On Shareholder’s Exit Mechanism For Conflicts Of Interests Relief In Limited Liability Company

The corporate governance mechanism, as a key part of the corporation legal systems, aims at protecting and balancing the benefits of all parties in company management, which corresponds with the civil and commercial law charactering by princes of checks and balances of basic legal relations on commercial governance. So the system of shareholders’withdrawal is one important part of corporate governance systems, on which the degree of Systematization and standardization matters shareholders, corporations and stakeholders’ benefit and the healthy development of the market mechanism. The shareholders of the limited liability corporation have different interest demands in profitable allocation and corporate governance, which usually results in drastic conflicts of interests. The illegal and unjustified behaviors of shareholders such as flight of capital and oppression to minority shareholders not only cause a large amount of damage to other shareholders but also destroy the normal management order of a company. So the unjustified phenomena have greatly restrained the horizon of company development in the long run.The new company law of china adopts some beforehand relief systems such as evasion of voting rights and agreement remedies in the article of association and so on, which could prevent conflicts of interests between shareholders to some degree. But the single systems still cannot replace all other legal relief systems. In comparison to the relief systems of the restoration of rights, such as the corporate disgorgement system, the damage compensation system and lawsuit etc, which incorporate the flaw of hysteresis quality, inefficiency and rigidity and so on. The withdrawal mechanism of shareholders in the LLC incorporates some systems of the transfer of shares, the appraisal right of dissent shareholders and the reduction of company capital. At the same time of guaranteeing the right of withdrawal of shareholders, the systems are both benefit for maintaining the stable relationships and introducing the fresh human capital to balance the interests between the shareholders and the company. The article begins with the basic concepts of the withdrawal of shareholders, and consolidates the foundations of systematic theories. From the observation of the function of the withdrawal mechanism, we can get great experience and illumination from The Common Law Legal System countries and The Civil Law Legal system countries. On the basis of the new corporation law and judicial practice, we study several questions on the shareholder’s withdrawal mechanism, and further seek to gain some reasonable suggestions on the shareholder’s withdrawal to protect the rights of minority shareholders.