Study On The Restriction On Transfer Of Shares In Limited Liability Company

The shares transfer of limited liability company, for the cause of its personalitycharacteristics, different from the freely transfer in stock limited company, should beplaced some restriction. In judicial practice, limited company occur disputesfrequently during the transfer of shares, seriously affecting the interests of thecompany and its shareholders. Though the company law of the People’s Republic ofChina has set down some provisions to regulate what and to what extent should theserestriction be, still there are many questions and disputes not only from thecompanyies, but also from the scholars. Therefore the study on this project is of greattheoretic and practical value.Restricted on shares transfer of limited liability company has a legal basis. Thecapital requirements the shareholders’ investment as a liability basis for the company,and the withdraw of shareholder is prohibited. The personality requires the companybeing closed and mutual trust among shareholders, in order to maintain the company’snormal operation. Thus, the exit path of shareholders is the shares transfer in usually,which are subject to strict limits. Shares transfer restriction system is designed tostrike a balance between the capital and the personality of limited liability company,in order to maintain the company’s normal operations, balancing the interests of thecompany and shareholders.Different countries take different legislation on shares transfer restrictions. The Civil law countries adopt the legal limitation mode, while the common law countriesadopt the convention limitation mode. Section72in Company Act is not onlyauthorizes the association to regulate the shares transfer, but also retain the legalrestrictions. On one hand, from the company contract theory, the company act shouldhave a role of company model contract to reduce the cost of corporate transactions.Our company act ignore the value of shares transfer procedure, including the detail onconsent right and pre-emptive rights. On the other hand, the contract property incompany law called initiate the convention autonomy. Now company manage isbecome more and more perfected. Company convention should have an increasinglypowerful sense of autonomy in share transfer restrictions. However, the act does nothave a clear regulation, resulting that the association was difficult to play an role ofcorporate autonomy specification.After comparing the legislation of different countries, and combining with thepresent situation of China’s company legislation, in order to further improve therestrictive provisions of the Act regarding the transfer of equity interest in a limitedliability company, particularly proposed two measures: on one hand, it should be assoon as possible to improve the share transfer company the conditions for the exerciseof statutory restrictions and exercise program, in order to protect the legitimate rightsof the remaining shareholders. On the other hand, agreed to limit the Articles ofAssociation, the company implementing the concept of autonomy, to promote thecompany’s articles of autonomy, with full respect for the autonomy of the company asmarket players right to choose, to better balance the interests of the company parties.