A Study On The Identification Of Shareholder's Qualification In Limited Liability Corporations

The issue of shareholder's qualification is perhaps unexpected to the traditional company law, therefore, except in some common law countries, the legal definition of"shareholder"and standard for identifying shareholder's qualification can rarely be found in the company law, the commercial code or civil code in civil law countries. In fact, the theoretical studies on shareholder's qualification have long been in a dispersed and unsystematic state with few thematic studies on it both at home and abroad. In the limited foreign writings the author has referred to, only South Korean scholar Lee Zhe Song has discussed it in his book Company Law of South Korean. The same is true in China. A few publications mention the relevant content, but mainly involve a subsidiary study on shareholder's qualification when discussing shareholders, stock rights or other related issues. Although there is no lack of relevant papers, in terms of their content, duplication is abundant but consensus on the issue is limited. On the other hand, however, disputes regarding shareholder's qualification continue to emerge in practice, particularly in limited liability corporations, due to the irregular establishment and operation of corporations in China. Unclear stipulation in law and non-uniform theoretical studies have caused some confusion to the solution of those disputes, as the judiciary can not uphold the same principles and standard to make logically consistent judgments. Besides, the widespread problems such as anonymous investment, bogus shareholders, and shareholders without capital contribution or with defective contribution further increase the uncertainty and difficulty in the identification of shareholder's qualification.As a foundation for investors to acquire shareholder's rights and undertake shareholder's obligations, the confirmation of shareholder's qualification is of great importance to corporations, shareholders, creditors and other interested persons. At the same time, it's a basic problem needed to be solved when dealing with corporate lawsuits in judicial practice. A Clear standard for identifying shareholder's qualification will reduce investment risk, prevent legal disputes and reduce ex post relief. It can also help to guide judicial verdicts, to achieve fairness and justice of the law, as well as safeguard judicial authority and unity. Therefore, this thesis attempts to discuss the identification of shareholder's qualification in limited liability corporations on the basis of present theoretical studies and judicial cases, combining the analysis of theories and regulations of civil and commercial law.This thesis consists of three parts: introduction, main body and conclusion, of which the main body is divided into four chapters:Chapterâ… introduces general theory of shareholder's qualification. First the author distinguishes the meaning of"shareholder's qualification"on two different level through an analysis of its concepts appeared in theoretical studies. In this article, the identification of shareholder's qualification means identifying whether a person is a company's shareholder under specific circumstances. Then the legal significance of shareholder's qualification is discussed in two aspects. Shareholder's qualification is the foundation for acquiring and exercising stock rights, and for protecting investors'interests. The second section introduces two ways to acquire shareholder's qualification, namely original acquisition and derivative acquisition.Chapterâ…¡analyzes the identification of shareholder's qualification in limited liability corporations. The first section deals with evidences used to identify the shareholder's qualification and their functions, including capital contribution, articles of association, register of members, certification of capital contribution, company's industrial and commercial registration, and actual exercising shareholder's rights. The second section examines the identification of shareholder's qualification from the perspective of original acquisition and derivative acquisition.Chapterâ…¢expounds the logic applied to identify the shareholder's qualification in judicial practice. The identification of shareholder's qualification should begin with a distinction between internal and external legal relationships, and classification of dispute types. Admissible evidences should be different according to the type of disputes. Meanwhile, some common principles must be observed, such as maintaining the balance of interests among all parties, giving priority to the interests of bona fides third parties, maintaining the stability of community legal relationships, and sanction on evasion of law. Finally the author analyzes a judicial case with the above method and idea.Chapterâ…£talks about the identification of shareholder's qualification under some specific circumstances in practice, such as anonymous shareholders,bogus shareholders, shareholders without capital contribution.