The Equity Transfer Of The Limited Liability Company And Deal With

In recent years, as the new Company Law has been enacted and put in force, issues relating to shares of companies, especially limited liability companies, have become the focus of social attention, and the assignment of company shares is in particular problem-ridden. Now that in most Chinese companies the shares are highly or relatively concentrated, majority shareholders often exploit legal loopholes in shares assignment to conceal information or deliberately conspire, which easily poses an infringement on interests of minority shareholders, company creditors or other stakeholders. This situation considerably impedes the efficiency of company governance in China. Therefore, in order to improve the governance efficiency, on the one hand assignments capable of optimizing companys shareholding structure should be encouraged, on the other hand relevant legal rules should be refined so as to coordinate the convenience of shares assignment and the protection of stakeholders. However in practice, relevant legal rules have a common shortcoming of ambiguity and poor practicability, which leads to divergent criteria in determining the effect of shares assignments. Although the modification of Company Law in 2005 has supplemented and ameliorated the part of LLM shares assignment, loopholes still exist at large, so a theoretical study is necessary.This article adopts a layered structure: firstly, it analyzes the shares and shares assignment in LLM; secondly, it concentrates on the issues in LLM shares assignment practice to set down demonstration and put forward suggestions.There are four parts of this article in general:The first part: LLM shares and shares assignment. In this part, there is a brief introduction of LLM historical development and status quo, and a more detailed demonstration of the definition of company share and the determination of basis of shares, and then a further explanation according to the different contents or natures of company shares or implementing methods of relevant rights. On this basis are the reference and characteristics put forward. Through summarizing domestic legislative status quo of LLM shares assignment, the social value and meanings of corresponding study is revealed.The second part: requirements and legal effects of LLM shares assignment. Firstly, the requirements of assignment between shareholders are stated but not detailed on, because relevant rules are already clear enough; the focus of this part is the requirements of assignment with a third party, including: l)the company be legally established; 2) the assignor have the identity of shareholder; 3) the assignee have no certain identities the law provides for; 4) the formal requirements be met; 5) no deliberate conspiracy, fraud or duress which jeopardizes state, community or others interests be present. In final the legal effects of shares assignment are discussed.The third part: Analysis on problems and their solutions in LLM shares assignment. This is the most important part. In this part, six kinds of frequently encountered problems are listed: assignment based on defective capital contribution; partial assignment of powers vested in shares; assignment in infringement of purchase privilege of other shareholders; assignment without variation registration; assignment in infringement of association articles restricting shares assignment and assignment without consent. This article, apart from elaborating on the meanings and instantiation of above mentioned defective assignments, also analyzes their causes with reference to some theories of scholars.The fourth part: approaches to solve issues in LLM shares assignments. This is the hardest part. With jurisprudential analyses, the author examinates the above issues one by one to determine how to achieve the best results in practice, and then brings out the suggestions: 1)provisions should be added on supplementary compensative liability of faulty party in defective shares assignment; 2)company law should in particular provide for conditions of partial assignment of powers Vested in Shares 3)company law should detail on the price and process of shares assignment so as to protect other shareholders purchase privilege; 4)relevant registration should be improved; 5)in consideration of the overabsolute provision of new Company Law for company articles of association, exceptions should bemade to association articles restricting shares assignment; 6)assignment withoutconsent should be included by company law as a separate provision of CompanyLaw.