Shareholders Of A Limited Liability Company Statutory Exit Mechanism

In today's world, the number of the limited liability company(also called colse corporation in US or private company in UK) is more than the public companies, it is widely used because of its advantage of limited shareholders and easy to manage etc. Also it has close characteristics and the personal nature, but due to the lack of equity floating and transaction market, it is very difficult for medium & small shareholders to withdraw from the company and get back their investment. Most countries of the two system of law have established the legal withdrawal mechanism for shareholders when they facing such situations like, the company is at a stand or controlling shareholders infringe the fiduciary duty or the reasonable expectation could not be achieved, to protect their reasonable rights. Although China enacted the new Company Law in 2005 and stipulated our legal withdrawal mechanism at first time, the related articles of law could be better if we improve them to fully cover the exercise procedures and rights remedy. This paper is for the purpose to discuss the defects and suggestions of our shareholder withdrawal mechanism through analyzing comparatively foreign legislation and praxis, so as to make shareholder withdrawal mechanism has more active function in our new Company Law.This paper contains four parts besides the introduction and the conclusion.The first part introduces the basic conception of the shareholder withdrawal mechanism of the limited liability company. At first, it is indicated that the origin of the limited liability compnay and its characteristics. Secondly, explains why it is necessary for the Company Law to establish the shareholder withdrawal mechanism, and what is the concept of legal withdrawal:it means the shareholder withdraw from the limited liability company and get back his investment, also lose all his share rights as well as his qualification as a shareholder of the company according to the legal articles of law, through such ways like judicial dissolution or share repurchase claim of dissenters. Then discusses three theories including the reasonable expectation right under company-contract theory, the fiduciary duty theory and the interest balance theory. Lastly, introduces the influence of the mechanism for the three kinds of related subjects. The second part provides the comparative analysis of the withdrawal mechanism for shareholders in limited liability companies of foreign countries. It makes a detailed reserch of the regulations and prejudications of the representative countries of Anglo-American genealogy of law, such as the United states and the Great Britain, and that of the representative countries of the Continental genealogy such as Germany and Japan. And then, it analyzes the common points and the difference of the withdrawal mechanism in the representative countries of the two system of law comparatively.The third part studies the shareholder withdrawal mechanism of our country. Fristly, introduces the history development and the status quo of the legislative activities and the judicial practice, particularly admits the positive influence of the withdrawal mechanism establishment in our new Company Law by the way of demonstration and comparison. Secondly, analyzes the detailed articles of our shareholder withdrawal mechanism in limited liability company in 2005 Company Law and points out the shortcomings which are being needed to improve..The fourth part puts forward the suggestions of improving the legal withdrawal mechanisim of the limited liability company in our country. This paper provides three applied principles for the mechanism and some suggestions for the legal shareholder withdrawal mechanism in our new Company Law on the basis of the advanced experience learned from foreign countries.