Analysis On The Justification Of Share Repurchase Of Limited Liability Companies

At present,China's "Company Law" has made explicit legislation for the stock repurchase system of the company limited by shares,adopting a legislative attitude of "prohibition of principles,exceptions allowed." For limited liability companies,although the "Corporate Law" amended in 2005 stipulates in Article 74 the system of recourse purchase rights of dissenting shareholders of limited liability companies,the system is not equivalent to the equity repurchase system,and therefore limited liability.The legislation of the company's share repurchase system is still in the absence of status.However,in the current practice,equity repurchases can satisfy many practical needs of the company.For example,they can serve as an effective and convenient channel for shareholders to withdraw,become an effective means to ease the dissolution of the company,can be used as employee stocks,and prevent third parties from taking hostile takeovers and corporate financing.Efficient tools such as equity buy-backs have become more widely used in practice.The absence of legislation and the extensive application of the practice will inevitably lead to the increase of related disputes and the inconsistency of court judgments in judicial decisions.Therefore,based on the empirical study of equity repurchase cases in judicial adjudication,this article sorts out the views of court adjudicators and finds that the courts have different attitudes towards the validity of equity repurchases in practice and lack specific criteria for judgment.The main reasons include the courts' Whether the company law prohibits share repurchase is controversial,and there is no rational analysis of the application of the principle of capital maintenance in the "Company Law." Through analysis,the author believes that the "Company Law" doesnot prohibit the repurchase of equity,and from the perspective of the company law theory and the legislative practice in the countries outside the country,the equity repurchase is based on justification,and equity repurchases It does not necessarily violate the principles of capital maintenance and the principle of denial of legal personality,and can be avoided through relevant restrictive conditions.Therefore,a limited-liability company should be allowed to buy back shares in principle.On the basis of principle,because China's "Company Law" does not provide related restrictive conditions for equity repurchases,it is necessary to specify the relevant standards for fair equity repurchase in judicial practice.This article is mainly divided into four parts in structure,of which the main contents are as follows:The first chapter defines the research scope of the article,collects the equity repurchase cases in China's current judicial practice,conducts statistics on them,collates and analyzes the opinions of the courts,and finds that the existence of equity buybacks in judicial practice exists.The main reasons for the differences include the court's dispute over whether the “Company Law” prohibits share repurchase,and the lack of rational analysis of the application of relevant principles such as capital maintenance in the “Company Law”.The second chapter demonstrates the legitimacy of shareholder repurchase from the perspective of company law theory,the legislation of China's "Company Law" and the current status and trends of foreign country's legislation,and believes there is a theoretical basis for company repurchase.There is no company law in China.The prohibition of stock repurchase,that is,there is a legal basis,and the share repurchase meets the needs of the development of current commercial practice,and the legislative attitude of foreign countries to equity repurchase also tends to be "allowed by principle,exception prohibited".The third chapter analyzes the basic rules and regulations of the relevant companies that constitute legal obstacles to equity buybacks in judicial practice,and argues that equity buyback does not necessarily violate the principle of capital maintenance,the protection of the interests of creditors,the principle of independence of legal personality,and shareholders The principle of equality,etc.,the court should conduct specific analysis in specific cases.In the fourth chapter,based on the justification of the overall system of equity repurchase,the criteria of fair repurchase of equity were determined from theperspective of procedures and entities.In terms of procedures,if the articles of incorporation stipulates that the provisions of the company's articles of association stipulate that the company's articles of incorporation do not stipulate,the decision-making right of equity repurchases should be attributed to the shareholders' meeting;in terms of entities,the equity acquired,including the repurchased shares,should have fulfilled its capital contribution obligations.The repurchase price should be reasonable and have legally available repurchase funds.