For Dissent Shareholders Share Repurchase System Research

Nowadays, the voting principle in a modern company is mainly in the form of "capital majority voting" as a core decision-making mechanism to guarantee the high efficiency of its decision-making. This voting principle has made up the defects of the inefficiency of "unanimous consent" and fully implemented the decisions of the majority shareholders, which greatly improves the enthusiasm for investment of controlling shareholders. However, the biggest shortcoming of this principle is that it can derivate the "tyranny of the capital majority" during the structural changes which may seriously affect the interests of shareholders. Therefore, the controlling shareholders can easily use the advantages to hold their will as the company’s will and to violate the interests of minority shareholders who are bound to be seriously dampened. In order to balance the interests of shareholders, the system of repurchasing shares by dissentient shareholders tends to be the effective mechanism.Appraisal right refers to the right of dissentient shareholders to apply for repurchasing their shares at a fair and reasonable price during the structural changes of the company, which provides the minority shareholders who have lost the veto resolution a legitimate way to secede from the company. After the amendment of Company Law of the People’s Republic of China, the appraisal right of dissentient shareholder is added, which plays a positive role in balancing the efficiency and equity, protecting the expected interests of minority shareholders and other aspects such as their investing enthusiasm. This law lists five situations in which the appraisal rights of the dissenters can be applied, which is to some extent in response to various of managerial requirements on both theory and practice, and reflects the perfecting of the company’s legal system.This paper introduces the definition, quality, basic theory and values of the appraisal rights on the basis of its historical background. Through detailed analysis of the basic theory, it demonstrates the superiority and necessity of the system. As for the system structure, the legislative experience from developed countries provides a good reference for our own situation. This paper also introduces the comparative demonstration on company type, shareholders scope and specific exclusion in the hope that the legislative experience of other countries may perfect our appraisal right. As the practice is temporary and the theory is lagged, the judicial practice should sum up more suitable laws for our own. This paper, while making a positive evaluation of the status of appraisal right, focuses on the serious defects of its design and operation. Through comparing and analyzing the legislation of different countries (areas), I put forward my personal views and suggestion on the structural design and procedure development. I look forward to the perfection of the appraisal right of dissenters system in China so that it can play a more active role in the company management.