On Judicial Remedies For Corporate Deadlock

Corporation deadlock means that the company has been placed in a situation of stalemate, which is unable to operate normally and to make profit. On the surface, the formation reason of corporation deadlock depends on the opposition in the shareholders and directors. However, the original reason lies in the company’s institutional foundation of the capital majority rule and the principle of capital maintenance and fullness. In other words, corporation deadlock is a problem in which the modern corporation management philosophy encounters the characteristic closed form of the company. Therefore, the corporation deadlock always occurs in small limited liability companies with stronger people combination. Especially in Sino-foreign joint ventures, cooperative enterprise and familial private enterprises, the corporation deadlocks are relatively common, because these companies have single equity structure, small number of shareholders or directors. When they have different opinions, the corporation deadlock always arises. In view of the particularity of companies in our country, the legal problems of corporation deadlock appears frequently in recent years, and therefore it is urgent to solve corporation deadlock in order to maintain the process of China’s economic development.As early as in2002, the Chinese scholars began to study the problem of corporation deadlock and some regulations in relation to the corporation deadlock were added when the "company law" was amended. The new "company law" was taken into effect. Especially" the Supreme People’s Court promulgated the judicial interpretation on "Company Law of the People’s Republic of China-Two" in which the condition of action of the forced dissolution; mode and procedural issues were made in more detail, further improving the forced dissolution litigation with higher maneuverability, but it still have some problems now.The objective of the present paper aims at taking apart the corporation deadlock academically, attracting the attention by the legislature department, so that the unreasonable rules in existing company law will be revised, modified or complemented in later legislation.There are four parts in this article except introduction. In the first part, the definition of corporation deadlock, its characteristics, types and contributing factors are described. In the second part, the analysis of the theoretical basis of judicial relief of corporation deadlock, realistic basis and judicial relief basic restrictions as well as judicial relief measures are mainly discussed.In the third part, the corporation deadlock, judicial relief in the specific judicial measures and some alternative remedy measures are elaborated.In the fourth part, some suggestions about company deadlock, judicial relief measures in our country are put forward, mainly including the perfection of the judicial mandatory dissolution, compulsory equity replacement and separation system.