Criticism And Improvement Of Shareholder Oppression Remedies In Limited Liability Companies In China

“Shareholder oppression”,a concept originated from the Anglo-American law system,usually refers to those strategic behaviors,such as freeze-outs,which are carried out by the majority shareholders,leading to the minority shareholders excluded from the management and deprived of rights in receiving benefits.The common forms of expression of shareholder oppression are as follows: excluding minority from the management of the company,withholding dividend or improper distributing dividend,issuing new shares to dilute the minority interests,etc.In order to protect these oppressed shareholders,some legal rules are established in most jurisdictions.In our company law system,the term “shareholder oppression” does not exist in our corporation act.Although some statutory remedies play a role in protecting those minority shareholders whose interests are damaged by the majority misusing their controlling position,these remedies still have a long way to go.There are two types of statutory oppression remedies in our company law system: Article 20,article 22 and article 74.Article 20 is usually regarded as a principle,and the latter two are specific rules.Based on an empirical analysis of article 20,this paper finds some oppressed minority cannot obtain the relief under this article because of lacking clarity of the concept of “shareholder abusing rights”,which partly results in some problems in the cognizance.As a form of relief,Compensation is not enough for the minority.Under this rule,different reliefs are ordered by different courts.Article 22 and article 74 also have some defects.The effect of the company's resolution which is made by the majority abusing their voting rights isn't clear under the article 22,and there are also some problems in the judicial practice under this article.The current limits of the application of the share repurchase are too narrow under the article 74,and the scope of the subject of the repurchase is either too narrow.Besides,uncomplicated rule leads to poor feasibility.For purpose of improving these remedies and strengthening the protection of rights of the oppressed shareholder,we can borrow the experience of other jurisdictions,such as Anglo-American law,on the basis of our country's condition.In order to protect the oppressed shareholders under the article 20,and make it convenient for the courts applying this article to identify the oppression,some preliminary suggestions are proposed in this paper: the concept of the shareholder oppression should be introduced.The meaning and particular situation of a kind of behavior of shareholder oppression under the "abuse of shareholders' rights" should be cleared by the legislation and judicial interpretation respectively.As a single form of relief for the oppressed shareholder,Compensation cannot meet the needs of judicial practice.Our courts should be allowed to order a wide range of reliefs on a case-by-case basis on the basis of judicial interpretation.Some specific rules should also be modified.For example,judicial examination standard of the application of article 22 should be clarified.The company's resolution which is made by majority abusing their voting rights is invalid.When judging the effect of the resolution,the courts should focus not only on the legitimacy in formally,but also on the fairness and the rationality of the contents of the resolution.The scope of article 74 should be expanded,adding the particular situation of a kind of behavior of shareholder oppression under the "abuse of shareholders' rights",protecting the exit interests of the oppressed shareholder.