Study On The Shareholder Qualification System Of Community Equity Cooperative Enterprise

Community Equity Cooperative Enterprise (hereinafter referred to as “CooperativeEnterprise”) is a special type of enterprise which is transformed leading by thegovernment in China rural areas for the purpose of carrying forward the urbanization.In Bao’an District, Shenzhen City, there exist over four hundred CooperativeEnterprises. Such enterprises are created on the basis of local collective economyorganizations and assume various functions of basic level autonomy institutions tosome extent. They largely promote the urbanization as well as the development of theeconomy and society. However, due to the defects of their internal governance and thelack of the relevant legislation, in reality, the disputes among different persons withinterests concerned always occur. The grass-roots courts also deem it difficult whenfacing such suits because of the insufficient theoretical studies and legislated practices.Among the issues, shareholder qualification is a key problem. Although Shenzhen haspromulgated the Regulations on Equity Cooperative Enterprise in Shenzhen SpecialEconomic Zone, the provisions thereof in relation to the shareholder qualification andthe equity rights are quite a little.Driven by the urge for the theory and legislation, this article tries to decompose the shareholder qualification system of the Cooperative Enterprise in order to put forwardthe preliminary assumption of the regime. First of all, based on the reasons and aimsof such enterprises’ emergence, along with the existence of relevant laws and thedevelopment in the practices, the article analysis the legal characters and the status ofsuch enterprises. This kind of enterprise transforms the community assets, especiallythe collectively-owned land, into the assets of the company and divides them intoshares which are distributed to individuals with certain identities. Such enterprise hasa core of cooperative system and a framework of equity system which means that bothof these two systems impact the Cooperative Enterprise. At the same time, suchenterprise is in a transitional stage with strong co-personal characters and self-closurecharacters. Although it possesses certain transitional elements, it still has its ownindependent value. Because of its advantage resulting from cooperative system, itcould be maintained with slightly and proper adjustment. While studying this specialenterprise, the author considers that it should combine the theories of the collectiveeconomy organization membership qualifications into the analysis of originallyobtaining the shareholder qualification in such enterprise during the establishment;and after the completion of the establishment, the acquisition and loss of theshareholder qualifications may take the correspondent legislation and principle of thelimited liability companies.Further, this article interprets the existing legal provisions and analysis the actualproblems, and subsequently concludes the current shareholder qualification system ofthe Cooperative Enterprises in this district. The major problem is that the locallegislation is too simple and lack of feasibility. Based upon the above, this articlediscusses the following issues and systems:(1) proposal of the standards to identifythe shareholder qualification referring to the acquisition of the shareholderqualifications by referring to the collective economy organization membershipqualifications theory;(2) discussion on the originally acquisition of shareholderqualifications based on the aforesaid;(3) analysis regarding the inherit of theshareholder qualification in reference to the similar theory and legislation in thelimited liability company; and (4) study on the abandon and loss of the shareholder qualifications in such enterprise.At the end of this article, it proposes paths to further promote the legal system ofshareholder qualifications in the Cooperative enterprises. It is advisable to furtherstudy and specify the legal status of such enterprise, to confirm its independent value,and to promote the standardized legislations. It should also enrich the current laws atlocal levels as well as pay attention to the development of the collectively-owned landsystem. Meanwhile, the internal autonomy of the enterprises should be respected, andthe judicial power should be limited in a reasonable range. Only when these measuresare taken effectively, will there be progress in the development of shareholderqualification regime in Cooperative Enterprise along with other relevant systems.