Research On Preemptive Right Of Shareholders In Open Auction Trading

The Shareholder Preemption System is a system specially set up for the transfer of shares by shareholders of a limited liability company to persons other than the shareholders of the company.During the transfer of shares,due to any likely influence on the stability of right relation and operation relation in a limited liability company caused by new members joining in the company through buying shares,the related law plays an important role in maintaining person cooperation in a limited liability company by endowing other shareholders preemptive rights.Although China's “Company Law” and its judicial interpretation give the provisions on the shareholders preemption system,there are still deficiencies and shortcomings,resulting in a lot of disputes in operation.With a bidding equity transfer cases as a starting point,this paper analyses the legal issues involved,and left behind to be discussed and solved.In addition to the introduction and conclusion,this paper explains the preemption system from four aspects.Firstly,the start and the end of equity transfer cases are introduced,followed by focuses of dispute in the cases: Firstly,the disputes of effect on preemption made by shareholder agreement;Secondly,the disputes of legitimacy of bidding stock right transfer among limited liability company(LLC),followed by further thinking of the legal issues-----the exercise of preemption of shareholders in the bidding stock right transfer.These are three legal issues that this paper focuses on.The second part mainly introduces the nature of shareholder's preemption right,providing theoretical premise to solve the dispute.The nature of the preemption right will affect the exercise of it,so it is necessary to analyze the theory of the preemptive right of the various schools of thought and controversy,to lay the foundation for further exploring the preemption system.The third section analyzes the autonomy of the company and the shareholders to preemption right,which is analyzed from articles of association,shareholder agreement and resolution of shareholder meeting.Since the law only stipulates that the articles of association may make a special agreement on the transfer of shares,but there is no special agreement on the boundaries of the articles of association,and on the effect of special agreement of the shareholder agreement and resolution of shareholder meeting.The fourth section analyzes the conflict of between preemption right and bidding stock right transfer and reasons behind it,followed by connection scheme between them.Whether the limited liability company can implement the public bidding has always been a problem in the academic world and practice.This part will analyze the reason of conflict,followed by the reason that why preemption right and bidding stock right transfer can co-exist and connection scheme between them.The connection scheme is mainly elaborated by discussing the exercise of the preemption right in the public bidding stock right transfer,including whether the first purchaser needs to approach,whether it is necessary to participate in the auction,and the time of the exercise of the right.