On The Legal Remedy Of Company Deadlock

The situation that, based on different interests the great divergence between theshareholders and the directors lead to the paralysis of the company, is what we calledthe company deadlock. The deadlock of a company will seriously hazard theoperation of the company and the interests of the directors. It will not only cause thedivergence of the board of directors so badly that decisions benefited the companycannot be passed effectively, but also lead to a crisis that all the major decisions of thecompany even the management mechanism would become paralysis. This kind ofcrisis will cause the loss of the company properties, harm the legal interests ofshareholders and finally incur the irrevocable social problems.Researches on the topic of company deadlock of China has just began, while therelated foreign studies has a long history and plenty of experience was accumulated.Compared to the foreign study, China still has a long way to go. With the speeding upof economic construction after China’s joining-in of WTO, companies werepervasively existed in every corner. At the same time, the situation of companydeadlock had become less and less fresh. In the year of2006, certain attentions werepaid into this topic in The Companies Acts. However it fails to put forward a thoroughrelieve system. Under the current deficient single relieve system, the problems ofcompany deadlock becomes especially intractable.This thesis took a case of a company dissolution as an example to discuss theproblems of legal relieve about company deadlock by the means of case study.The first part introduced the origin of the topic, the research objectives andmeaning, the main content of this chapter and the creative points. This part startedwith the fact that the company deadlock exists widely and the solutions to thisproblem were to simplex. Through the discussing of the focus problems and a seriesof related problems aroused of the case, the author proposed the solutions. Thecreative points were that the author conducted comparative analysis and empiricalanalysis and put forward the prevention, solution, and legislation suggestions ofcompany deadlock with pertinence. The second part analyzed the major facts of the case and the main points of theadjudication. This part gave an account of the real case that the Meihuan Industry andTrade Company of Xiamen city (hereinafter Meihuan Company) suited the Desire ofthe City Catering Company of Xiamen (hereinafter Desire Company) for the latter’sdissolution because of company deadlock. Through the adjudication of the court, theauthor educed the company deadlock and related legal issues: whether the operationof the company was in deadlock, which involves the problem that whether theoperation of Desire Company were in a severe trouble; whether the continue of theDesire Company will cause the serious loss of the shareholders of Meihuan Company;Can the loss of interests of the shareholders who faced the economic difficulties besettled by other means with the premise that the company remains alive. Besides, thecrucial problem that what is the approach of the legal relieve of the company deadlockwas also mentioned.The third part deals with the legal analysis of the focus problem of this case. Itwas unfolded mainly from three aspects. Firstly, the author overviewed the companydeadlock and then emphasized the defining, the factor and the damage of the companydeadlock. Secondly, the identification of the company deadlock was discussed. In thispart, the author analyzed the focus problems in this case one by one, i. e.: a serioustrouble was happen into the operating management of the company; the on-goingexisting of the company will harm the interests of the shareholders badly; thedeadlock cannot be settled through other method by the company. Finally, the authorgeneralized the legal relieve of the company deadlock and explained its definition andthe main condition.The four part mainly mirrored the extraterritorial relieve of company deadlockand the inspiration to China. The author briefly introduced several representativecounties’ solutions on the problem of company deadlock from both Anglo-AmericanSystem and Continental Legal System, attempting to find the inspirations to thesimilar problem in China.The fifth part dealt with the current problems and perfection of legal relievesystem of company deadlock of China. In this part, the author firstly illustrated the current situations and existing problems of legal relieve system of company deadlockof China and then put forward the advice on the perfection of legal relieve ofcompany deadlock of China. The author will unfold her discussion of the adviceaiming at perfecting China’s system of company deadlock from two major aspects:the general policy principle of legal relieve of company deadlock and the constructionof multiple relieve measures. Finally a multiple solution system was established toefficiently handle the negative influences caused by company deadlock.