Research On Effect Of Shareholder’s Preemptive Rights Of Limited Liability Company

The legal effect of the shareholder’s preemptive rights is the core problem of the system.What kind of impacts will be produced for the assigner,the third party and the claimant when a holder claims for the right of preemption? Solving this problem is directly related to achieving the purpose of legislation.After two amendments in 2005 and 2013,the regulations about the shareholder’s preemptive rights in the Company Law of China have been greatly improved. But most of the provisions is still about proceeding. Both the legislative and judicial interpretations are not involving the effect of the rights. The lack of the regulations not only make the dispute about equity transfer become the hardest hit, but also caused a lot of conflicts in the judicial practice of the judgment, hurting the credibility of the law.In the academic theory, most debates on the shareholder’s preemptive rights are about the nature,exertion and limitation. Based on the existing research, this paper tries to start from the perspective of the effect of the right, combining with real cases.The first section illustrates the basic problems on the effect of the shareholder’s preemptive right, including three theory such as the nature of preemptive right, the value of preemptive right, the meaning of the effect of preemptive right. The effect of the right directly defends on the nature of the right. The author holds the viewpoint that the preemptive right of the shareholders should have the nature of right of formation. While the nature finally depends on the value. The value of the system of shareholder’s preemptive right also play a very important role in determining the content of the effect of the right. The system’s first objective is to protect the personality in company. But now it pursuit the balance of interests. The logical starting point of the effect of the shareholder’s preemptive rights is the exercising of the right. It refers to the influence for the legal relationship among three of the parties. And it can be divided into two part: inner effect and outer effect.After making the basic theories clear, this paper will discuss both the inner effect and the outer effect in detail in the following parts.From the internal perspective,when assigner transfer equity to the external of the company,the claim for the preemptive right by other holders will establish a contract whose content is the same as the contract between assigner and the third party between assigner and claimer. The establishment of the contract should satisfy three conditions: the basic fact of external transferring, in accordance with the “equal conditions”, and the claim for the preemptive right. Among them, the specific point of when other holders can claim for preemptive right is when the assigner reach an agreement,which should include the price and quantity terms,with the third party. The holders should exercise or waive the right with the express written. The exercise of the right should be subject to time constraints. And the deadline should be allowed to set by the assigner.From the external perspective, claiming for the preemptive right have an impact on the interests of the third party. After claiming, the contract between the assigner and the claimer has the priority to be specific performed.But it won’t affect the contractual effect between assigner and the third party. In the circumstances when the Company registration has been complete for the third party without notice to other holders, these holders can claim for the preemptive rights against for the third party except for the bona fide one.Finally, based on the theoretical analysis, this paper tries to put forward some suggestions on the perfection of legislation: the exercise of shareholder’s preemptive right should take the form of writing, and given different interpretations for different expression.; under normal circumstances, the term should be 20 days. while in abnormal situation, the longest term should be no more than 2 years after changing registration; the “equal condition” should contain price an quantity clause at least. And substantial agreement should be given the same effect; making tort liability, liability for breach of contract and the exemption rules into an integration to structure an appropriate responsibility mechanism.