Dissenting Shareholder Equity Repurchase Claims

The appraisal right of dissenters is a newly-established systemduring the modification of corporation law. This paper analyses thelegislation background, theoretical bases, practical significance and rulesystem about the development of the system, and presents some adviceon the application and improvement of related systems. In addition tointroduction and conclusion, this paper spreads in four parts.Part one analyses its connotation on the base of the briefintroduction to the appraisal right of dissenters. As an important reliefright, the appraisal right of dissenters allows shareholders who dissentthe resolution concerning fundamental changes of the corporation todemand the corporation to buy back their shares with fair value, andthen secede from the corporation.Part two mainly discusses the legitimate base of the system.Despite the dispute between positive view and negative view, this paperfirmly holds that the establishment of the appraisal right of dissentershas its strong legitimate base. Both contract expectation right theory,shareholders' equality theory, and benefit theory, company dismissaltheory agree the existence of appraisal right of dissenters. In moderncorporation law, the appraisal right serves the new function ofmonitoring management's conduct through the remedy and adjustmentto the majority rule. And today it has evolved to an effective tool ofprotecting minor shareholders and maintaining the normal corporateoperation. Therefore, the system of the appraisal right of dissentersmeets the original intention of corporation law and protects the rights ofminor shareholders, and has great practical significance. Certainly, someside effects that the system brings to corporate system, capital principle,venture bearing and operation target shouldn't be neglected. Hence, areasonable attitude towards the system is to properly restrict itsapplication.Part three examines the framework of the system by comparison.Some related legislations of different countries are comparativelyanalyzed in six aspects such as applied companies, conditions and typesof shareholders, procedure of claim right, the appraisal of shares and thedisposal of shares after buying back.Part four focuses on the specific provisions in our Corporation Law. The introduction of the appraisal right of dissenters is a great progress inour Corporation Law. But these contents have some defects in fully andeffectively protecting minor shareholders, for instance, undefined ambitof applied companies, lack breadth in applied conditions, not coveringall deserved shareholders, no elaborate provisions in procedure security,and without institutional security in shares price. We should rationallytake the experience of foreign legislations for reference to improve someprovisions of our appraisal right system.