On The Cognizance Of The Shareholders Of A Limited Liability Company Qualification

For the time being, the establishment and operations of many companies of china are not so formal due to definitely obvious defects in our previous legislation system. There are a lot of disputes with respect to identifying shareholder qualifications. In practice, there is a great difference in the use of evidences regarding the registration with local AIC, paid-up capital, articles of association of company, register of shareholders and the rights of the real shareholders. This leads to the difficulties in dealing with the relevant disputes. The legal issue of identifying shareholders has become the hot and difficult issue in the present judicial practices. Although the new law of corporation establishes the deductive restriction of the register of shareholder and the restriction of company's register in confronting bonafide third parties, it fails to recognize that the company's articles of association and the certification of capital contribution can be used as evidences in deciding shareholders. The author of this thesis will give a detailed analysis of evidences'definitions, characteristics and functions in identifying shareholders from the view of the evidences and tentatively put forward a general principle in deciding shareholder qualifications and an identification criterion for judges in company trials.This thesis consists of three parts.The first part of the paper concerns with the general theory of acquiring and identifying shareholder qualifications. The concepts of shareholder, shareholder qualifications, stock right and their interrelationship are introduced, among which the acquisition of shareholder qualification is emphasized. One can obtain the shareholder qualification through two ways: contributing funds to the company or inheritance. As one of the necessary conditions for the acquisition shareholder qualifications, the investing of the investor, doesn't necessarily mean that he should acquire the share or stock and qualify himself as a shareholder, neither does the stockholder's rights transfer. Even after the stockholder's rights transfer come in force, one cannot acquire shareholder qualifications, when the articles of association and the register of shareholder hasn't changed and registered. Only when the transfer is registered, one can get the status of shareholders, enjoy the rights of shareholders and confront the company.Part two expounds and analyses the evidences for identifying a shareholder and a detailed evaluation of these evidences is presented as well. Among the evidences, the limited liability company's articles of association play a critical role. Anyone signed on the company's articles of association possesses the qualification of shareholders; because of its restriction of certification of the shareholder qualifications, of public confidence and of confrontation to the third parties, a company's registration has the priority in the conflict of deciding the qualification of shareholder for bonafide third parties; the register of shareholder possesses the deductive restriction (with the register of shareholder, one can be deduced to have the shareholder qualification), if there is no opposite evidence; the certification of capital contribution is the basic evidence for one to obtain the qualification of shareholder. With the certification of capital contribution, one can require the company to perform the duty to record or change the record of the company's articles of association and the register of shareholder, thus obtain the qualification of shareholder. When deciding what evidence should be adopted to identify a person's shareholder qualifications, judges have to take many factors into consideration, eg. various legal relations among the shareholders, company and third parties etc, the interest of bonafide third parties, stable relationship of the company, suitable criterion of identification of shareholder.In part three, the author tentatively designs a system on identifying the qualification of shareholder in the limited liability company. If one wants to obtain the qualification of shareholder, the following two conditions must be met: firstly, fund contribution for the company must be made; secondly, name or title of the shareholder must be recorded in the company's articles of association and the register of shareholder. Further discussion concerning identifying shareholder qualifications is presented when any of the two conditions isn't met. Furthermore, the identification of qualification of nominee shareholders, fake shareholders and trusted shareholders are illustrated.