On The Legal Economic Analysis Regarding Shareholder’s Preemptive Right Of Limited Liability Company

The legal system of limited liability company is an essential part in the company law and its legal characteristic is mainly expressed as the combination of the characteristic based on capital and the characteristic based on person. As for this, in the event that the shareholder of a limited liability company intends to transfer its equity externally, considering the characteristic based on person of the limited liability company, the preemptive right of the shareholder emerged. This paper is trying to analyze this subject on the basis of legal analysis and by means of legal economic analysis. The innovative point of this paper is to merge together jurisprudence and economic analysis of law. With the theme on the legal system of the preemptive right of the shareholder, this paper is divided into four chapters.Chapter One summarizes the basic theory of the preemptive right of the shareholder. This chapter includes the discussions about its definition, theoretical basis, legal character and study of comparative law. The theoretical basis of the preemptive right of the shareholder mainly focuses on the characteristic based on person of the limited liability company, the expectation interest of the shareholder and the balance of each party. The legal character of the preemptive right of the shareholder is the right of formation, the right of expectation and the quasi‐real right.Chapter Two is the exercise of the preemptive right of the shareholder. In this chapter, based on the relevant provisions in the existing company law in China, the following issues encountered in the practice of the preemptive right of the shareholder are analyzed and studied:1. the determining standard of “same conditions”;2. the exercise of the preemptive right of the shareholder in special circumstances.Chapter Three is an essential chapter of this paper. Taking the legal economic theory proposed by Posner as the theoretical basis and the starting point, and utilizing the relevant concepts of “transaction cost” and “efficiency” in legal economic theory, this chapter mainly discusses the economic rationality of the legal system of the preemptive right of the shareholder. In the process of the analysis, I analyzed the logic of the legal provisions, quoted relevant cases, constructed the analytical models, and conducted an effective value and analysis about the economic efficiency of the preemptive right of the shareholder.Chapter Four is the conclusion part of this paper. Based on the analytical results of the preamble, this chapter evaluates the economic rationality of the legal system of the preemptive right of the shareholder and hereby further proposes the suggestions for optimizing legislation.