Research On Legal Issues About Defective Equity Transferof A Limited Liability Company

As one of the current common commercial subjects in the rapid development of market economy, company has created equity, an important form of social wealth which is valued by people. Equity circulation not only ensures that the old and new shareholders can transfer the company smoothly in the form of low cost and high efficiency, but also reduces the transaction cost of company resources without affecting the normal operation of the company. But in reality, the problems of the existence of the defective capital contribution abound in the company operation, while transferring defective capital contribution will cause a series of complicated legal problems and contradictions, and will affect the rights and interests of many subjects inside and outside the company. The shareholders of limited company by shares can transfer the shares freely due to the characters based on capital, while for the limited liability company lays particular stress on human characteristics, the equity transferring of its shareholders would be limited. But the legislative intent is to allow shareholders to transfer the equity on the basis of balancing the interests of all parties, so that the regulations on equity transfer of the limited liability company is more subtle and complex, and Corporation Law has a specialized chapter stipulating the equity transfer methods and the corresponding program. Equity transfer is becoming more and more frequent, and conflicts and legal problems have become commonplaces, especially the cases caused by the equity transfer of defective capital contribution abound in practice. How to solve the problems of the equity transfer with the flaw factors, standardize the rights and obligations and reflect efficiency and fairness are in urgent need of relevant system specifications. In our country, laws and relevant specifications of judicial interpretation are too simple and not comprehensive, and there always existing various solutions and consequences in judicial practice, which lead to the difficulties and disputes in the judicial practice. The understanding and handling about such disputes differ between the theoretical circle and judicial practice, which brought about the damage to the authority of law and made against judicial justice and stability. This paper, based on the study of predecessors, makes a consideration and an analysis on the legal issues appearing in the transfer of defective equity, hoping for the future help in handling such disputes.The author puts forward the issues, the research background, the present situation, the scope and methods in the first chapter. The second chapter lays theoretical foundation in the successive chapters by defining the concept and scope of defective equity transfer and defective capital contribution, and making a scientific classification about the defective capital contribution according the performance situation and specific causes. The third chapter analyzes the potency of transfer contract of defective capital contribution, clarifies that the contributors with the legal from have the shareholders status even when the defective capital contribution existed. And then it analyzes the different understandings and processing method on this issue of the academic circles and the judicial practice, sums up the train of thought to cognize effectiveness of this kind of contract by combining applicable rules of commercial law and civil law. The fourth chapter studies defects liability issues after the defective equity transfer. With the comments on the related standpoints of academic circles and the judicial practice, this chapter summarizes the method to identify the subject of the responsibility, and then focuses on how to specify responsibility, study the following questions separately, such as the bearing methods for defect of capital contribution, liability to pay compensation, breach of contract towards non-defaulting initial shareholders, liability for satisfaction towards the company creditors, etc. The fifth chapter makes the further thinking based on the above analysis, puts forward personal legislative suggestions, and focuses on how to improve the rights protection including risk prevention and legal relief for the transferee of defective equity.