Co., Ltd. Shareholders' Predicament And Its Judicial Relief System Is Perfect

One of the major problems of Limited Liability Company is that the shareholders are in a dilemma situation– they could neither act / maintain their own benefits nor quit the company. Before the new Company Law enacts, this sort of situations always happen. When the shareholders are not able to self-relief, they usually hope the court could help. Therefore, there are often some typical cases about requesting disincorporating or requesting withdrawing the fund. However, the judging results usually reject the plaintiff's prosecution due to"there is no written legal reference". The new Company Law (2006) added new principle references for the shareholders quitting the company regarding to the close corporation problem, although the principles are still not quite integrated. This article will discuss and analyze the major disadvantages of judicial relief principles in the new Company Law regarding to the close corporation problems in Limited Liability Companies; also, some relevant recommendations are provided.This article contains three chapters:Chapter 1 discusses the basic issues about close corporation problem and shareholder self-relief situations. To understand how to improve the close corporate problem for Limited Liability Companies, it is essential to decide which type of close corporate problem it is. Firstly, the scope of the close corporate problem discussed in this article is set through the researches of relevant legislation and judicial practice in UK, US,Germany etc. Secondly, the reasons for why the close corporate problem happens are analyzed– the characteristics of Limited Liability Company and the limitation of shareholder self-discipline are the reasons for this problem. Finally, the importance of judicial relief principle for readjusting incomplete contract and actualizing shareholder rights of close corporate problem is discussed. Chapter 2 analyzes the limitations of the close corporate problem relief principle for Limited Liability Companies in China. Firstly, the article reviews the old Company Law and then discusses the new improvements of new Company Law in close corporate problem. Secondly, after comparing and analyzing the judicial relief rules for close corporate problems of limited liability companies in different countries, some legal rule limitations in judicial relief of close corporation problem for the current Law are summarized through some practical cases: the limited applicable scope of close corporate problem for judicial relief, and the involuntary judicial dissolution is too abstract and is not easily operated in practical situations.Chapter 3 gives some recommendations for improving the limited liability company close corporation problem relief rules in China. First is to ensure the judging standards for the close corporation problem; credibility & reasonable expectation principles are the referential standards. Secondly, this chapter discusses increasing the scope of involuntary judicial dissolution. Thirdly, discuss the system of involuntary judicial dissolution, and the bye-outs rules are introduced; and the necessity,applicability and operation methods of bye-outs rules are analyzed. It could be concluded that for improving the legal relief rules of Limited Liability Company close corporate problem, it is necessary to increase its applicability, endue the judges with free jurisdictional right in a way, and the legal activities based on legal cases would also have very important effects for improving the Limited Liability Company close corporate problem relief rules in China.The conclusion is finally summarized.