Introduction Of LLC Legal System Into China

As a new type of organizational form, the LLC combine the benefits of limitedliability, the flexibility of partnership and pass-through taxation. It is a dependentform from corporation and partnership. Since the first LLC legislation was stipulatedin Wyoming, LLC has been spreading in the US. Until now, each state in US has itsown LLC statue. Recently, the LLC form has been introduced in UK, Japan andKorea.The LLC has very ease requirements on formation because it allows very broadtypes of capital and members. The management form of LLC is very flexible,because it allows members to choose member management and managermanagement. In addition, the theory of piercing veil of corporation also applies toLLC to protect the benefits of a third party. At last, the LLC enjoys the benefit ofpass-through taxation. The arrangements of LLC provide us a good solution toperfect our corporation system. Through analyzing our current economic and legalenvironment, it is necessary to introduce LLC into our corporation law. Theprocedure should be gradual and currently, we can improve our corporate law systemin accordance with the LLC.The first chapter introduced the concept of LLC, its value and the necessity andfeasibility of its introduction to our current corporate law system. Since theorganizational forms are very strict and stiff, they are not suitable for thedevelopment of small and medium enterprises (SMEs).The second chapter focuses on the formation regulations. In US, the LLCregulations allow the capital type such as credit and labour. Our current law systemcan diverse our capital categories in accordance with LLC.The third chapter focuses on the management of LLC. In US, LLC memberscan choose member management and manger management. We should create aneasier management mode for our LLC form.The fourth part analyses the theory of piercing veil of corporation and its improvement for LLC. As origins from corporation, LLC inherits some theory fromcorporation. Due to lack of being specific, our corporation should improve relatingregulations.The fifth part will pay more attention on the special taxation treatment for LLC.One of the most favorable factor of LLC is its pass-through taxation. Our legalsystem should accept that concept and try out for SMEs.