Study On The Legal Issue Of The Preemptive Right Of Shareholders

Shareholder’s preemptive right is a right granted to other shareholders of the company during the external transfer of the limited liability company’s shares.Its purpose is to harmonize the personality of the company,remain the company’s shareholders within the existing structure and maintain the company’s existing stability.Equity transfer disputes represent the most numerous and most controversial disputes in company,among which the focus and difficulty is the dispute on shareholders’ preemptive rights,mainly involving its nature,dual setting of the right of consent and preemptive rights system and the “equal conditions” of such rights,existence or abolition of shareholder’s right of rescission and the validity of the equity transfer contract signed by the transferring shareholder and the third party.Some of them have been specified in Provisions of the Supreme People’s Court on Several Issues Concerning the Application of the Company Law of the People’s Republic of China(4)and The Summaries of the National Conference for Work of Courts on the Trial of Civil and Commercial Cases published in 2019.For instance,the factors for determining “equal conditions” include quantity,price,payment method and duration of the equity transfer;the equity transfer contract infringing on the preemptive right is valid in principle.However,there are still some issues in dispute,which still cause great problems to judicial practice.In this light,this thesis will combine the current legislative and judicial practical problems to further analyze the existing controversial issues of shareholder’s preemptive right.After that,such conclusion can be drawn: in terms of the nature of shareholder’s preemptive right,right of formation is more in line with the legislative intent;as for dual setting of the right of consent and preemptive rights system,it is more reasonable to stipulate the laws and regulations of shareholder’s preemptive right;on the issue of equal conditions of such right,it would be better to solve the current judicial dilemma by restricting partial exercise of shareholder’s preferentialpurchase right,unifying the transfer price determination standards,and clearly defining the payment obligation as the “equal condition” recognition factor;regarding the disputes concerning shareholder’s right of rescission,it is acceptable that such right of shareholders should follow existing laws and regulations,but it should be restricted and its deadline should be specified,so as to reduce shareholder rights abuse.