The Company Judicial Dissolution System

The Corporation Law passed in 1994 was a "premature" which adopted in the commercial sense of being indifferent to the community as a whole. While business organizations had the basic framework, the content was too rigid and outdated. Because the legislation excessive considered Chinese characteristics and lack of business rules, the company became a closed group of big shareholder's will which denied the conflict of interests between shareholders. Because of the principle of "majority decision" which resulted in no restraint of the big shareholder's conduct, it was reasonable that the company stemming from the judicial system had dissolved. And therefore the courts universally showed a passive attitude toward the lawsuit of judicial dissolution by shareholders, which resulted in great damage of the shareholders' interests, especially those of the minority shareholders. The new Chinese Company law, which came into effect on 1st, Jan 2006, imports the system of judicial dissolution for the first time. Art 183 of the law definitely prescribes that shareholders can bring a suit of judicial dissolution of a company on statutory situations. However, it is too simple to be applied in the judicial practice because of the deficiency of the defendant in a lawsuit, legal proceeding, supplementary measures and aftermath. As a result, the author tries to explore the theoretical foundation of the judicial dissolution system, and makes some comment on the system of China's new Company Law on the basis of the theory and the practice of other countries. The author hopes that this preliminary study will make some contributions to a better application to the academic and the legal practice.The article mainly consists of the preface, the main body and the conclusion. On the basis of the definition of the company's judiciary dissolution and the legislation of other countries, the preface complies with the cause and main purpose of this article. The main party includes three parts.The first part is the introduction of the reason and the conditions of the case. After a brief description of that, the author pointed out the focuses of the case which are whether the company was deadlocked and its management was in serious difficulties that can not solved through other channels. The second part is the theoretical and normative analysis of the judicial dissolution system of the limited liability company shareholders. Firstly, after the analysis of the legal values of the judicial dissolution system, the author pointes out the necessity and feasibility of the values of contemporary China, which is "the basis of fair, balanced efficiency". Secondly, on the basis of the comparative analysis of the use of the various methods of civil law and common law's theories, we should explore the legitimacy of the origin of the law from China's existing legal provisions, and improve the dissolution system under the guidance of the theory of contracts. Finally, after the analysis of the entities norms, the article says that the standards of the company's deadlock should be based on the criteria of a people-oriented with reference to funding. Even so, the judge in the Magistrate must also uphold the principles of "careful judicial" philosophy to maintain the survival of the company as far as possible.The third part consists of three aspects. First is the evaluation of the case's focus from two perspectives which are definition of the deadlock of the company and the value of legislative consideration. The author pointed out that the Court's ruling embodied the legal values of "a fair basis, balanced efficiency" and correctly grasped the depth and intensity of the judicial power which involved in the internal management of companies. Second is the reconstruction of the entity regulating system from two dimensions, which is "the serious difficulty of the company's management" and "the difficulty to solve through other channels". Third is the reconstruction of the procedural norms of this system, including the definition of eligible defendants, the contact with other systems, and the liquidation after the dissolution.Conclusion is a summary of this article.