Legal Problems Of The Deadlock In The Limited Liability Company

This article pays attention to corporate deadlock. Corporate deadlock is a kind of unusual phenomenon, which appears frequently in corporate operation practice. In recent years, with the development of market economy in China, more and more deadlocks have emerged in limited liability Corporation, especially in Chinese-foreign joint venture enterprises. Corporate deadlock becomes a social problem. People don't have profound understanding to the definition of corporate deadlock, the characteristics of corporate deadlock, the harm of deadlock, the reason why deadlock emerges and so on. Other countries have rich theories and mature legislations on corporate deadlock, but in our country, the theories are divergent, the legislation is imperfect. How to avoid and break the deadlock has become a significantly theoretical and actual problem. This article discusses this problem from four parts.Part Ⅰ introduces basic problem about corporate deadlock. This part discusses the definition of corporate deadlock, summarizes a series of characteristics of corporate deadlock, classifies corporate deadlocks according to different standard, and pointes out that the corporate deadlock can do great harm to shareholders, to the corporation and to the whole society. At the same time this part analyses the reason why corporate deadlock emerges. The author thinks the conflict of " human gathering nature" and " joining of assets" is the most immediate cause to the deadlock, and thinks the barrier of capital transfer further intensifies the deadlock. The elaboration of this part enables us to have a more profound understanding to the corporate deadlock.Part Ⅱ is the theory and the practice about breaking the limited liability corporate deadlock in other countries. This part mainly introduces the rationales behind breaking the corporate deadlock overseas, particularly in British and in America, such as the contract theory of articles of incorporation, the contract theory of corporation,and the theory of fails of anticipation benefits. This part also introduces the legislations on handling the corporate deadlock, such as the agreements in articles of incorporation, involuntary dissolving the corporation, and other alternative judicial remedies. Our country can profit from all these theories and legislations greatly.Part HI shows the reason and legislative flaw on corporate deadlock in our country. This part points out that relatively low quality of shareholders, the special environment and the imperfect corporate governance are special reasons why limited liability corporate deadlock emerges in our country. At the same time, this part analyses the disputes on handling the corporate deadlock and the flaw of present legislation on corporate deadlock. Through analysis and elaboration, it indicates the direction to handle corporate deadlocks in our country.Part IV indicates how to deal with the limited liability corporate deadlocks in our country. Based on the analysis of the third part, this part proposes some measures to handle the limited liability corporate deadlocks, including improving corporate law and other related systems and making the contract in the articles of corporation and signing an agreement after deadlock and establishing all kinds of legal remedies, such as forcing one shareholder to by out other shareholders' stocks, giving the deadlocked shareholder the petition to dissolve the corporate and establishing non- judicial mediation system. In particular, this part conceives the concrete systems of involuntary transfer of stocks and discusses the condition, the procedure of the involuntary dissolution and so on.