Research On Issues About Surplus Distribution Of Limited Liability Company In China

Surplus allocation right of claim, which is the core of the beneficial rights ofshareholders, its implementation not only affects a company’s shareholders’enthusiasm for profit and investment, but also plays an important role in thedevelopment of company’s overall system in China. Breaking the conventionaltheoretical research methods, this thesis summarizes three core issues that arise fromsurplus allocation process from the perspective of statistical induction for originalcases through studying the relevant cases from a magic weapon of Peking University.They are respectively the qualification cognizance of the shareholder dividends,accumulation fund system disputes and the pressure by richer shareholders. Throughin-depth analysis of the core conflicts, this thesis aims to reduce surplus allocationdisputes and protect shareholders for the distribution of equity.The first task for company to enforce surplus distribution process is determiningthe distribution object, and the shareholder qualification confirmation is the premiseof whether the subject were qualified to gain the dividends, as well as the prerequisiteof whether the subject would gain the relief after violation of the right of claim insurplus distribution. So the mainly content in the first part is to clarify thequalification cognizance of the shareholders.Accumulation fund is a kind of reserve fund extracting from company’soperating income and the important content of company profit distribution system.However, due to China’s current Company Law that relatively high proportion ofstatutory reserve fund and arbitrary extract limit of accumulation fund without clearregulations, all of these lead to that the actual dividends which shareholders gain islower than expectation, then here goes the disputes. Aiming at the problem, lessonscan be drawn from German law whose proportion of statutory reserve fund isrelatively low. At the same time, put on a limitation on the extract of arbitraryaccumulation fund in order to coordinate and further clarify the legal responsibilityfor illegal extract of accumulation fund. It is very common that the shareholders abuse the principle of capital majority toachieve malicious non-allocation during the surplus allocation process. In statisticalcase, nearly forty percent of the disputes were related to this. Maliciousnon-allocation is mainly shown in that controlling shareholders violate the surplusallocation right of claim for small and medium-sized shareholder. The fundamentalcause is the abuse of the principle of capital majority has a natural defect that canmade the shareholders who possess most capital up-level their will to the companies’’.As a result, the implementation of the principle must be restrained and controlled.The author considers that limit should be put on to control shareholders voting rightthrough laws and regulations and also the articles of company to improve capitalmajority principle.For the construction of surplus allocation system, more ideal state should be thecombination of company autonomy and law enforcement. Under normalcircumstances, the company will be subject to autonomy principle. Under the existinglegislation framework, stipulate the surplus distribution condition, measures and reliefmeasures through company’s article. When governance structure fails, the compulsorydistribution should be introduced into the company major disputes among differentsubjects in order to provide reasonable guarantee for all parties by letting the court toinvolve in the governance. At the same time, introducing case guidance system intothe process of the trial in order to reduce the phenomenon of same case receivingdifferent sentences to improve judicial credibility.