The Impasse And Its Countermeasures Of Limited Liability Companies

Corporate deadlocks are often generated in the practice of cooperation limited companies, while as to the definition of the corporate deadlocks and how the deadlocks is to be solved, there is no certain explanation and relevant provisions set in China's company law. This paper presenting from the concept of corporate deadlocks deems that the deadlocks with the following four characters is the corporate deadlocks we are about to discuss: intersubjective opposability, abnormal operation of the corporate system, durative of the deadlock situation and the lack of jural superiority. With the deepen discussion on the reasons for causing the deadlocks, this articles believes what results in the corporate deadlocks is the close operation of the corporate limited, limitation of the shares majority and the lack of the current law and provisions, essentially, the lose of the main character of the corporate limited, which may not only damage the shareholders, corporate and the creditor, but have negative influence on the market and social stability. How do we face the corporate deadlocks, in another word, what are the countermeasure? Firstly, to avoid the generation of the deadlocks, the articles of association should be perfected and arouse the awareness of the damage caused by deadlocks as well; Secondly, the judicial remedies should be set out since remedies means legal rights. The lack of provisions about judicial remedies on corporate deadlocks in China's company law makes it confused on dealing with the cases. And there is no an agreement arrived by the scholars even it has long existed in the foreign judicial system. The formation of judicial remedies is helpful for solving the deadlocks, relieving the social confliction and carrying out the idea of democracy. For different types of deadlocks, the attitude adopted should be different also. And the judicial remedies should be processed under the following principles: maximum of the main business body maintenance, justice of the shareholders suit and overall consideration for the post affairs. This paper fully discussed the three measures of judicial remedies, that is, judicial dissolution, shareholder fallback and shareholder conference assembly. Corporate judicial dissolution refers to the loss of the legal representative qualification. There are relevant provisions for the judicial dissolution on legal representative while lack of the provisionsrelated to the company dissolution in China's general civil law. The joint venture enterprise law has set certain provisions on the dissolution of this type of operation, however, for the majority of the company, there was no such provisions. The establishment of judicial dissolution in China's judicial system is helpful to encourage the investment, to avoid the major shareholders' grind and to benefit the minor shareholders. This paper also stated the type of the suit, the suit party, the legal reason and the liquidation procedure. The shareholder fallback means that one shareholder buys the other share from another shareholder with reasonable price since the deadlocks, which will lead to the loss of the membership of one party and resolve the deadlocks. There are different analyses on the fallback in Germany and America. This article believes that the establishment of the shareholder fallback system will meet the requirement of protection of shareholders' interest, supplement of the shareholder remedies right and so on, and analyses how the shareholder fallback system assort with the capital system and company community, which further set forth the several items as suit party, legal reason and price identity. The shareholder assembly right talks about the right to hold the shareholder conference if it is believed necessary by the shareholder when the board director are not approval of such proposal. Reviewing the current situation of China's shareholder conference assembly right and referring to the provisions abroad, to establish the assembly system in China is the need of holding of the shareholder conference, the need of realization of shareholder right and the need of justice and fairness.