Study On Forced Buyout

In2006, The Company Law of People’s Republic of China provides, for the firsttime in law, the provision of judicial dissolution for company in deadlock, whichdemonstrates great improvement in the company law of China. Judicial dissolutionmay be an effective way in breaking the company deadlock; however, it diminishesthe company personality, thus brings too much cost for both the company and relatedinterested parties. In legal practice, judicial dissolution should not be the only way todeal with the complicated puzzle of company deadlock. With reference to successfulforeign law practices, it is proved that forced buyout can be an alternative measure.The company may still stand after forced buyout was implemented to break thecompany deadlock.This thesis studies the rule of forced buyout in four parts.The first part of this thesis introduces the background of forced buyout. Itclarifies its definition, discusses the situation of company deadlock for which themeasure is developed, and introduces current Chinese legislations on companydeadlock. Then, by comparing forced buyout with other foreign judicial remedies, thispart proves that the former one is more suitable for our country if the current situationof China is considered.The second part of this thesis studies the theory of forced buyout, analyzes itstheoretical basis and feasibility, and proves its necessity due to the limitation of bothjudicial remedy and remedies other than litigation. At last, it compares forced buyout with related measures and emphasizes its unique effectiveness, which lays thefoundation for structuring the rule of forced buyout in China.The third part of this thesis conducts the analysis from a comparative perspective.It studies the compulsory equity replacement in American law, the right of expulsionand withdrawal right in German law, summarizes successful experience therefrom,and proposes recommendations for the company law of China.The fourth part of this thesis, based on the discussion above and the currentlegislation on company deadlock in China, tries to establish the forced buyout inChinese law from three aspects: its applicable conditions, applicable subject and theprice for the equity buyout.In conclusion, this thesis states that China should establish the rule of forcedbuyout. This measure provides an alternative remedy for company deadlock withoutsacrificing the existence of the company which clearly has not come to a dead end.