Research On Legal Issues Of Shareholder’s Right Of Preemption

A limited liability company is a relative large proportion of existing forms of enterprises in China.The good point of this organization is that the management method is free and flexible,and investors are protected by limited liability compared with the partnership,so it is favored by most SMEs.Compared with stock corporation,the limited liability company is small in scale,has a small number of shareholders,and has the characteristics of human.The target of the right of first refusal is to restrict the transfer of equity.The number of cases concerning the right of preemption accounts for a considerable proportion of company cases and are more controversial.The provisions on the area are more general,so there is a large gap in this field.The Supreme People’s Court of the People’s Republic of China stipulates "The Judicial Interpretation of the Company Law Ⅳ",and it enrich the relevant blank areas.However,the problems in judicial practice are endless,and the " The Judicial Interpretation of the Company LawⅣ" remains unresolved for some difficult problems.This article will summarize the relevant literature,and extract the corresponding typical cases to discuss the current problems and perfect methods.The main structure of this paper is as follows:The first chapter mainly introduces the basic theory of shareholders’ preemptive right,and expounds the theoretical premise of the limited liability company’s humanity.The limited liability company is not a purely joint company,but a form of company that combines humanity and capital.Humanity is mainly reflected in the trust relationship between shareholders of limited liability companies.The purpose of setting up shareholder preemptive rights is to protect this trust-based relationship within the company.Next part is the proposal of the problem.In summary,articles 16 to 21 of The Judicial Interpretation of the Company Law IV refine the issues of exclusion of application,judgment of equivalent conditions,determination of exercise period,and relief for preemptive rights.However,for some difficult issues in judicial practice,the new judicial interpretation is not covered.Therefore,it is necessary to explain and answer the questions in practice.The second chapter discusses the nature of preemption.Defining the nature of the right helps to determine the legal application of the right.For a long time,the theoretical circles have different opinions on the nature of the right.In the past,the mainstream view recognized the shareholder’s preemptive right as the right of formation.This chapter combines judicial practice and related theoretical doctrines.It is believed that after the introduction of the new judicial interpretation,the formation rights theory has been somewhat out of date.The request rights theory is more in line with the trend of the times and can balance three parties.The third chapter discusses the effectiveness of the behavior of infringement of shareholders’ preemptive rights.By comparing relevant theoretical theories and combining judicial practice,this chapter believes that the effective theory is more conducive to balancing the interests of all parties.When Bona Fide Acquisition conflicts with the shareholder’s preemptive right,this chapter analyzes the legal basis,institutional basis and legal protection,and concludes that if the Bona Fide Acquisition is applied in the external transfer of equity,the value in preemptive right of shareholders will be loss.The fourth chapter discusses whether shareholders’ preemptive rights have"penetration effectiveness".This chapter analyzes two typical cases in judicial practice.Combined with relevant theories,it is believed that the law should clearly stipulate that shareholders’ preemptive rights exist only between the direct shareholders of a limited company.If the shareholders of limited company have special needs beyond the scope of the company law for "humanity",they can stipulate it in the company charter.