The Research Of Shareholder’s Pre-Emptive Rights Enforcement

Shareholders’ pre-emptive rights are special systems established for the equity transfers in the Limited Liability Company, whose value lies in the maintenance of "People Combination" and normal operation order of limited liability companies and so on. In order to conform to the developing current situations of China’s market economy, amendments are revised several times to the Company Law. The current Company Law greatly lowers the thresholds for establishing limited liability companies, which gives a healthy and fair competition platform to the market. However, the relax enrollment needs strict supervision. Therefore, the company needs to be regulated in their business process, so as not to prejudice shareholders’legitimate interests, and to safeguard the market order. However, in the existing Company Law and relevant judicial interpretation, only two provisions related to this system, which can not play a clear role in the guidance of the complicated equity transfer.Through the study of the relevant provisions of the "Company Law", drawing on previous conclusions, the author proposes the existing problems and improvement suggestions of shareholders’ pre-emptive rights in this paper.Specifically, the essay divides into the following four parts:The first part, the existing problems of the conditions of shareholders’ pre-emptive rights:the problems of main qualification and the same purchase conditions are not obvious, in which, the subject of pre-emptive rights should be the actual inventors rather than non-nominal shareholder. Those shareholders who violate the rights of other shareholders may not exercise shareholders’ pre-emptive rights. Those exercise pre-emptive rights shall be completely civil capacity. The defective contribution shareholders’ rights of first refusal should be determined in specific circumstances. The author raises the identified problems of the same purchase conditions, and gives the specific suggestions of improvement standards of the same conditions.The second part, the existing problems of the exercise of shareholders’ pre-emptive rights:mainly including the obligation to fulfill the notification issues and how to prevent the abuse of pre-emptive rights of the shareholders. By listing the cases of failing to fulfill its obligation to notify, the author gives suggestions of standardized equity transfer notice. The cases of abuse of shareholders’ pre-emptive rights are listed as well, by which, the author recommends other shareholders should provide a performance guarantee when advocate their pre-emptive rights.The third part, the existing problems of the effectiveness of shareholders’ pre-emptive rights:mainly including part of the exercise of shareholders’ pre-emptive rights, under the subscription system, whether it can be subscribed to confirm the funded ratio according to its subscribed amount, and whether the association articles can exclude shareholder priority purchase rights. Among witch, the author puts forth to the existing Controversies of the exercise of shareholders’ pre-emptive rights, discusses the feasibility of the partial exercise of shareholders’ pre-emptive rights. The author believes that in subscription system, if the two shareholders advocate their pre-emptive rights at the same time, the winner should be chose by their actual capital contribution ratio. And the reasonable period of time should be provided to the shareholder with larger amount of capital contribution, so the shareholder can pay in time to win the pre-emptive rights. Under the company autonomy charters, shareholders’ pre-emptive rights are legal rights and can not be deprived of randomly.The fourth part discuses the problems of how to exercise the pre-emptive rights of shareholders under the circumstances of equity free transfer:mainly including equity grants, divorce equity split, and equity inheritance. Author considers other shareholders can still advocate pre-emptive rights under the circumstances of equity gift and divorce, and other shareholders cannot rule out the property rights of equity inheritance.