Research On The Appraisal Right Of Dissenters

The appraisal right of dissenters provides the shareholders who are dissatisfied with the company's fundamental changes the right to get the fair value and leave the company on the cost of giving up the veto. On the one hand this right helps the dissenters leave the company fairly; on the other hand this right can remove the obstacles from the dissenters and make the company size the opportunities in timely manner in a rapidly changed market. The appraisal right of dissenters originated from the United States and it has been developed for about one hundred years. Now it is provided by relevant laws in many other countries and districts. The appraisal right of dissenters acts as a balance between the majority shareholders and the minority shareholders and becomes the powerful weapon of protecting the minority shareholders'interests under the"capital majority"rule.The new Company Law amended in 2005 introduced the appraisal right of dissenters in two articles. It meant the end of the lack of the appraisal right of dissenters in law, and the conform to the"interests balance theory"in modern company law and the improvement of the system of minority shareholders'protection. But it did not means the application and the research of the appraisal right of dissenters in our country are as good as the countries with sophisticated legislation. Some amendments and additions are really needed to maximize the value of the appraisal right of dissenters based on the deep analysis of our special system atmosphere.In the modern society, the company consolidation and merger, asset purchase and other important deals are becoming more and more frequent. It is urgent for us to establish and perfect protection system of the minority shareholders in order to satisfy the needs of minority shareholders. The appraisal right of dissenters is a must of the protection system of minority shareholders. This paper, from different perspectives, makes a compound analysis with the theoretic foundation, the value and the function of the appraisal right of dissenters. Then it makes a comparative study, in the field of corporation law and judicial practice, among United States, Japan and other countries. At last, based on the advanced philosophy of foreign countries, the author gives several suggestions for the improvement and the perfection of the appraisal right of dissenters. This paper contains four parts:The first part is about the brief introduction of the appraisal right of dissenters. First, it begins with the definition and characteristics of the right. In the analysis of the concept of the appraisal right, we find that this right protects the interests of minority shareholders in two ways: First, minority shareholders may leave the company when their interests are affected by the company's fundamental changes. Second, minority shareholders may get the fair price when they left the company. Then it gives a description of the history of the appraisal right of dissenters. It was 1851 when the appraisal right of dissenters was established in Ohio, the United States case law. And now, it has been adopted by England, Canada, Italian, Germany, Japan and other European countries. We find that the formation of the appraisal right of dissenters is closely related with the company's voting system and the right is the outcome of the balance between the controlling shareholders and the minority shareholders under the"capital majority"voting system. At last, down to theoretic foundation, the author deeply analyzes the rationality of the appraisal right of dissenters.The second part is about the value and the function of the appraisal right of dissenters. From the perspective of value, the necessity, fairness, efficiency make this right indispensable after it was established one hundred years ago. With the time goes by, the function of this right is changing from a traditional liquidity to a mechanism of monitoring the shareholders and protecting the fair value of the investment.The third part focuses on the overseas legislative situation. It focuses mainly on the comparative study and analysis in the applicable scope, applicable conditions, applicable proceeding, the protection of creditors and the establishment of fair price with the center of Model Business Corporation Act and Japanese Company law. Though the comparison, First, it is not hard for us to find that every country has established the suitable law based on every country's system atmosphere with the notion of fairness; Second, the interests of controlling shareholders, minority shareholders and creditors are involved in the appraisal right of dissenters, so we should balance their interests well to maximize the value of this right. Although many issues has been exposed by comparison, but it is the advanced legislative skills that will definitely provide the precious experience for the improvement of the appraisal right of dissenters in our country.The forth part first describes the legislative situation of our country's appraisal right of dissenters and analyzes the legislative defects in details. Then, with the reference of sophisticated legislation of foreign countries, the author makes some suggestions based on our special corporation governance structure and equity structure: First of all, define the kind of company and shareholder clearly. Secondly, expand the applicable scope in order to strengthen the protection of minority shareholders. Thirdly, make specific provisions for the procedure to make the shareholders exercise the rights conveniently. Fourthly, make the provisions for the protection of the creditors'interests. We should pursue the balance among the controlling shareholders, minority shareholders and creditors. Lastly, apply the exclusivity principle in condition.