Research On The Equity Trust System Of Limited Liability Companies' Hidden Shareholders

The phenomenon of Anonymous investors investing in limited liability companies as anonymous shareholders is very common in the company practice, the law does not specify this problem, theorists have not form a consistent understanding yet, which can easily lead to disputes in practice. From a pragmatic view point, this paper uses the comparative jurisprudence and legal value analysis, discusses the practice and legislative status state of implicit shareholder in the limited liability company. Directing at the problem of hidden investors in limited liability companies, the writer put forwards a specific operation mode under our current legal framework, namely, the trust system to achieve the demands and interests of related subjects. Through the discussion, the author made a shallow knowledge about numbers of legal problems of implicit shareholder in limited liability companies.This paper is divided into five chapters, plus introduction and conclusion.The first chapter mainly expounds the basic problems about hidden shareholders in the limited liability company.From the general concept of hidden shareholders, this chapter put forwards the view on the hidden shareholders. When the company founded, they actually invested in the company and during the existence of the company they buy shares on the purposes of enjoying the shareholders' equity. But the incorporation articles, the register of shareholders or the business registration materials recorded the investor as the others. Then, this paper focus on the legal characteristics of anonymous shareholders, due to all causes shareholders are not hidden shareholders, including implicit shareholders are not in the company registration material resulted from an objective omission and false shareholders. Finally, the author divided anonymous shareholders into completely hidden shareholders and not completely hidden shareholders from the standards of insiders range. Completely hidden shareholder means he is only known by the shareholders who signed investment agreements with the anonymous shareholders, other shareholders and third-person have no knowledge of them. Not completely hidden shareholder means that the undisclosed shareholders, nominee shareholders, company, company's other shareholders know the existence of hidden shareholder, only the third person outside the company without the knowledge. This classification laid the foundation for the trust shares in the following specific design of the system.The second chapter explores the current legislative status on the hidden shareholders and the legislative deficiencies and defects.Firstly, this chapter discussed several typical kinds of disputes involving implicit shareholder in judicial practice, summed up several types of legal relations which need to deal with, namely, the legal relationship between hidden shareholders and Nominee Shareholders; the legal relationship between hidden shareholders and other shareholders of the company; the legal relationship between hidden shareholders and third person outside the company. Then the author used several practical cases to further illustrate the complexity and diversity of the anonymous shareholders problem. Secondly, sorted out and the simply analysed Chinese current legal norms dealing with hidden shareholder disputes, the inadequacy of current laws and regulations is not clearly definited the legal relationship between implicit shareholders and major nominee shareholders, let alone the specific criteria to determine the nature of legal relationship between them, resulting in no overall grasp of all the legal issues involved in hidden shareholders. In a word, it will be a wise choice to bring hidden shareholders legal issues into the existing legal system.Chapter III discusses advantages and legal basis on the use of trust system in implicit shareholder issuesFirst, the author introduced and assessed the main points in educational circles about the nature of legal relationship between hidden shareholders and Nominee Shareholders, including the trust and agent specification standards. It is possible to rule implicit shareholders by the trust legal system. Secondly, from institutional fit between the trust and the implicit shareholders phenomenon, combined with the specific provisions of Chinese "Trust Law", I discussed the advantages to rule anonymous shareholders legal issues by trust system. Thirdly, I specifically stated the legal relationship among main parties under the equity trust framework, including the legal relationship between clients and trustees, principal and the company, client and the third person, the trustee and the companies, which is a design bedding for the equity trust system of the anonymous shareholdersThe fourth chapter primarily focuses on the specific design and operating mode of the implicit shareholders trust equity system under our law framework.The main line in this chapter is the establishment,operation and termination of the trust. Firstly, analyze the effective establishment of the equity trust contract, and then analyze the effective establishment of equity trusts. For the Completely hidden shareholders, they can choose to notarize the trust contract to protect their legitimate rights and interests to the maximum extent. For not completely hidden Shareholders, they can write the Trust issues into the articles of incorporation, indirectly public to the publicity, replace the publicity function of trust registration, make up the defects of our trust property registration system (publicity does not cover anonymous shareholders name and name). Secondly, the focus of the trust running is the equity trust contract performance issues. Accordingly, mainly focus on the specific content of the contract and agreed legal rights and obligations between the trust contract parties. Finally, briefly analyze the company's legal status during the operation of the equity trust. Thirdly, describe the conditions of termination of the Trust shares, focuses on the handling of the trust shares after the termination of the Trust. During the existence of the company, if a trust relationship terminated, the implicit shareholders return on their investment or become formal shareholders, it is necessary not only to comply with the requirements off the company's contracts and trust law, but also in line with company law and relevant judicial interpretations of the provisions.Chapter V the author puts forward to the ideas of improving implicit shareholder equity trust regime.From the micro and macro viewpoint, the author proposed improving thinking on equity trust system. Firstly, accelerating the establishment of equity trust registration laws and regulations, curb the Chinese equity trust bottleneck from the system level. Secondly, strengthening application of the trust legal system and developing the publicity awareness of the trust system, creating a good social atmosphere for the trust function.