Equity LLC Enforcement System

With the national legislation constantly affirmed by law in the form of stock right can be as the subject of enforcement, the enforcement of stock right has been widely used in judicial practice. However, due to the legal provisions are too simple, rough, a lot of procedural issues are not regulated, some of the problems even have legal loopholes, which lead to a lot of difficult legal issues arising in the implementation. Such as, how to coordinate the conflict between mandatory auction and preemptive right of shareholders; the scope of the subject of enforcement; whether the other shareholders can exercise part of preemptive right in the enforcement etc. These issues must be resolved immediately. Therefore, the author believes that it is necessary to systematically study the system of enforcement, including in-depth analysis of some typical problems existed. The study will have the instruction function to improve the system. The dissertation includes three parts, a total of two thousand words.The first part summarizes the system of stock right enforcement. This part mainly expounds the meaning of, the legal nature and characteristics, as well as the necessity and feasibility of the stock right enforcement. It provides the theoretical bases for the explorement of legal issues.The second part describes common legal issues in the system of stock right enforcement in limited liability companies. These typical legal issues include:(1) The conflict between mandatory auction and preemptive right of shareholders. When compulsively auctioning stock right, the principle of auction is the "highest bidder" competition rules. There is no equal condition at all. However, preemptive right of shareholders emphasis on the right of preemption under the same conditions. Which makes the two clashed; behind this conflict is the "Auction law" and "Company Law", in the same level in legal system. Then how to coordinate the conflict has become the practical problems faced by judicial practicers;(2) Part of the preemptive right of shareholders in the enforcement of stock right. There are two opposited academic views about whether or not to allow shareholders exercising part of the preemptive right. From the legal theory and the characteristics of stock right as well as the legislative purpose, some scholars consider part of the preemptive right can be exercised. The others do not agree the exercise of part of the preemption right, for it is contrary to the basic rules of contract law about offer and acceptance;(3) The procedure defect of stock right enforcement. The law of stock right enforcement is fragmented and abstract, the operability is not strong, and the defect of its procedure is more obvious. Therefore, the author will prove the defect of legislative procedure through analyzing two main laws regulated the system of stock right enforcement.(4) Air-share right enforcement. As the shares didn’t pay capital, after enforcement, who would bear the responsibility of capital make up has become the focus of theoretical and practical circles’ controversial. Some believe it is the debtors and the assignees who take joint responsibility to complement capital; while the other believe it is the debtors who have that responsibility.The third part is the perfect proposal of common legal issues in the system of stock right enforcement in limited liability companies. It is the solution of a few typical problems based on the second part. Including:(1) The coordination of mandatory auction and preemptive right of shareholders. Balancing other bidders through improvement of the specific procedure of enforcement, particularly, the interests of highest price bidders and the other shareholders;(2) Conditional recognition of part of the preemptive right of shareholders. The condition is that when the other shareholders exercise part of the preemptive right can not harm the interests of shareholder as a transfer, specifically, they can not affect the remaining part of stock right transfer smoothly;(3) The design of procedure of stock right enforcement. Considering the procedure defect in the system, I designed a complete set procedure of stock right enforcement (4) The responsible person identified after air-share right enforcement. The author believes the responsibility should be borne by the assignees.