On The Impasse And Solution For Limited Liability Corporation

The liability limited corporation together with the stock limited corporation has become the dominating incorporating form in various countries today by right of their flexible and efficient structure as well as the limited liability of shareholders, after hundreds of years' filtration and tribulation. The number of this kind of corporations ranks the first in western countries. Similarly the liability limited corporation has taken an important role in the socialistic market economy. It is apt to achieve the minimal costs and maximal profit by proper utilizing the resource with dynamic and stable development and limited liability. Thus, it is the most popular form with private investors. However, when there are conflicts between capital element and human resource element, and the cooperative will and the stable collaboration are broke up, the corporation impasse would come about because the corporation would prioritize the capital element. The deadlock of a corporation will lead to operation paralysis and at loss which will ultimately lead to the damnification. When this happened the investors will have no other choice or get profits. The deadlock of corporation will not only prevent the realization of the value of capital, but also lead to the waste of social resources.The concept of corporation impasse and its judicial redress were not prescribed in Corporate Law and the other three modifications. When there is an impasse, the judicatory department will either intercede in order to avoid responsibility, or ignore with the reason of lack of legal gist. If things continue this way, it will go against the establishment and improvement of corporation system. The practical and urgent problem confronting to us now is how to define the impasse of liability limited corporation and how to settle it down.The first section is introduced with two cases and their commentaries. This part sums up the concept and feature of corporation impasse, as well it brief their Manifestations and types, based on the comparison and analysis of the concepts raised by foreign laws and domestic learners. This thesisproposed that the impasse is the loss of cooperation in the company due to the interest conflicts among shareholders and administrators. Finally the power department and administrative department are not able to make any decisions on the corporation issues, which will lead to the operation paralysis.The second section analyzed the legal reason for the appearance of impasse. It brings in the analytical of contractual relationship and summarizes the jurisprudence reason for it by analyzing the various standpoints of learners both oversea and domestic. The reasons include: the three capital principles in traditional corporation restrict the quit rights and freedom of shareholders; the limited corporation itself has some obturation, and there are structural flaw in operation; there are conflicts between shareholders and the board; it lacks of corporation regulation and the handling approaches when there are conflicts. The reason for the impasse is due to the defect of contractual mechanism and carry-out mechanism as well as the additional mechanism.The third section of the passage is discussion on settlement of impasse. The Common law and the Civil law, the various standpoints of domestic learners are briefed. Then it opens out the Corporate Law vacancy on that field and the corresponding puzzlement in practice by introducing the related laws and judicatory practice. Thirdly, this thesis begins with a corporation regulation. And encourage every party to draw out settlement regulation on rights and obligations under the conditions of law vacancy. It advocates to design an approach with respecting the parties and settle down the impasse meanwhile, with the instruction of contractual theory.The fourth section comes to the legislation suggestion for the corporation deadlock. The legislation on that is urgent. The relevant legislation suggests have been put forward in this thesis in entity law and formality law respectively on the basis of redress prior principle, business major party maintaining principles and meaning autonomy principle. It is suggests that the shareholder should be empowered to assumpsit the approaches automatically to handle the corporation impasse. At the same time the judicatory department can intervene on some conditions. In terms of the assignation of the tasks of offering evidence, it is believed the first stepshould be the proving of the existence of impasse by the accuser shareholder, in addition, it has to conform to the constituents of impasse. After that the defendant should prove that they did not abuse their rights and duties. If the defendant refuses to offer relevant financial materials and evidence which have direct relation with the accusation, then the proposition of accuser will come into existence. Therefore it will be decided that the defendant has to settle the impasse according to the corporate regulation, or else the judicatory department will intervene purchasing shares and dissolute the company forcefully.This thesis put the contractual relation theory as the approach to analyze the corporation impasse. It proposed that on the basis of searching the optimistic function of company regulation, the judicatory department can intervene properly. Relying on the contracts and regulation of corporation, it is benefit to handle the corporation impasse by the combination of contracts and laws.