Research On The Legal System Concerning Compulsory Profit Distribution Of Limited Companies

China's corporate earnings distribution litigation cases have been increasing in recent years.Through analyzing the judicial precedents,it was found that the shareholders' meetings are mainly controlled by the controlling shareholders,who do not vote on the company's surplus distribution in time.Besides,it's very common that the controlling shareholders in the limited company often hold positions of director,supervisor,and executive,paying themselves high salary for a long time.What's more,the controlling shareholders tend to infringe on the investment dividends of small and medium shareholders in the company's earnings distribution.Therefore,there are deficiencies in the system of compulsory profit distribution in China's limited companies,which is also controversial in academia.Through the review of judicial cases and domestic literature,the introductory part of this article suggests that Interpretation ? of the Company Law has defects.For example,Article 13 of Interpretation IV of the Company Law declares that the company shall be the defendant.However,whether shareholders or directors who abuse powers can act as defendants is not stipulated,which leads to shareholders who abuse their powers even more unscrupulously abuse capital decisions;Besides,what are the specific cases of abuse of power is not stipulated in "Article 15 of the proviso",which provides a powerful shield for controlling shareholders.Therefore,the legal system of compulsory profit distribution in China's limited companies needs to be improved.In addition to the introduction,this article is divided into three parts.The first part discusses the legitimacy of the legal system of compulsory profit distribution in limited companies.It explains how to overcome the limitations of the company's internal profit distribution system(lack of autonomy in the company's articles of association,insufficient prevention of shareholder agreements,and defects in the principle of capital majority decision),and how to make up for the shortcomings of alternative settlement mechanisms(lawsuits for damages,lawsuits for judicial dissolution,lawsuits for repurchases of dissenting shareholders,etc.)as well as the principle of honesty and credibility and the principle of fairness and impartiality.From the three aspects,it comes to an conclusion that the legal system for the compulsory distribution of limited company profits is justified.The second part studies the causes and boundaries of the compulsory distribution of limited company profits.On the one hand,the causes mainly include:abuse of commercial judgment principles;large shareholders withdrawing arbitrary provident funds;shareholders' meetings maliciously refusing to formulate or vote on the company's profit distribution plan;shareholders maliciously evacuating the company's surplus and the failure of the company's autonomy mechanism.On the other hand,a boundary needs to be established between the shareholders' filing of mandatory earnings distribution and the company's autonomy.Based on the premise of the profit distribution resolution submitted by shareholders,supplemented by the distribution plan set out in the company's articles of association and improved by the distribution agreement reached between shareholders,the boundaries of the company's mandatory distribution of profits are clarified.The third part studies the method of compulsory distribution of limited company profits.Mainly by sorting out the judicial precedents,it's found that there are defects in the way of compulsory profit distribution in China's limited companies.Then through reviewing the legal system of compulsory profit distribution in foreign countries,the thesis puts forward suggestions to improve the way of compulsory profit distribution in China's limited companies.Firstly,the litigation status of shareholders who abuse their rights should be clearly defined,which means the controlling shareholder who abuses his power should be the defendant in a lawsuit for the forced distribution of profits of a limited company.Secondly,the distribution of the burden of proof should be clarified,and the burden of proof of small and medium shareholders should be appropriately reduced.Finally,the legal effect of the shareholder agreement should be clarified,and the application of the shareholder agreement should be added to Article 15 of Interpretation ? of the Company Law.