Limited Liability Company Options Appraisal Right Legal System

In the corporation laws of modern countries and regions, the principle of "majority consent" is generally adopted in the decision-making of structural changes of a corporation. This principle embodies the concept of the democracy between shareholders and the equity of capital. But such principle may lead to the impairment to the rights of minority shareholders. In practice, it is easy for controlling shareholders to turn their own mind into the decision of company because they hold the majority voteable shares of the company. In the case of lacking of forceful restriction, the controlling shareholders may take various methods to damage the interest of company and other shareholders, especially in Limited Liability Company.In consideration of it, many countries and regions adopt a series of means to supply remediation to minority shareholders in their corporation laws, and the appraisal right is one of the means mentioned above. Appraisal right refers to the right of dissentient shareholders to ask the company to buy-back their shares at a fair and reasonable price when some material changes of company will happen. In order to consummate the protection of minority shareholders, China has also adopted this remedy in its newly revised editions of Corporate law in October 2005. The emphasis of this article is to introduce the structure and the significance of the appraisal right system. At the same time, this article analyzes the potential problem of this system both in academic constructions and in the practice. Finally I'll offer some suggestions to the amendment of such system in our country.