A Research On The Possession In Good Faith Of Limited Company’s Stock

The Supreme People’s Court made The Third Explanation on Several Issues of Application of Company Law of the People’s Republic of China (hereinafter referred to as the Third Judicial Interpretation of Company Law) on January27,2011. This judicial interpretation definitely prescribes that it is possible for shareholders to consult good faith acquisition provided in Property Law on the condition of "dormant investment" or "a equity two sell" for the first time.Good faith acquisition is one of the most important legal systerm in the modern civil law system. And its value is embodied in emphatically protecting the dynamic interests of the third person in good faith. However, there exist a lot of discussions about whether good faith acquisition should be applied when equity transfer of limited-liability company occurs in the academic fields. Those who think good faith acquisition shall apply to equity believe that it is beneficial to protect transaction security and transaction efficiency, while naysayers claim that it will violate collaboration of human resource of limited liability-company and the preemptive right of shareholders. This is what the paper will discuss. The author reckons that the system of shares acquired in good faith has legal basis. However, the inappropriate use of the system of shares acquired in good faith may lead to chaos in the equity transfer in real life.Besides the preface and conclusion, the paper is divided into three parts:The first part introduces the nature of equity, the transferring mode of equity and theoretical basis of the system of shares acquired in good faith.The second part introduces the application of the system of shares acquired in good faith, including legal components of the system of shares acquired in good faith, what conditions do shares acquired in good faith should be meet: disposition of property rights by the assignee, the assignee in good faith, transfer at a reasonable price and completion of industrial and commercial registration; and then introduces several types of situations of shares acquired in good faith:"disposal of equity by nominal shareholders","a equity two sell"; and lastly introduces the influence on the company exercised by the system of shares acquired in good faith, similar provisions on equity transfer in Germany and British as well.The third part introduces some misuse in the process of applying the system of shares acquired in good faith, discusses how to reduce the complexities of equity transfer to the greatest extent.