Research On Corporation Deadlock Legal Issues

In China’s judicial practice, the number of the limited liability companies’ dissolution which were due to the Corporation Deadlock, showed an increasing trend in the past. "Company law" of China filed Corporation Deadlock as one prerequisite for judicial dissolution of the company for shareholders simply. About the essence of the international standards level and form level, also triggered controversy concerned personage in practice.The article used case analysis method and comparative research method to analyze the Huatong company disputes. The Corporation deadlock was a critical issue in the case. For in-depth research on this critical issue, author aimed to analyze China’s current laws dealing with Corporation Deadlock problem, there were advantages and disadvantages. In addition, the article would like to put forward feasible proposals.Huatong Company Dissolution Case is a typical representative in these cases. There are two controversies in it: 1. Whether Huatong Company was constituted Corporation Deadlock; 2. If Huatong Company was constituted Corporate Deadlock, whether the company should be judicial dissolution. In response to the first issue, the article dissected the China’s current criteria of Corporation Deadlock. The article summarized the criteria as substantial conditions and formal conditions. These requirements are unified and indivisible. According to the above criteria, the article argued that Huatong Company had been constituted Corporation Deadlock. Meanwhile, the article defected in the reflection of the criteria. For example, it had ambiguous terms and misguided concepts. Then, the article redefined the criteria. In response to the second issue, the article discussed the necessities and limitations of judicial dissolution proceedings breaking Huatong Company’s Corporate Deadlock and similar cases. Combining China’s judicial status with the United States, Japan and Germany’ experiences, the article focused on comparing Mandatory Stock Exchange System, Arbitration Procedures and Conciliation Procedures as approaches to break the Corporation Deadlock, with Judicial Dissolution. Based on the above achievements, the author endorsed S Municipal Court’s Verdict.Through the case study, the article argued that the best remedy for corporation deadlock is prevention. Limited liability companies may rely on the articles of incorporation to establish the corporation deadlock early warning mechanisms, such as refining criteria of Corporation Deadlock, establishing shareholders’ class voting and the punish mechanism for shareholders who produce the Corporation Deadlock. These prevention approaches came from the company’s perspective. However, from an external point of view to the Corporation Deadlock prevention, the author recommended that the Chamber of Commerce Organizations’ functions may assist companies. The author argued that establishing expert consulting committee and conciliation committee.