The Measures To Affirm Oppression And The Relief To The Oppressed Shareholders In The U.S. Corporation Law And The Beneficial Experiences To China

The Limited Liability Company (Close Company in the U.S) and the companylimited by shares (Public Company in the U.S) have a totally different nature. Due tothe collaboration of human resources, the Limited Liability Companies own somebasic features such as fewer shareholders, centralization of power, non-marketability,etc. Having a weak liquidity of its shares, the investment of the shareholders,especially the minority shareholders, in Limited Liability Company is facing a muchbigger risk. In accordance with the majority rule, the controlling shareholders decidethe major issues and operating guidelines. Thus, there is a huge possibility for thecontrolling shareholders to be dictatorial on the corporate governance and to conductoppression on the minority shareholders.To learn the Corporation Law of U.S., the legislative goal concerning with theoppression issue should be comprehended firstly. The Corporation Law in many statesof U.S. does not focus on the continuing operation of the company, but the protectionof the minority shareholders, which reflects the prioritization of individual rights. Asto current Corporation Law of China, the focus of it is how to deal with the corporatedeadlock but not the oppression between shareholders.When evaluating whether there is an oppression, there are three principlesconsidered by the court frequently. They are Legitimate Business Purpose,Contractual Approach and Reasonable Expectation. Every principle has its merit andshortage, which should be considered completely when the Chinese Corporation Lawwants to learn from it.The Corporation Law in U.S. also offers various methods to relieve minorityshareholders from oppression. These provisions are detailed and definite. Amongthese methods, there are two most important methods used by the court of U.S whichare judicial dissolution and buyout. Although the Chinese Corporation Law alsoprovides judicial dissolution and buyout, but the threshold is too high for the applicant.One of the requirements is the confrontation of serious difficulty to operate the company. These requirements reflect that the Chinese Corporation Law is still focuson the issue of corporation deadlock but oppression.Thus, when learning from the Corporation Law of U.S., a full comprehension ofthe legislative purpose is indispensable. After the confirmation of an appropriatelegislative goal, it will be much easier to determine whether a specific provision issuitable to the corporation law system of China.