Limited Liability Company Ownership Transfer Restrictions

The stock right means the right of obtaining economic benefits andthe right of participating in company's management and administration,which is enjoyed by shareholder on the basis of his shareholder'squalification. By the look of such respects as formation, subject,function, exertion and so on, the stock right is the right that is enjoyedby the shareholder as one member of the company, so it should be themember's right in nature. The characteristics of limited liabilitycompany's stock right is that the stock right is equal, relativelycentralized and restrained from being transferred freely. Due to thepeople combination and capital combination natures of limited liabilitycompany, the company laws of various countries all set restrictivecondition on stock right transferring for the purpose of protectingshareholder's interests and safeguarding creditor's interests, just theyardstick is different. The total legislative principle is that the stock rightcan be transferred both totally and freely, and the trust relationshipbetween shareholders should be safeguarded.Our country's Company Law also set up special restrictedregulations to the transfer of limited liability company's stock right,including entity's elements and formal elements, which are mainlyembodied in article 72 and article 73. But these regulations are relativelyprinciple, with some contradictive places to the social realistic.Therefore, consent right and priority right of current regulations wereanalysized in this paper through the comparative research on legislatingat home and abroad. In addition, the relevant legal questions of stockright transferring were discussed and some advice on administration ofjustice was proposed.The analytical method of comparative jurisprudence is used in thepresent paper. Starting from such basic theories as the nature of shares,characteristics of limited liability companies and personalities of thecompany law, etc, the author analyzes the deficiency of the current stock transferring system, summarizes the experience of relevant foreignlegislation, then proposes the author's own designing concepts regardingthe stock transferring procedures.To be specific, this paper consists of five parts apart from thepreface and conclusion. Its main contents are roughly as follows:The first part explains the concept and legal nature of the sharesand the share right transfer, and consider share right to be a new kind ofcivil right, share right transfer a dealing action without any change inthe character of company. Lastly, we give an introduction of the basictheory governing share right transfer.In the second part of this article, we first analyze the cause ofdifferences between share right transfer in Limited Liability Companyand Share Company. Then, we conclude that the basic principle oflegislation is to realize the harmony of credit-combination andcapital-combination.The third part discusses the existing problems on the shares transferto anyone other than shareholders. The meaning of Paragraph 2 ofArticle 72 is too fuzzy to play an effective role as a provision.The fourth part discusses problems existing in the provisions onshares transfer. The regulation is too simple. Points out the reasons ofcondition on the internal transfer of LTD. CO, the legal effect of theagreed transfer condition in the company article or shareholders'contract.The fifth part discusses the legal effect when the shareholderdoesn't be consistent with the transfer restrictive condition.Finally, the conclusion makes a simple summary of this paper.