Research On The Exercise And Restriction Of The Privileged Allocation To Stockholders In Limited Liability Company

Since the first “Company Law” in modern China was published in 1990 s,there had been debated over the specific implementation of the system of privileged allocation to stockholders,in particular,it was difficult to reached a unified consensus on the problem of application and limitation in the exercise of privileged allocation to stockholders.In this way,it not only caused the confusion of the application of law in judicial practice,and it was not conducive to the protection of the security and stability of commercial transactions.At this time,the Judicial Interpretation Section? on the Company Law(Solicit Opinion Draft)had been decided to set up of principle by the Supreme Court in December 2016,and the legislature made specialized legislative interpretation to solve the problem of exercise and restriction of the privileged allocation to stockholders.thereby,this article intends to use proof methods of case analysis,comparative analysis and so on,combining with latest legislative regulation,then the article presents an in-depth theoretical study of exercise and restriction of the privileged allocation to stockholders.The article conducts research from the point of the definition and fundamental of the privileged allocation to stockholders,then discussing the legal basis and constitutive elements of exercising rights,The following contents focus on clarifying general principles and specific standards of how to identify “the equal conditions”,After deep analysis about constitutive elements of the exercise of rights,then the article describes and analyzes the application limitation and the possibility of conflict which may exist or happen in the process of exercising rights.Basing on the above research approach,the paper holds that it should not only clarify procedural components when analyzing the constitutive elements of rights,and it has yet to be define connotation of “other shareholders”,which is subjective elements of the privileged allocation to stockholders.In addition,there need to set the upper bound about the time limit for exercising of rights.But most important is,we should not only insist the general Principles of “one body two wings”,and we need to add the criterion for judgement of credit,when we need to clear the judgment and identification on the essential elements of rights “the equal conditions”.For the Price Formation Mechanism in “the equal conditions”,the article believes that we shouldnot be use circular pricing which is too tedious.And for the problem of some contradiction between the privileged allocation to stockholders and the transfer contract which has flaw,third acquisition in good faith,restrictive clauses in articles of association,for these situation,the article makes three suggestions for applying distinguishing principle,sustaining that the privileged allocation to stockholders has higher effectiveness,and conducting conflict from the point of feature of articles of Association to coordinate the conflict.