareholders of owning the appraisal right; 2. the dissenters provide a written notice in advance; 3. the dissents present themselves for the general meeting of shareholders and express their attitude; 4. the dissenters propose the appraisal request; 5, the price of a company's purchase of its own shares is determined.The appraisal right of dissenters is not regulated by the Chinese Company Law in 1993, and is only sporadically mentioned such two normative papers as the Mandatory Provisions for the Articles of Association of the Companies to Be Listed Outside the PRC and the Guidelines for the Articles of Association of Listed Companies. In order to fuether improve the corporate structure of management, effectively protect the legal rights of companies, shareholders and creditors, the newly amended Company Law make new regulations upon a company's purchase of its own shares, i.e. the Article 143 and Article 75 of the Company Law. Compared with the company law in 1993, the Chinese newly amended company law definitely regulates the appraisal right of dissenters, but the regulations in the newly company law are too simple, and own certain abstract property, which causes the difficulty in practice. Its limitations specifically lie in: the lack of relevant legislative provisions, the briefness and roughness of relevant legislative provisions, the lagging property of present legislative provisions, and inconformity to international trend.The contemporary company law establishes the legal position of the preponderance of the majority shareholders, and meanwhile, focuses on protecting the interests of the minority shareholders. The simultaneous execution of the majority shareholders'right to determine corporate affairs and the minority shareholders'right to interfere in and supervise corporate affairs, is a vital reflection of the concept of the equality among shareholders, which is advocated by contemporary companies, and the two sides of the same coin. Facing various deficiencies of the present legislation in China, it has been gradually on the agenda to amend the present legislation in China, and to improve the system of the appraisal right of dissenters in China.Through considering the present situation and deficiencies of the present legislation in China, and comparing relevant legislation in other countries and regions, the author deems that we should, based on the practical situation in China, refer to the legislative experience in foreign countries, improve and perfect the regulations on the appraisal right of dissenters in China, in order to establish relatively perfect system of the appraisal right of dissenters during the future amendment of the company law. The specific conception is:1, as for the type of companies, China should regulate that the regulations upon the appraisal right of dissenters be applied to the limited liability companies, the listed companies of a limited liability company, and the non-listed companies;2, as for the specific situation applicable to the appraisal right, China should adopt the general style of legislation, i.e. when the following dramatic changes take place in the company, the dissenters can exercise the appraisal right;3, as for the scope applicable to the shareholders, it should be definitely regulated that the dissenters, including those without the right to vote, all own the appraisal right;4, China should not too strictly regulate the procedures of exercising the appraisal right of dissenters, and instead, should reduce the procedural requirements of shareholders'execution of this right, including that the company provides the shareholders with a written notice, the dissenters offer the opposite written notice in advance, the dissenters propose a written request for the company's purchase of its own shares, and the price of a company's purchase of its own shares is determined.5, as for the standards of determining the price of a company's purchase of its own shares, the author deems that it is not proper for China to determine a certain evaluating method, and instead, to determine the evaluating method applicable according to the specific situation, and simultaneously adopt such three methods as the method of market value, the method of assets value, and the method of revenue value, in order to finally determine the price of a company's purchase of its own shares. How to persevere the just rights of the middle and small shareholders is a particular and vital field of improving the legal system in the event of contemporary market economy, and is also one of the important standards of measuring the scientific and democratic degree of the contemporary company law.The appraisal right of dissenters serves as a kind of effective system of protecting the minority shareholders'interests, and the Chinese legislation on companies should endue the middle and small shareholders with more comprehensive scope applicable to the appraisal right of dissenters, further clarify its procedures applicable, and provide the specific practical operations with scientific guides, in order to really realize the protection of the interests of the middle and small shareholders.