Discussions On The System Of The Expulsion Of The Shareholder Of Limited Liability Companies Of China

Limited liability companies become a main form of company in our country because of their own unique characteristics. Upon the requirements of collaboration of human resource, shareholders of the company need more mutual trust. However, conflicts between shareholders can not be avoid relating to interest, resulting in the appearance of contradiction, even leading to corporate deadlock. Although Company Law of the People's Republic of China(hereinafter referred to as Company Law) has stipulated equity transfer mechanism, share repurchase mechanism and judicial dissolution mechanism on purpose of resolving conflicts, those mechanisms can not solve all problems for the limits of application conditions and objectives of set-up. Especially, concerning the cost of judicial dissolution, the loss outweights the gain. As for the expulsion of the shareholder, its aim is to remove malicious shareholders out of the company with a relatively small cost to maintain normal operation. Article 17 of Supreme People's Court on Certain Issues Concerning the Application of the Company Law of the People's Republic of China(III)(herein after referred to as Judicial Explanation III of Company Law) roughly confirms the expulsion of the shareholder, but there are still lots of disadvantages in it, such as the narrow scope of application, lack of operability and so on. Undeniably, apart from those mentioned above, the expulsion of the shareholder provides a new and valuable method to cope with conflicts. In this angle, it seems as the best choice. So this paper has a try to build the system of the expulsion of the shareholder in limited liability companies based on judicial practice and foreign experience in order to draw scholars' attention on the system of the expulsion of the shareholder and give a hand to perfect China's Company Law.This paper divides into four parts:The first part uses two cases to educe the expulsion of the shareholder in which stipulations of the expulsion of the shareholder are both written in articles of associations, but the results of validity of stipulations are identified different by courts. The two cases pave the way for the identification of the expulsion of the shareholder, discussion of theories, analysis of the necessity and feasibility of the system of the expulsion of the shareholder. Importantly, the two cases are steppingstones to construct the system of the expulsion of the shareholder.The second part is mainly to introduce the theories of the expulsion of the shareholder, including corporate contract theory, corporate autonomy theory, collaboration of human resource of limited liability companies. This part is to interpret the system of the expulsion of the shareholder from the layer of theory, clearly putting forward the legitimacy of the expulsion of the shareholder.The third part mainly analyzes the system of the expulsion of the shareholder construction from the aspects of necessity and feasibility. Present Company Law does not formulate strict measures to punish malicious shareholders, therefore, company's and benign shareholders' rights and interests suffer a loss. So this system has the necessity to be constructed. Through the analysis of theories, legislation and judicial practices, this paper pinpoints that to establish the system of the expulsion of the shareholder is feasible.The fourth part mainly analyze the shortcomings of the sole stipulation relating to the expulsion of the shareholder, such as the narrow particulars, deficient procedures and so on. Based on that, this part mainly discusses the establishment of the system of the expulsion of the shareholder in detail from the aspects of subjects of right, causes, procedures, results of the expulsion of the shareholder and right protection in order to make the system of the expulsion of the shareholder feasible.