On The Legal Issues Of Corporation Deadlock

As one type of modern enterprise, limited liability company made a great contribution for the development of our national economy.The limited liability companies are built on the people combination and rely on trust as the base for operation, but when people combination losss, the trust crisis appears or disappears, the foundation will collapse, the company management will be paralyzed,the company business can’t normally developed, the company’s assets will continue to be loss and loss, and the company thus will appear deadlock. The so-called company deadlock is a situation that the company’s operations are in stagnation or failure, which was resulted by the shareholders’meeting or the board can not work effectively or to achieve effective resolution that was undering the problems of standoff or stalemate of civil shareholders or directors for any reason in long-term. To classification in purpose and effectiveness the company deadlock generally divided into the shareholders deadlock and the board deadlock, the equivalance deadlock and the nonequivalence deadlock.When company deadlock appears it can cause some damage to the company’s efficiency as well as the shareholders’interests and social interests,and there are three aspects of reasons that leading the corporation deadlock,one is that the articles of the company failed to give full play to the role in the prevention of company deadlock, and the lack of advance prevention mechanism left a growth space for company deadlock; second is that the closed and illiquid shares of limited liability company with the requirements of the three principles of capital limits the shareholder’s exit,then it boosting the company deadlock; third is that the limited liability companies are based on the people combination, rely on trust for the operation, when people combination is lost and apears trust crisis the foundation will collapse, the essence produce factors or roots of comany deadlock is the loss of people combination.For breaking the company deadlock, other counties under the rule of law have taken some relief measures,such as designated supervisor, specify the temporary directors, the dissolution of the compulsory share purchase and the court referee company. This article during the related presentations, their pros and cons analysis of judicial relief measures, and points out two measures:one is the specified superintendent, the other is the specified temporary director. In temporay Chaina it’s lack of professional market managers, court for compulsory intervention company generation owners management behavior,so that this seriously violated the company autonomy theories, also didn’t fully explain the rights that deprived the company deadlock factions of decision that which party has the veto right, or it does not have a portability that whether it’s more reasonable or more rational to instead the parties who concerned in company deadlock to management; compulsory share purchase system is mainly for protecting the minority shareholders, when small shareholders received "pressure" and request forced to dissolve the company by the accused company or other shareholders, the litigation plaintiff proposed acquisition of shares. It is a "win-win"system that not only solved the company deadlock, but also avoid the fate of dissolution; the court to dissolve the company can thoroughly solve the company deadlock, but the company once after dissolution may give shareholders and the society a lot of disadvantages. It embodies the judicial dissolution of the company’s caution according to the other state laws and regulations referenced above. It has a certain enlightenment to perfect our companies’deadlock judicial relief measures,and we should be based on the actual situation to choose or transplant.According to the183th regulation in the "Company Law", shareholder may file a lawsuit to dissolve the company, but the regulation is too principle, and the specific standard, the parties, the status, such as the jurisdiction of the court are not clear, although the judicial interpret the conditions that dissolve the company under company deadlcok, and also correspond to the procedure of provisions, but in judicial practice there still exist following problems:one is that the litigation subject qualification is not clear, the second is that there exist misreading in management with serious difficulties, the third is that there has no clear regulation to decide who has the right to participate in litigation representatives, the last is that there are no compulsory share purchase system. This paper proposed some countermeasures to chartering the role of prevention in the company standoff; clearing the two deadlock company on behalf of the companies responding; establishing shareholding system of compulsory acquisition and give full play to the mediation function.