The Study Of Entitling Dormant Partner In Company Limited

With the development of the economic,dormant investment is a new mode created by people.Therefore,no rules can be found in Corporate Law to be applied to it.Dormant investment was first stipulated in Judicial Interpretation of Corporate Law?,which means it was legitimized.However,in the system level,there is no sound mechanism yet formed for dormant investment.The relations and interests involved in dormant investment are multiaspect and complex.So it is necessary to provide a sound system guarantee from the legal level,which helps to promote economic transactions and to ensure the order of business activities.Judicial Interpretation of Corporate Law ? recognized that dormant partner has right to enjoy the investment interests based on his fulfillment of the duty of contribution.In practice,even he can have the investment interests;he cannot acquire the shareholder qualification,because of the rule that “more than half of the other shareholders agree”,and nominal shareholder still owns the qualification.In fact,as to the investment interests,dormant partner entirely depends on nominal shareholder.When nominal shareholder does not act on dormant partner's behalf,dormant partner can pursue the default liability or tort liability of the nominal shareholder,or he can achieve investment rights through entitlement procedure.If the other shareholders refuse his requirement,dormant partner will take the risk of losing his investment interests.However,for those who actually exercised the rights of shareholders without others' objection,it seems unfair.Therefore,the problem of entitling dormantshareholders should be treated differently,and the interests of the dormant shareholders should be properly protected.In addition to the introduction,this article is divided into four chapters.The first chapter raises the question that under the current entitlement procedure,the protection of the interests of the dormant partners is obviously insufficient.Firstly,the entitlement predicament of dormant partners is put forward through an analysis of a specific case,that when the nominal shareholders are passively exercising the shareholders' rights,dormant partners cannot get the qualification because of the rule that “more than half of the other shareholders agree”.If the other shareholders infringe dormant partners' interest deliberately,the investment interests of dormant partners cannot be guaranteed at the level of company law.Secondly,the reasons of the entitlement predicament are: the separation of the pecuniary interests and personal interests,the protection of the character-based nature of Company Limited,and the different effect of the contract.Lastly,the article pointed out the shortage of current entitlement procedure.The second chapter discusses the protection mode of the legal relationship of dormant contribution.The internal relations between the dormant partners and the nominal shareholders are civil legal relations,which emphasizes party autonomy.The purpose of the contribution must be clarified as making equity investment,or it will be understood as lending relationship in practice.The nature of dormant investment may be agency relationship,trust relationship or anonymous partnership,and therefore,many people proposed that dormant investment mechanism could be built on these modes.This paper holds that indirect agent model is the best choice to solve the problem of dormant investment.Because the trust system mainly solves the "property" problem,while the dormant investment is to solve the "identity" problem.The third chapter tries to seek the protection methods of dormant partners in entitlement procedure under the indirect agency system mode.The indirect agency system is the agency system in the Anglo American law.The 402 nd,403rd clause of our contract law is also regarded as the introduction of the indirect agency system.In the mode of indirect agency system,dormant investment can be divided into hidden proxy relationship and undisclosed agency relationship.There are two problems in hidden proxy relationship.One is that dormant partners can be entitled directly without taking into account the character-based nature of Company Limited.Theother is that there is no clear standard of recognizing shareholders' qualification,which leads to two contradictory results in the same mode.In undisclosed agency relationship,dormant partners have two ways to be entitled.In order to solve the contradictions,it is necessary to join the corporate law.The fourth chapter puts forward some suggestions for the improvement of current entitlement procedures.We should classify the dormant investments and treat them differently.Distinguish lawful cases and unlawful cases.Only dormant partners in lawful cases can be entitled.Distinguish rights-exercised cases and rights-unexercised cases.We need to consider if the character-based nature of Company Limited is damaged from the substantive level in rights-exercised situation,while fully considering other shareholders' opinion in rights-unexercised situation.Distinguish disclosed cases and undisclosed cases.In disclosed cases,other shareholders must have bona fides,while there is no requirement in undisclosed ones.Finally,it is suggested that we should clarify the consent standard of other shareholders from four aspects.The first is that the scope of other shareholders needs to be defined as the shareholders other than nominal shareholder.The second is that when other shareholders have malice,dormant partners can be entitled directly.The third is that constructive consent has same effect with express consent.The fourth is estoppel.