The Institution Construction Of Limited Liability Company’s Share Repurchase

Share repurchase is an act that the company buys back its own shares held bythem by paying a certain consideration according to reaches an agreement with itsshareholders, and dispose these shares in accordance with the law. Share repurchaseinstitution can fulfil the purpose of adjusting company’s capital structure andownership structure, adjusting the stock supply, stabilizing stock prices, carrying outemployee stock ownership plans, enhancing company’s cohesion and growthmomentum, and meeting the real needs of the company’s business development etc.Share repurchase has been widely used in many countries and regions. But sharerepurchase system involves the interests of a variety of subjects, including but notlimited to the company, its shareholders and creditors. If conflicts of interest are notwell coordinated between the various subjects during the construction of the system,this kind of system is not only not be able to play its outstanding features, but alsohave all the disadvantages, which is not conducive to long-term healthy developmentof the company, or even damage the social fairness.China implement differential treatment on share repurchase institution of jointstock limited company and limited liability company both in legislative andtheoretical level. In legislative level, joint stock limited company’s share repurchaseinstitution has basically been completed, but the limited liability company’s sharerepurchase institution can be said to be completely in the absence of the state, only theclause74of Chinese Company Law has been involved, but in the academiccommunity, there is still much controversy on whether the nature of this clause isshare buyback system. In theoretical level, there are various studies on joint stocklimited company’s share repurchase institution, but limited attention has been paid to the limited liability company’s share repurchase institution. The reason whylegislation and theoretical studies emphasis on joint stock limited company lies in thepast few decades, our country is in the takeoff stage of economic development,economic development requires more large company and large enterprises. Butlimited liability company, as the general legal form of SMEs, play an increasinglyimportant role in the national economy. Moreover, China Continue to increase ourefforts to support SMEs in the legislative and policy in recent years. The relevantsystem construction of "Company Law" should also keep abreast of legislation andpolicy trend and limited liability company ‘s development rhythm, otherwise willcause adverse consequences that law actually hinder the development of the limitedliability company.As two of the most important company form, there are many common attributesand common demand to share repurchase among joint stock limited company and thelimited liability company. Introducing the share repurchase institution which runs wellin joint stock limited company to the limited liability company will play a positiveeffect to the institution improvement of Limited Liability Company; the clause74ofChinese Company Law is not the limited liability company’s share repurchaseinstitution, but shareholder exit system which can not completely replace the role ofshare repurchases institution; moreover, with the rise of the venture capital industry,the existing legal provisions can not meet the real needs of the practical operation ofthe share repurchase regime of limited liability companies. In summary, constructionof a limited liability company share repurchase institution is necessary. Meanwhile,the construction of share repurchases regime also has rationality.“Stones from other hills may serve to polish jade”, according to legislationinvestigate of the United States, Germany and Japan, this article analyzes theirlegislation, the development of the background and key points, learns from theiroutstanding institutional arrangements, and makes a number of recommendations tothe share repurchase institution of Chinese limited liability company.