Research On Appraisal Right Of Dissent Shareholders In Limited-Liability Companies

Appraisal right of dissent shareholders originated from the United States.When China revised the Company Law in 2005,it confirmed the appraisal right of dissent shareholders of limited companies.This right is the product of the development of the company's business form to a specific historical stage.When the voting mode of the company develops from the principle of unanimity to the principle of majority decision,the major shareholders may make some decisions that damage the interests of the small and medium-sized shareholders by taking advantage of their superior position in capital and information.In order to make up for the disadvantage suffered by the small and medium-sized shareholders,the law gives them the right.These minority shareholders have the right to request the company to repurchase their shares.When this right is realized,there are actually two effects: one is that the dissident shareholder withdraws from the company,the other is that the dissident shareholder gets a cash equivalent to the value of his equity.Appraisal right of dissent shareholders applies to both limited liability companies and limited companies.In the Company Law of China,the provisions of the system of limited liability companies are in Article 74,and the relevant provisions of joint stock limited companies are in Article 142.The establishment of this system has great significance for protecting the interests of minority shareholders and maintaining the balance of interests within the company.However,in the past ten years since the system came into being,the commercial society has undergone tremendous development and put forward new requirements for legislation.In the Decision of the Standing Committee of the National People's Congress on Amending the Company Law of the People's Republic of China,adopted on October 26,2018,Article 142 of the Company Law was amended.The revised provisions increased the exceptions of the repurchase of shares by joint stock limited companies,relaxed the restrictions on the repurchase of shares by joint stock limited companies,and provided for the free circulation of shares.Further institutional safeguards.In contrast,it is much more difficult for the small and medium shareholders of a limited liability company to transfer their shares than the small and medium shareholders of a joint stock company.Therefore,it needs more legislative protection.However,the same is related to the company's repurchase of its shares.The amendment of the Company Law does not make any adjustment to Article 74,which applies to a limited liability company.According to the provisions of Article 74 of the Company Law,when the shareholders' meeting of the company decides on the matters defined in this article,the shareholders who voted against it at the meeting may exercise the right of claim for share repurchase and request the company to purchase its share at a reasonable price.Seemingly endowed with the rights of minority shareholders,in fact,the provisions of this article set many obstacles for the exercise of rights,making it difficult for minority shareholders to really realize the rights.In judicial practice,there are few cases concerning appraisal right of dissent shareholders in limited liability companies,and the number of cases that shareholders' lawsuits are supported by the courts is also low.This also confirms that the protection of small and medium-sized shareholders in Article 74 of the Company Law is weak.Article 74 of the Company Law has some problems in the procedural provisions for the realization of rights,such as vague qualification provisions for the subject of rights and unreasonable procedures for exercising rights.In the substantive provisions,the defects in legislation are unreasonable triggering reasons for rights and the lack of a mechanism for determining reasonable prices.Legislation should improve this.Specifically,regarding the subject of rights,it is necessary to clarify whether unregistered investors,defective shareholders and non-voting shareholders are qualified as subject.In terms of the procedure for exercising rights,the author suggests relaxing the premise for objecting shareholders to exercise their right of claim for share repurchase,so that they are not subject to strict restrictions.In addition,specific provisions should be set for objecting shareholders to request companies to repurchase their shares.Procedures should guide and guarantee the objecting shareholders to exercise their rights;in the setting of the triggering causes of rights,we should expand the scope of triggering causes of rights and reduce the difficulty of triggering legal causes;as for the determination of reasonable prices,the author believes that it is not appropriate to use the net assets evaluation method to determine the equity price solely,and different companies have different ways to determine the appropriate equity price.Because judges are not good at accounting knowledge,the author suggests that the thirdparty financial experts determined by the court should choose the method of stock price evaluation.