Research On The Shareholder Expulsion In The Limited Liability Company

Currently,there are only two provisions available for the application of shareholder expulsion in the limited liability company in China:(1)Article 17 of Provisions of the Supreme People's Court on Several Issues Relating to Application of Company Law of the People's Republic of China(III)and(2)Article 71,Section 4 of the Company Law.The scope of the former is so narrow that it is easy to be abused by speculators,while the latter as a default provision only provides the possibility of the charter autonomy in relation to the equity transfer-there is no detail and the appropriateness of the application is still open to question.In view of this,many scholars have proposed to build a shareholder expulsion system for limited liability companies,but couldn't reach a unified view on the concept,function and rule design,which has affected the legislative process and judicial practice to some extent.The shareholder expulsion system originates in Germany and has been developing for a long time.It has three sub-systems:Kaduzierung(loss of power),Zwangseinziehung(compulsory share resumption)and Ausschluss aus wichtigem Grund(expulsion under major causes).The shareholder expulsion system safeguards the interests of the company,other shareholders and creditors by expelling the specific shareholder out of the company.It's a useful way to ensure the company's capital enrichment,resolve the company's deadlock problem to avoid a possible company's dissolution.This paper compares the status quo of China Law and the three related sub-systems in German law,aiming to clarify the concepts and find a way for the Chinese judiciary to get out of the dilemma in the practice by building a new Chinese shareholder expulsion system mode.Based on the three relevant German systems this mode should be constructed in a separated mode consisting of three catalogues of expulsion reasons:the reason in law,in articles of association and at the judicial discretion.The procedures and consequences should be accordingly designed on the system functions and accessible remedies provided to both parties.With the new mode the author hopes it can make some contribution to the further establishment and improvement of the shareholder expulsion system in China.