Impasse And Its Legal Response

The Corporations of our country are divided into two types that a re the limited liability corporation and the share limited corporation. The former has fewer shareholders than the later, and are founded on the base of the identity or relationship among shareholders. When conflicts happen among the shareholders with equal percentage or approximate percentage of shares, it will lead to make no policy made in shareholders assembly and makes the board unable to complete the daily management, therefore, deadlock arise. Based on the contractual perspective on company law, the nature of the deadlock is the business obstacles that the parties particularly the shareholders reasonably expected, while a series of contracts including the article of incorporation being carried out .It has seriously affected the fulfillment of the company goal and made the parties of the contracts, especially the shareholders reasonable expectation in vain.The arising of the deadlock is related to the basic system of the corporation, including the capital system, the voting system and the organizational structure in the corporation. The capital system awards the shareholders—who have equal percentage or approximate percentage of shares-the ability and means to conflict. However, the confrontation leads to the deadlock because no decision is made in this way. Resulting from the principle of equality that "one share has one vote", the majority rule comes into domain in the corporation's governance and decision-making process. The corporation is subject to the principle of majority rule: holders of a majority of the voting share govern after it is established by contract or special charter or bylaw provision. To protect the interests of minority shareholders, the cumulative voting rights, the agents for the right to vote, the exclusion to the right to vote, and the restrict majority shareholder voting system have been developed in the company law. This system weakens the majority shareholders and brings new problems to arise deadlock. The feature of the company is one reason lead to deadlock. The regulation is also one reason. Both of Civil Law State and Common law countries have law to deal company deadlock. Our Company law has provision of deadlock, but it is not perfect.The research method of comparative studies is used in the paper. The paper is divided into five parts. The first part introduces the background and meaning of this paper. The second part discusses the basic theory of company deadlock, defining company deadlock and introduce the categories. The third part discusses the reason and influence of deadlock. The fourth part discuss the solution of deadlock in many countries especially mediation,arbitration,compulsory share purchase and compulsory dissolution. In this part, I use comparative way to introduce and give the suggestion that how to improve the legal system in our country. The fifth part is the ending.