The Legally Binding Of Shareholders' Preemptive Right

The preemptive right of shareholders is a problem that is often involved in the transfer of equity in limited liability companies.At the time of the establishment of many companies,there was no special agreement among shareholders on the right of preemption of shareholders,and the rules on the right of preemptive shareholders set in the company law of our country were too general.This leads to the issue of how to protect the shareholders' right of first refusal in the case of equity transfer.There is no contractual agreement to keep and there are no legal rules to follow.Although the "Company Law Interpretation IV" recently explained the specific application of the rules,there are still some contradictions.In particular,from this explanation,we cannot make a definitive understanding of the final validity of the shareholders' right of pre-emption.In view of the fact that the issue of the validity of shareholders' right of preemption has still not been solved,this article will combine the provisions of the latest judicial interpretation of the “Company Law” on the right of shareholders to purchase rights,and sum up the disputes on the effectiveness of shareholders' right of preemption in the theory and practice.In order to clarify the connotation of the "priority" effect of shareholder's right of first refusal and the scope and mechanism of the effectiveness of rights.The word "priority" is the focus of the term "shareholders' preemptive rights." "Priority" is the core effect of shareholders' preemptive rights.How the "priority" effect of shareholders' preemptive right is understood in the end is related to the application of the rules of shareholders' preemptive right and the immediate interests of the preemptive right holder,the equity transferor and third parties outside the company.In the dispute that infringes upon the shareholders' right of first refusal,the interests of the three parties are involved.In the equity transaction,it is difficult for the three parties to achieve a win-win situation.One party benefits and the other or both parties may suffer damage.When national public power intervenes in the transactions between market entities,it is necessary to balance this interest conflict as much as possible,and to maintain the interests of one party in a preferential manner,the other party's losses should be controlled within a reasonable range.This is also what this article should consider when explaining the effectiveness of shareholders' preemptive rights.The main point of this paper is that the priority effectiveness of the shareholder's right of first refusal is concentrated on the priority of fulfilling the creditor's right owned by the right holder under the same conditions,that is,the priority of contract execution.Moreover,the realization of such priority effectiveness needs to be guaranteed by unilateral coercion.This is because giving other shareholders priority over the transfer of equity to third parties outside the company is intended to protect the “humanity” of the limited liability company or the expectation of the company's membership in the surviving shareholders.Placing the decisive right to promote the equity sale contract in the hands of the priority purchaser is more reasonable and more consistent with the long-term value orientation of the limited liability company in China's "Company Law." The rules of shareholders' preemptive right in the “Company Law” are based on the concept of fairness.Under the premise of admitting the freedom of equity disposal and guaranteeing the smooth exit of shareholders,the right of first choice is provided to the old shareholders – whether it is to maintain the familiar relationship or Admission of new members.The preemptive rights of shareholders can be used as an implied term to give third parties a risk warning.It does not deny the third party's contractual validity and takes care of the third party's interests.It is reasonable and practical to place the contract between other shareholders and the equity transferor on the prior execution.The most important feature of this article is to start with the “priority” of shareholders' right of first refusal,regard it as the core effect of rights and the exercise of rights holders' rights,and use comparative research with similar priority rights and an analysis of the internal logic of laws.Explain the meaning of the "priority" effect.Linking to this,starting from the point of view of maximizing the effectiveness of “priority” and combining previous disputes about the nature of rights,it is necessary to demonstrate the necessity of achieving a contractual effect in a unilateral sense.In addition,this article will use the latest judicial interpretation to explain the effectiveness of the shareholders' right of pre-emption,so as to provide a reference for practical operations.