On Establishing System Of Shareholder Expulsion Of Limited Liability Company

As one of the two corporate forms in China,a limited liability company(LLC)generally has stronger nature of person joint than a joint stock limited company and the personal factors of a shareholder in a LLC are more likely to have an impact on the interests of the company and the other shareholders.While such effects seriously hinder the normal development of the company,it is obviously a measure lacking economical efficiency and also an unfair solution for the other shareholders,if simply solve such problem by dissolution of the company.The aforementioned system dilemma can be solved effectively by the system of shareholder expulsion of LLC through expelling the “Problem Shareholder” to ensure the normal development of the company,thus produce a more optimized system in terms of legal legitimacy and economic efficiency.However,China has not yet constructed a system of shareholder expulsion in true sense.And only Article 17 of Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the “Company Law of the People's Republic of China”(?)stipulates shareholder expulsion in the case of shareholder's serious capital contribution flaw.However,such provision is far from meeting the practical needs of the shareholder expulsion,no matter in the matter of applying the applicable conditions of the shareholder expulsion or establishing the shareholder expulsion procedures.Correspondingly,the theoretical discussion of the shareholder expulsion system in China's theoretical circles is also insufficient,especially the theoretical basis with sufficient explanatory power has not yet been formed.Therefore,the combing,analysis and argumentation of the shareholder expulsion system from theory to the establishment of the system is of great practical significance for corporate governance in China.This paper intends to analyze and discuss the establishment of the shareholder expulsion system of LLC in China in three parts:The first part is based on the fundamental theory of the shareholder expulsion system of LLC.This paper firstly analyzes the person joint basis of formation of the system and then discusses the different viewpoints of the system requirements and the cause of such difference.Then it leads to the problems of the theoretical basis of the shareholder expulsion system.To be specific,on the basis of expounding the current powerful theories including the group disciplinary power theory,the statutory expulsion right theory and the contract dissolution theory,this paper analyzes and comments on each doctrine and chooses the contract dissolution theory as the theoretical basis of the shareholder expulsion system.The second part discusses the application of the expulsion system.In this part,the paper firstly discusses the applicable conditions,the substantive system of the shareholder expulsion system.This paper analyzes this system from three aspects including the legal conditions,the conditions stipulated by the articles of association,and the other important conditions and goes deep into the application of the applicable conditions of the shareholder expulsion in practice in combination with relevant judicial cases and affirms the necessity of the three conditions above,and explains the application order.Secondly,this paper discusses the establishment of the procedural systems of the shareholder expulsion,including the pre-notification procedure,the expulsion resolution and the litigation related to the shareholder expulsion.Among them,this paper discusses the method of reminding and the determination of the reasonable period of the reminder in the pre-procedure.In terms of the expulsion resolution,the focus is on the voting rules,including the exclusion rules of voting rights and the voting method.In the related litigation concerning the shareholder expulsion,the focus is on the related issues of the shareholder expulsion litigation.The third part analyzes the legal consequences of the shareholder expulsion and elaborates in two parts.The first part is about the legal consequences of the effective shareholder expulsion,mainly focusing on the following three issues: whether the reasonable value of the expulsed shareholder should be returned,the effective time of the loss of shareholder qualification,and the follow-up disposition of the capital contribution of the expulsed shareholder.The second part mainly discusses the issues of the expulsed shareholder rights relief in the case of the defective shareholder expulsion from two respects,the litigation of the defective shareholder expulsion resolution as the way for expulsed shareholder rights relief,and the legal consequences under different causes of defective shareholder expulsion.