Corpoation Deadlock In The Limited Liability Company And Judicial Intervention

The poor efficiency of corporate governance is the long-standing issue in the practice of our country. With the enactment of the new"company law"in China, a favorable legal environment has been created for the initial investment. So a new upsurge in setting up a company is in the making. But in the practice of corporation the deadlock must be common phenomenon because of the combination of the limited liability company's closure property and our cultural tradition. The firm has been immobilized by deadlock, which has unable to reconcile the contradictions, and the shareholders'investment interests could be frustrated by this locking condition, but this problem has not been well solved by the common remedies. Judicial intervention, which must be the most-needed, just and authoritative, because of the jurisdiction is the last ditch for right relief and the best way to make up the abuse that has been caused by corporate autonomy.To dissolve the company in substance for shareholders, which need for procedural right to appeal and judicial adjudication to guarantee. That should be no doubt the court has jurisdiction over dissolve the company. The shareholders of corporation want to withdrawal and disinvestment only by dissolving company except that by transferring of shares. When the company in deadlock and the shareholders' rights and interests had been infringed, the judicial intervention to break the deadlock must be the only way to protect the rights of shareholders. In terms of definition, formation and the damage caused by company deadlock, this article not only assents the core status of judicial intervention but also posing some problems in this judicial procedure. Aiming at these problems, the author presents the corresponding resolution methods for the purpose of being beneficial to advance relevant legislature and judicial practice.To understand what to study is the first step, so analysis of the basic theory of corporation deadlock is made in the first. This chapter introduces the legal definition of deadlock, summarizes a series of characteristics of deadlock, discusses the nature of deadlock, analyses the reason why deadlock emerges, classifies deadlocks according to different standards, and point out that the corporation and to the whole society. The secondly, this paper indicates to interpreting the theoretical basis for judicial intervention in rationales behind breaking the corporation deadlock overseas, such as the contract theory of corporation, the theory of fails of anticipation benefits, shareholders trust obligations theory. Finally, the application of the relief system and the setting up of judicial procedures are discussed.