Study On Defective Share Transfer Of A Limited Corporation

Although the strict liability of capital contribution from the contributors has been regulated by many countries, the behavior of the defective capital contribution occurs frequently in practice. The existence of the defective capital contribution results in the creation of the defective share, which is the material foundation of the defective share transfer. In recent years, caused by defective capital contribution defective share transfer disputes emerge continually; however, there is no definite regulation for it in our country. At the same time, the theoretical study on corporate law also lays its emphasis upon the liability of the defective capital contributor, lacking of systematic exposition of defective share transfer. Therefore the article mainly discusses the problems of the defective share transfer in the limited liability corporation, with the aim to help solving the disputes on defective share transfer. Defective share transfer is defined herein as share of defective capital contribution.In addition to the introduction and epilogue, the article could be divided into three parts, and the structure hereof is as follows:Partâ… is the introduction to the formation of the defective share. Firstly, the reasons of the defective capital contribution are introduced. The existence of the defective capital contribution results in the creation of the defective share, which is the material foundation of the defective share transfer. With the various performance of the defective capital contribution, the reason of the defective share shows in a variety of features. Secondly, the problem of the shareholder's qualification of the defective share is discussed, and the transferability of the defective share is analyzed. In the view of the author, the shareholder who owns the defective share still holds his shareholder's qualification, and the defective share is still transferable in despite of its defective factor. At last, starting form the general form of defective share transfer-the defective share transfer contract, the nature and feature of the defective share transfer contract is studied, compared with the share transfer contract.Partâ…¡is the analysis on the effects of the defective share transfer. In this part the author mainly focuses on the usual theories on the effects of defective share transfer, including absolute no-effect theory, absolute validity theory, middle theory, and the discriminating theory; Besides, the basic principle and thinking of judging the effects of the defective share transfer is illustrated from the following aspects: the link between corporation law and contract law, and the dialectical application of the thought from commercial law and civil law, after that the influence of the defective capital contribution and inner meaning of the parties on the effects of the defective share transfer is discussed. At last, it's the recitation of these theories and the conclusion. After analyzing the merits and faults of all the theories, the author draws the conclusion, according to the basic principle and thinking.Partâ…¢discusses the consequence of the defective share transfer, and the way to deal with it. To begin with, how to share the liabilities of defective capital contribution between the parties is highlighted--after the defective share transfer, who is responsible for the defective capital contribution liabilities is probed into. Next, it is the defect warranty of the transferor that is explored. Owing to the fact that the transferor has the main liability to the creation of defective capital contribution, the author insists that the transferor should lastly bear the warranty to his defective capital contribution, which is the implied promise from the transferor to the transferee.Finally, the relief of the transferee to defective share transfer is emphasized. Under different circumstances, the transferee should possess the right of defense, the right of recourse, and so on separately. Furthermore, in order to protect the safety of dealing,the transferee can take some effective measures to defend the risk of the defective share transfer in advance.It is the defective share transfer that is a theme with practical significance, whose legislation lags far behind the practice. Even though the contents of this article is not mature enough, with the development of practice and deep-going study , more and more people will pay attention to it, resulting in the organic and systematic improvement of such a theory --the defective share transfer.