On The Cognizance Of The Equal Condition Of The Shareholder's Preemptive Right To New Issued Stock

The article 34 of the Company Law of the People's Republic of China(hereinafter referred to as the "Company Law")stipulates that when the Company increases its capital,the shareholders have the preemptive right to subscribe for the capital in accordance with the proportion of the paid contribution,except all shareholders agreed not to pay in proportion to the proportion of priority payment.However,in practice,there is a divergence between the understanding of the conditions for the exercise of the priority of the shareholders' right of subscription.In this article selected new capital subscription dispute cases,in order to introduce strategic investors to help the company complete restructuring and listing,one party considers that the shareholder who is the other party do not have the preemptive right when the other shareholders will transfer the new capital share to the strategic investor.The other party thinks he be considered to be the same with the strategic investor transferee about new capital share of the same price on time to subscribe to meet the "equal conditions",and may exercise the right of priority payment for the new capital shares transferred by other shareholders.The focus of the dispute in this case seems to be whether the shareholders have the right to subscribe for the new capital share of the shares transferred to the third person by the other shareholders.In fact,it is the question of how to determine the "equal conditions" of the shareholders.That is shareholders can be identified as "equal conditions" at the same price at the same time.By reviewing the literature,combined with the relevant theories of the shareholders' right of first refusal,the author finally concluded that "equal conditions" that need to consider the transfer price,the amount of subscription,capital contribution period,auxiliary payment obligation,breach of contract and other factors.Regrettably,the Courts failed to hear the case on the basis of the "equal conditions" criteria,but denied that the shareholders had priority over the new capital shares transferred by other shareholders.This article as a case study paper,has a total of three parts:The first part is the case introduction.This section concisely reviews the main plot of the new capital subscription dispute case between Guizhou Jie'an Investment Co.,Ltd.and Guiyang Qianfeng Biological Products Co.,Ltd.,and then clear the two sides and see the essence through the phenomenon of the issue,finally refine thecontroversial focus of the case:how to determine the "equal conditions" of the priority subscription right.The second part is the analysis of the focus of the case.In view of the dispute,combined with the doctrine,judicial case,foreign legislation and other evidence,the author analyze the role of the transfer of the price,the amount of subscription,capital contribution period,auxiliary payment obligations,the liability for breach of contract as the major factors in the identification of "equal conditions" one bye one.And the author also analyzes the subjective qualification of the transferee,emotional relations as secondary factors,and clear its generally not as a factor.The third part is the conclusion.It is not advisable to take into account that any doctrine should be directly used in determining the "equal conditions" of the preemptive right,but we should consider the main factors such as the transfer price,the amount of the subscription,capital contribution period,auxiliary payment obligations,the liability for breach of contract and the secondary factor of the subjective qualification of the transferee.This time factor,and specific issues specific analysis to adapt to the new situation.And to adapt to the new situation,we should have the thought of “specific issues specific analysis “.