About The Company Deadlock And Its Prevention And Solutions

Company deadlock which is caused by the disputes between the shareholders ofa company and/or the board of directors refers to a kind of state decision-making andmanagement mechanism of a company came into paralysis and the company couldnot be operated normally. Accompanied by the further development of socialeconomy and the evolution of Modern Corporation system, adaptability between theoriginal basic corporate governance structures, the interests of the present stage ofeconomic complexity and business risk have increased rapidly. And companydeadlock is also gradually increasing.Company deadlock will lead to the deterioration of the company operatingconditions and the depreciation of assets value; furthermore, it will lead to damage ofall stakeholders including the shareholders, employees, creditors and others.Therefore, preventing the emergence of corporate deadlock and timely resolvingcompany deadlock are profoundly meaningful and important to protect the companyassets, the legal rights and interests of stakeholders and optimize the companymanagement mechanism.In China’s current legal system, the “company” refers to a limited liabilitycompany or a joint stock limited company. A kind of opinion which acceptedcommonly is a limited liability company is easier to fall into company lock for thereason that the restriction on shareholder exiting mechanism; in contrast, makingresearch on preventive and resolving project of company deadlock will appearpractical significance.Company deadlock can be classified as different categories according differentnorms. For example, according to the level of company deadlock, it may be dividedinto the deadlock on the board of shareholders and the board of directors. Accordingto the specific matters in voting, it can be divided into deadlock on business and onnon-business. In this paper, it will make a brief introduction and discussion on theconcept of company deadlock and causes about it regarding to the two main ways of classification of corporate deadlock (deadlock on board of shareholders and board ofdirectors, deadlock on business and on non-business).Of course, from a logical point, prevention programs to corporate deadlock itselfdoes not belong to the category of resolving company deadlock, however consideringthe formulation and implementation of effective prevention programs, has a positivesignificance to the greatest extent to save company resources and social cost;therefore, the author is inclined to list the prevention project as a part of the overallcompany deadlock solution programs.