Research On Effect Of Restrictions Of Equity Transfer In Articles Of Incorporation

With the rapid development of social economy, the corporate structure plays a more important role in the business field. Limited company possesses characters based on capital and shareholder. As an important type of corporate structure, limited company needs to coordinate the balance of value and profit between character based on capital and character based on shareholder inevitably no matter for understanding and application of external law environment and setting and implementation of articles of association. Equity acts as the important carrier of wealth of limited company and interest of shareholders, its entity flow and procedural regulation are involved in lots of stakeholders, such as the company, transferor, transferee and surviving shareholder of company, etc. With increasing frequency of flow of social capital, the disputes about equity transfer are common.It is found by way of surveying the cases that the claims in cases of disputes about equity transfer in limited company mainly include:claim for consideration of payment of equity transfer; claim for confirmation of shareholder quality obtained from transferred equity; claim for confirmation of invalidity of action of equity transfer or claim for canceling the agreement of equity transfer; dispute about bearing creditor’s rights and liabilities of corporate caused by equity transfer; and competition prohibition caused by equity transfer.The reasons for above disputes are various but the biggest reason that cannot be ignored is that parts of shareholders try to preserve the foundation of shareholder and relative closeness of corporate by way of Articles of Association. Meanwhile, the rest shareholders appeals to respect the character based on capital of the corporate and actively seek for the path of withdrawing investment and obtaining profits. Denying any side will be unfair and unjust. Therefore, in this paper it will discuss the gradual exploration of appropriate boundary under the framework allowing limited company to limit equity transfer.The article consists of introduction, main body and conclusion. The main body is divided into four chapters.The first chapter mainly discusses the basic theory of equity transfer of limited company and constraint of Articles of Association. Firstly, it starts from the concept of equity and proposes that equity is an independent right and it possesses characters of status right and property right as well as transferability. The character based on shareholder is prior to the character based on capital in limited company; the corporate law focuses on random norm but also combines compulsory norm; the Article of Association is just like law of autonomy of the corporate in status; compared with initial Articles of Association of corporate, the amendment of Articles of Association does not have compulsory legal effect or legal effect of depriving parts of legal rights of shareholders for its lack of contract property. They are all the theoretical foundation of limitation of Articles of Association to equity transfer. In the second chapter, it analyzes the effect of limitation of Articles of Association to transferor and transferee by way of actual cases from the aspects of all the shareholders and parts of shareholders as well as internal transfer and external transfer. In the third chapter, it studies the classification and effect of content limitation clauses of equity transfer. Under parts of transfer of powers and functions, it analyzes the effect limiting individual transfer of voting and dividend rights. In chapter four, it mainly discusses the effect limiting the procedure of equity transfer. It is determined in the survey that preferential transfer right is the last saving path for surviving shareholders to maintain the character based on shareholders of corporate and it also found that the preferential purchasing right cannot be limited or deprived, but its "detailed condition" and respective execution of rights can be limited. At last, it concludes that the regulation of Corporate Law for the equity transfer of limited company combines mandatory and random characters and endows the limited company with rights of limiting action of equity transfer according to various factors of legal rights. However, this kind of limitation cannot deprive the inherent right of transfer shareholders or surviving shareholders, including block the rights of equity transfer of transfer shareholders or approval rights and preferential purchasing rights of surviving shareholders or in other methods.