On The Execution For Limited Company's Stockholder's Rights

Execution for Stockholder's Rights in the Limited Liability Company (L.T.D)means that, according to the creditor's application, on the basis of the legally effective judgment, the court transfers the shares of the stockholder in the limited liability company forcibly, who is subject to enforcement. The company characterizes publicly-hold, and the stockholders put the credit foundations not only on capital but also on contributors. So when the execution makes organizational changes, other stockholders will eliminate the execution for stockholder's right in their hearts. Since the procedure of execution for stock right in our country is under hiatus at present, there are many problems in the theory and the reality. In the judiciary practice, the other stockholders of the company discriminate against "the third person" who obtains the stock through execution entering the company, so the shareholder position of the alienates often initiates disputes, and also evoke an awkward situation that"the company will deny the alienee's shareholder position when gaining profits, but undertake risk responsibility when the company deficit". Therefore the procedure of executing stock right often has no way to proceed as planned and without a hitch because there is nobody willing to accept the stock rights that is being transferred. Second, the regulations about executing stock right is superficial at present, because there are few regulations about the"Corporation Law"and the "Civil Procedure Law"that are closely related to the execution of the stock rights, and there are not definite and uniform standards on the share of property that ought to be executed. Besides, the quality of the judges who are responsible for execution is uneven. Therefore during the execution practice, the judges frequently infringe on the rights of the creditors, the person subjected to execution, the company and the other stockholders. Some courts ascertain the company directly as the person subject to enforcement and the company will pay the debts for the shareholders, which infringe on the rights of the company and the other stockholders. Without appraising the stock right's value, some courts'execution are directly limited to the stockholders'capital at the company's establishment. If the company business performance is fine, the stock's price is higher than the amount of the contribution value. At this time, the creditor's benefit is not sufficiently protected; if the company business performance is relatively poor, and the stock's price is lower than the amount of the contribution value, the rights and interests of the company and the other shareholder are damaged and the other shareholders and the other creditors will undertake all the business risks; some courts deny the stocks being executed, but the stock dividend and bonus can be executed, which does not realize the creditor's rights sufficiently, because the property available to pay debts has decreased. Third, the procedure of execution on stock is short of forceful supervision. Despite the interested party has disagreement right on the inappropriate execution, the court is still in charge of the execution. This is against one important natural law that is"one cannot be the judge of his trial". Finally, since the cognition of the stock right character is unclear, there exist disputes over the issue that whether the stock right can be carried out. There are many theories about stock right at present, like proprietary right, creditor's rights, new model right, and subsidiary right, and so on. All the above various theories have advantages and disadvantages respectively. I believe the stock right should be definite as mitgliedschaftsrecht, which characterizes property rights and personal right. And if the stock right is comprehended from this angle, it should be executed.Abroad, there has been many regulations about the execution of the stock right, the priority of the stockholders and the procedure right to relieve the relevant subject, which is worthy for our country to reference. Despite our country does not have special legal rules about the execution of the stock right, the system of acquisition in good faith and the principle of public summons and public trusts of the"Property Law"has important reference meaning in accordance with ascertaining the shareholders'position. Because the protection of the alienee and the others are involved in the stock's transfer, on the base of protecting transaction security, the legislation original intention of the stock transfer and the system of acquisition in good faith are similar in fact, which has opened the legislative idea to us. According to the pledged right of the"Property Law", it may deduce out that "the transfer of the stock right in the Limited Liability Company takes the shareholder register records as the criterion ".But the "Corporation Law" Stipulates that "the company ought to handle new shareholder registration procedure Intra legitimism tempus ". If the register is simply regarded as public management of the country, it is unfair to the stock alienee obviously. The alienee who gets stock right by the fact that the court carries out the stock, is outsider of the company. And the limited liability company has very strong characteristic of the shareholders-combination; the stockholders'list isn't spectacular to public to inquire. Therefore when the alienee or the others come into contact with the company, they will depend on the certificate registering preserved in the company authority but not the shareholder register inside, the recordation may not be identical. In order to protect bona fide third party's benefit and to promote business safety and efficient, the provision of the"Corporation Law"above-mentioned is probably improper. At this time, the system of acquisition in good faith of the"property law"can be drawn, and the alienee can get shareholder's position now. For the principle of public summons and public trust, the shareholder's position which the shareholder gets from execution should base on the certificate registering prevailed. Despite the execution has came to an end, the court should superintend the company's organ changing the shareholder register and document registering, but the shareholder register belongs to the company inside document after all, the outsiders have no way to look it up. They can only trust the company register, which is the only safeguard for them to protect themselves, so the principle of public summons and public trust is important for us to establish the regulation of executing stockholder's stock.In connection with the above-mentioned problems in the theory and in the practice, and combining the legislation experiences home and abroad, the thesis is established in resolving the deficit of the forcible execution procedure to execute the stocks. First, the uniform principle should be instituted to execute the stocks. To start the enforcement procedures, the creditor can apply if he thinks executing the stocks is more benefit ,without the necessary premise that the debtor has be executed to repay the debt. When executing the stocks, the court also should base on the existing value of the stocks, therefore evaluating the stock right is the basis for forcible execution stock right. The right of preemption of the other shareholders should also respond to protection when the court executes the stocks, so the company's organ could transfer the stocks preferentially inside. If it isn't achieved, the court can acute or sell the stocks forcibly; after the stock being transferred forcibly, the court responds to supervise the company organ changing the shareholder scroll and the company register, the shareholder position of the alienee takes the register as the standard. Secondly, the supervisor of the forcible execution stock right should be definite, and a special supervisor should be established or the procuratorial organ should be responsible for every section of the forcible execution stock right, for ensuring that the interested party can effectively exercise the right of procedure relieving. At last, after the problems that the procedure hiatuses has been settled one by one, the thesis designs a simple procedure to execute the stock right. Starting the produce depends on the creditor's application, then the court should engage the value estimating organization to appraise the stock right. In order to protect the preemption of the shareholder's of the Limited Liability Company, under the court's supervision, the company can handle the stocks in advance according to the assessment of the court. If it can not be handled internal, the court can auction or sell the stocks. And after signing the contract of transferring the stock and handling relevant formalities of alteration, the alienee gets the shareholder's position. At last the court delivers the sores of transferring the stock, so the forcible execution procedure is over just now. The forcible execution of the especial"One Man's Company's stock right"and"dormant partner's stock right"have been simply discussed above in the article. So as to the forcible execution of the"One Man's Company's stock right", it can respond to"spear the company's veil"and execute the property of the shareholder directly. And for the forcible execution of the"dormant partner's stock right", according to the principle of the public summons and public trust and the principle of outward appearance doctrine, the court should set the"show shareholder"being the real stockholder and execute his stock right, and regarding relationship between the dormant stockholder and the show shareholder as creditor and debtor.