Restrictions On Share Transfer Of Limited Liability Company

Limited liability Company, with its relatively low threshold of the establishment and comparatively flexible organizational structure, is gradually developing into an extremely popular form of business organization in various countries including China. Meanwhile, along with the diversification of the investment forms and increasingly frequent capital flows, a large number of problems associated with the share transfer especially treaty share transfer in limited liability company appear. After the amendment of the China's Corporation Law in 2005, the establishment of the share transfer of the Limited Liability Company is formulated in the special chapter. Too abstract contents are removed and the provision of principles is greatly improved. However, there are still some shortcomings with respect to the logicality and operability in existing provisions of the Corporation Law. Based on the Article 72 of the Corporation Law and fundamental theories of the share transfer, also combined with related legislations of the share transfer in other countries and regions, the paper provides with some practical suggestions regarding the limitation provisions of treaty transfer inherited in the share transfer of existing limited liability companies.This paper is divided into four parts:In the first chapter, the basic theory of the share transfer is discussed. Firstly, it demonstrates the concept of the equity stake, makes it clear and definite that the equity stake is a new kind of independent civil right other than the traditional property right obligatory right and personal right. Then, the concept of the share transfer is clarified; three pairs of the value conflict between the integration of capitals and persons, the rule of law and autonomy as well as fairness and efficiency faced by the Limited Liability Company with the design of the share transfer system are explained; the maximal balance should be achieved between diverse values on the basis of reasonable share transfer system which is generally accepted.The chapter two illustrates the standard norm of the internal share transfer. First of all, the legislative examples concerning the limitation of share transfer in some other countries and regions are listed. Secondly, the legislative choices of the mode from absolute freedom to regulatory autonomy of our internal share transfer are analyzed. The paper proves that nowadays, it is still necessary to specify the optional nature by legislation and to some degree, instruct the stipulation of the corporate rules. Furthermore, the necessity of the limitation of internal share transfer is proposed from the point of view that the corporate integration of persons, expectant right and fairness of shareholders are expected to be protected. Finally, it investigates the legislative attitude to"one-person limited liability company"caused by the internal transfer of shares.In Chapter III it elaborates on the external share transfer placing the emphasis on the agreement system and the preemption of the shareholder. Chapter three discusses the external share transfer. We focus on the consent right of external share transfer and the preemption of shareholders. First, it cites legislations in other countries and regions. Second, the subject, the voting rules, constructive assent and the relief system of transfer agreement are discussed and the paper makes appropriate legislative proposals. We deal with existing consent right of the share transfer and provide corresponding legislative suggestions centered upon the point that is heated discussed in the academic area: the consent body, voting rules, the appropriateness of the consent system and the relief of transfer consent system. Finally it explains the concept, its properties, the theory, the subject, the determination of "equal conditions" and partly exercises of preemption of shareholders.Chapter IV are some suggestions about restrictions on share transfer of Limited liability Company. The paper comprehensively makes a number of legislative proposals on our share transfer system from the viewpoint of internal and external share transfer, respectively.