Studies On Some Issues Of The Right Of Preemption In Limited Liability Corporation

The right of preemption for a shareholder is one of the shareholders’ criticalrights in a company with limited liability stipulated in Company Law. The right ofpreemption serves to balance the free transfer of stocks among shareholders, maintainthe human joining and ensure the safety of transactions with a third party as well asthe freedom of agreements. The imperfection on the right of preemption in theexisting Company Law, such as the vague of the nature of the right of preemptionand its impact on the effeteness of stocks transfer agreements, may cause a good dealof adversities. Besides, the condition and due time of exercising the right ofpreemption meet diverse views in practice.The article selects a case of infringing the stock right of preemption, combiningwith options and actions of transferor and transferee of shareholders, shareholder withthe right of preemption as well as the court decision, to point out four typicalproblems of exercising the right of preemption in practice. The problems follow as:the debate on the nature of the right of preemption; the influence of right ofpreemption upon the effeteness of stock transfer agreements; the exercise of right ofpreemption and relief to the violation of the right of preemption. Then, by thecomparative analyze and documental analyze, the main body of the thesis reachesfour respective conclusions through discussions based on the said four problems ineach chapter.Various standpoints exist in theory and practice upon defining the legal nature ofthe right of preemption. The thesis analyzes the different points on the definition ofthe right of preemption to have its own theory by the comparison with the right ofpreemption in civil law and the right of consent in the stock transfer. It aims to solvethe following problems upon the nature of the right of preemption：It is about theinfluence of right of preemption upon the effeteness of stock transfer agreements.Based on the nature of right of preemption, the thesis defines the effeteness of stocktransfer agreements by combining the cases and practices；The exercise of the right ofpreemption as the same condition and the due time is upon the discussion by the twocases about the exercise of the right of preemption.；It analyzes the reliefs to theshareholders suffering the infringement of the right of preemption and the third partyacting in good faith. In the end, the author puts some suggestions upon the defects of provisions onthe right of preemption. The legislation should be clear of the nature of the right ofpreemption and exercise rules, define the legal responsibility and relief forinfringement of the right of preemption.