On The Possession In Good Faith Of Limited Liability Company’s Shares

Although the judicial application of shares acquired in good faith was conductedby Supreme People’s Court in2007, and the institution of shares acquired in goodfaith has been confirmed legally in Article25and Article27of Regulations onSeveral Issues of Company Law of People’s Republic of China by Supreme People’sCourt in2011, the institution of shares acquired in good faith is still a difficulty injudicial practice and theory study of company law.The institution of shares acquired in good faith is irreplaceable. Meanwhile, theright rechtsschein theory of commercial law also needs the institution of sharesacquired in good faith to exert its legal value. Therefore, from the positive perspectiveof the institution of shares acquired in good faith, the legislation and judicial practiceof the said institution should be further exerted and improved.This paper is divided into four chapters.The first chapter takes specific case as guidance. The supreme court directlyapplies property acquired in good faith system in shares dispute, which means theconcept of shares acquired in good faith has consistent connotation with propertyacquired in good faith.This paper supports supreme court. Identity right andproprietary right of shares are only the empowerment of shares. Shares is still aproprietary whose only purpose is to obtain profit and can be represented by currency.It’s reasonable for it to be applied in property obtain in good faith system. Althoughconstituent elements of shares acquired in good faith are directly applied to propertyobtain in good faith system, there are much room for discussion about the constituentelements of shares acquired in good faith due to special change mode of shares,confrontation effect of shares registration, restriction of foreign shares transfer byArticle71of Company Law, etc.The second chapter continues to talk about the question whether shares acquiredin good faith under the particularity of shares and shares right transfer can getconsistent connotation or not. In unauthorized disposal, business registration shouldbe the right appearance of shares.Shares unauthorized disposal should contain formal unauthorized form and concrete unauthorized form, which is shareholder’s disposalright manifested by company’s registration agency and may also form unauthorizeddisposal.The particularity of shares transfer mode affects the range of unauthorizeddisposal and the transfer of shares should follow creditor’s right conceptual-ism.Good faith can be separated as deliberation and fault, though Article71of “CompanyLaw“sets barriers for shares transfer, the third party may be still in good faith, for thesack of the excluding of the articles of the association and collusion betweenshareholders. The third party’s good faith should start from the beginning of sharestransfer and will not finish until the completion of the business registration transfer.In the case, whether Sun paid for the reasonable consideration is unknown. However,in shares, paying the reasonable consideration is still the identification standard forshares in good faith. On the completion publicity, shares acquired in good faithshould be based on the business registration. However, the effect of sharesregistration lacks strong public trust congenitally. We should reflect on the case thatthe shares of actual rights holder was stole. Therefore, our nation should combinecertain rules from German Law and introduce culpability of actual rights holder inshares acquired in good faith.The third chapter focuses on analyzing the legal effect of shares acquired ingood faith system and original equity obtain by bona fide third party. It takes bonafide third party informed as limit. Every burden and defect of equity disappear.Person without rights of disposal should burden default to original rights holder orresponsibility of illegal profit restitution. The rights of real oblige disappear and bonafide third party becomes company shareholder.The fourth chapter combines relevant regulations explained by Supreme Court.This paper generalizes different types of shares acquired in good faith. In nominalshareholding, it seems that nominal shareholder has right of disposal, but the logic ofdisposal shares composing unauthorized disposal lies in the fact that unauthorizedright of disposal is a relevant term to actual investor; in “shares sold twice”,according to the doctrine of intentionalism of shares rights alteration, agreement onassignment of shares interests come into force. And at the moment, right holder registered in industrial and commerce authorities transfer shares for one more time,then it will compose unauthorized disposal.Issues in shares acquired in good faith is the new ones that Company Law ofChina faces in theory and practice, which requires us to keep exploring in practiceand in theory in order to make comprehensive and systematical regulation on suchissues and play its due role.