Study On Expulsion Of Shareholders Of Limited Liability Company

On February16,2011, China officially enacted the Third Stipulation of Supreme People’s Court on Certain Issues Concerning the Application of Company Law of the People’s Republic of China, which preliminary established the expulsion shareholders system of limited liability company in the form of judicial interpretation. Based on legal practice, this article chooses the case concerning shareholder’s right dispute between Mr. Zhang and Tsingtao Outlets Business Limited Liability Company to analyze the shareholders expulsion system in our country. The article concludes two main issues of dispute. The first one is whether the resolution of shareholders meeting with only one shareholder’s attendance is valid. The second is whether the resolution of expulsion that Outlets Company made has legal effect. Combined with the foreign mature experience and China’s current status of legislation and judicial practice, when making a legal analysis on application conditions, expulsion procedures, legal consequences and rights relief of the expelled shareholders, this article finds current law has problems in accurately identifying the two statutory circumstances, narrow application scope of the expulsion term, less guaranteed of the expelled shareholders’legitimate interest and inadequate protection on the interests of creditors. Therefore, based on the analysis on legal practice and correlation theory, the article puts forward four suggestions accordingly, which are, making the two statutory circumstances more explicit, fully respecting the company autonomy and confirming expulsion by articles of association, insuring expelled shareholders’ right to institute legal proceeding for rescinding the expulsion resolution, protecting the creditor’s right to know, allowing them get into the board of directors or the board of supervisors, and safeguarding the interests of the creditors.