Detailed Study On The Preemptive Right Of Shareholders Of Limited Liability Company

Limited Liability Company is distinguished from other forms of firm by its unique nature of joint-people and joint-capital, which demands absolute trust between shareholders,so the transfer of the stock rights should be restricted appropriately. To grant preemptive right to other shareholders is one of the measures for restriction. However,because the stock rights in a Limited Liability Company are short of circulation, and there is no active secondary market, the restriction on the transfer of stock rights must be reasonable and proper. So, the system of the preemptive right of shareholders should be balanced between the freedom of stock rights transfer and the restriction on stock rights tranfer, which should not only guarantee the interests of the shareholders who sell their stock rights, but also maintain the trust between the shareholders. The thesis is composed of four chapters, which discuss respectively the fundamentals of preemptive right, the change of its legislation pattern, its conditions to exercise and its legal protection.The first chapter goes with the fundamental of the preemptive right of shareholders. The preemptive right of shareholders is a right to purchase in advance of all others on specified terms, but it is only triggered if the shareholder decides to sell his stock rights. About the nature of the preemptive right, scholars gave many opinions. In my view,the preemptive right is a right which can be contracted, which not only has some characteristics of real right, but also has some characteristics of creditor's right, which can be exercised by one party, which is exclusive and procedural right. The existance of the premmptive right gives tremendous impact on the freedom of stock rights transfer, the safety of transactions and the third party's interests. Why do we still retain it? because it can protect the shareholders'reasonable expectation, maintain the nature of of corporate joint-people, promot economic efficiency.The second chapter is about the change of legislation type of the preemtive right. Melvin Aron Eisenberg who is a famous Ameran scholar gave some new views on the classification of rules of the company law. According to his classification, the legislation pattern of the preemptive right can be divided into three kinds: mandatory pattern, enabling pattern, supplementory pattern. This part also points out the change tendency of the legislation pattern of the preemptive right. In the end,the author gives a reasonable explanation of the change tendency.The third chapter presents the conditions of the preemptive right. The prerequisite to exercise the preemptive right is the transfer of stock rights from one shareholder to the third party who are not the shareholder of the same company. The owner of the preemptive right is"the other shareholders", i.e. those shareholders who disagree to the transfer of stock rights, not including those shareholders who have agreed to the transfer and those sharesholders who are regarded as agreeing to the transfer because of their silence on the transfer of stock rights. The substantial condition is"Under the same conditions". The other conditions include the"notice","deadline","approval", etc.The fourth chapter involves the legal protection against the violation on the preemptive right of shareholders. No relief, no right. If someone violates the preemptive right of shareholders, the law can not keep silent. This part consists of four points. First is the acknowledgement of such violation, an acknowledgement standard is proposed in this section. Second is the ascertainment of the litigants. The third is about the lawsuit guarantee. The fourth is how to make a decision.