Research On Some Problems Of Succession Of Stock Rights

The succession of stock rights in LLC which in practice or research in legal theory, is a problem of which can not be ignored but urgent need to resolve. On the one hand, there have been some cases of inheritance involving equity in judicial practice, which need for concrete regulation to guide in the law urgently. On the other hand, there are different views in legal circles on this issue. As our country economic development and alternation of shareholder in limited liability companies, the existing entrepreneurs will exit, How to protect the inheritance of their cause and smooth transition of the companies? This is which the article mainly focused on.Obtain of stock rights are closely related to financial contribution, which have negotiability and attribute of property, in limited liability companies. May the heir inherit stock rights when a shareholder in an LLC dies? What regulation should be followed if the heir inherits stock rights if the answer is positive? In the theory and practice of company laws are always confused by this problem. The Section 76 of our country's Company Law set: After the death of a shareholder, who is a natural person, his legal heir may inherit his qualification, except where otherwise provided for by the company's articles of association. Although country's Company Law which was amended in 2005 prescribes it, there are many theoretical divarications on this issue, since this provision is more principle-based and still have problems in practice. This paper attempts to discuss some common issues in succession of stock rights.This paper considers that stock rights in LLC can be inherited. Succession of stock rights is one form of derivative acquisition, which is shares non-consensual transfer essentially. The full text divided into four sections.In the first part, start research from the concept and nature of inheritance and characteristics of succession of stock rights. The time when successor gets the property interests of stock rights and eligible of shareholder will be the same. But the gets of eligible of shareholder is rejoin the company not because of the succession. Compare with the transfer of stock right in premise and protection on personal nature. As one form of shares non-consensual transfer, it can reference the provisions of transfer of stock rights in some ways. However,the transferee of stock is not particular, while the successor of stock is predictable by other people in the LLC. Shareholder would have known the successor will enter the LLC as a Shareholder. So, provisions which protection on personal nature in share transfer should equal to or more weaker than succession, when it can not be found in the articles of a corporation.In the second part, this paper do some researches on inheritable and successor. The author discussed in detail the eligibility of stock rights as object in succession. Although there is academic controversy in the nature of stock rights, but one thing is certain that the property nature of shares make it be succeed. Compared with a Co. Ltd., LLC is a kind of close corporation, our country's Company Law set interdiction on public offering, the number of shareholders and the free transfer of shares, the LLC is based on deep trust and sincere cooperation amongst shareholders. The personal nature impact on free inherit of stock rights in an LLC while the shares in a Co. Ltd. can be inherited freely.This paper define the extent of subject in succession, it is natural person who can meet this condition. This paper also discussed the capacity of the special subject in the succession of stock rights who will become a shareholder. It will affect the form of organization of the company when the number of successors change. The author proposed some rationalization proposals.In the third part, expound the interrelation between company law and articles through the theory which treat the Corporate Law as the"Standard Contract". it is investigate on the way of acquire stock rights and analyze the restricted mode in succession. It can be divided into block mode and restricted mode. Block mode is the best way of expel Unpopular successor by the company, and it did no harm to the succession rights of heirs. We can use special articles in the constitution of an LLC while we drafting and amending it. As constitution inside an LLC, articles are the basis of self-government and external manifestation. It can formulate that somebody who can not enter corporation as shareholder thought succession, also it can set when properties division. In this paper, these special terms will be in the form of handling the problems were analyzed individually.In the fourth part, this paper gives advices to the limitation of the Section 76 of our country's Company Law, set further provides on proviso clause and procedure. Procedure of succession is a complex process. But it is not enough on the details under the current law, the lack of supporting measures which increased uncertainty in practice. Draw lessons from continental law system and Anglo-American law system, put in-depth study in accept and exclusion process of inherit of stock rights. Acceptance procedure of stock rights is the necessary process of successor enter the company, it includes change and confirm of stock rights and the division of stock rights. It is necessary to set procedures to manage stock rights and determine the price of shares, Sources of funding and mode of payment when the heirs can not be a shareholder. This will not only ensure the full protection of the interests of heirs, but also ease the contradiction between the old and new shareholders in some extent. It can maximum shortening the unstable period of the company after shareholders died.The inheritance of stock rights in the LLC is a complex issue which both relates to the protection of rights and interests of deceased shareholders and their heirs and personal nature in the LLC. This paper systematically reached the theoretical basis of succession of shareholder's right in an LLC. For some problems on the succession process, put forward views based on the results of previous studies, benefit and development the succession of stock rights System. At the same time, shareholders of a LLC Should pay attention to the important role of the articles. They should use the provisions of the law and articles of association, make proper arrangements on these matters to achieve the coordination of the company, the interests of shareholders and heirs.