The Study Of The Exercise Of The Shareholder's Preemptive Right Of A Limited Liability Company

The limited liability company is jointly invested and established by shareholders based on mutual trust,with the nature of human joining.Therefore,for the nature of closure of the limited liability company,the shareholder's preemptive right is legislated to protect the vested interests of the existing shareholders and to maintain the foundation of human joining.However,with the rapid development of the market economy,the demand for free flow of equity as a kind of capital is also increasingly obvious and the frequent transfer of equity has caused many controversies.Article 71 of the Company Law has made conceptual and basic provisions related to the shareholder's preemptive right on the right of consent,the compulsory purchase obligation of dissident shareholders and the preemptive rights under the same conditions,but such provisions are too general and simple,which are unable to give relatively unified guidance on various and complicated issues in the practice of equity transfer.In judicial trials,similar cases may have different judgments.So the Supreme People's Court issued the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China(IV)(hereinafter referred to as "Company Law Interpretation IV"),which makes details concerning the exercise and remedy of shareholder's preemptive right,such as specifying notification procedures,exercisemethod,duration of exercise,same conditions,damages and remedies,etc.It seeks to clarify the exercise scope and remedies of shareholder's preemptive rights,to unify judicial practice by specifying the procedures for exercising shareholder's preemptive right,and further to resolve disputes in practice caused by equity transfer contract which damaging the shareholder's preemptive right.However,the provisions of the Company Law Interpretation IV on the shareholder's preemptive right are still vague and semantically unclear,so it is still easy to cause ambiguity in practice.In this thesis,for the purpose of solving practical disputes,the provisions on the exercise of shareholder's preemptive right in the Company Law Interpretation IV will be analyzed in-depth,remaining problems will be pointed out,and the writer's opinions on correct application of the shareholder's preemptive in practice will be clarified.In addition to the abstract,the introduction and the conclusion,this thesis consists of four aspects: the procedure issue of notification;the criteria for judging the same conditions;the inherent logic of rescission and the nature of the shareholder's preemptive right;the validity of equity transfer contracts and bona fide acquisition of equity.The introduction mainly introduces the main problems and research value and significance of this thesis,points out the shortcomings of the existing legislation and judicial interpretation,and summarizes the research results and academic controversy of the main issues of the shareholder's preemptive right.Chapter ? The Procedure Issue of Notification,by analysis of the contents of the two notifications implied in Article 17 of the Company Law Interpretation IV,leads to the fact that the consent right and the preemptive right coexist in the equity transfer system in China.Comparing the difference with one notification acknowledged in judicial trial and practice operation,the essence of the problem is that the coexistence of consent right and shareholder's preemptive right conflict with efficiency.And by comparing the legal provisions of other countries and regions,China's two-tier structure of consent right and preemptive right is considered similar to the structure of Taiwan.However,it is somehow different from the strong consentright of Taiwan,as it is a weak consent right.Therefore,one notification will not substantially damage the exercise of the shareholder's preemptive right.Though the Company Law Interpretation IV does not clearly stipulate the number of notification,it leaves a flexible space for practical operation.Chapter ? The Criteria for Judging Same Conditions,on the basis of analyzing the basic doctrines on the criteria for judging same conditions and combining with the provisions of the extraterritorial law and related cases,further clarifies the detailed criteria for judging the same conditions listed in Article 18 of the Company Law Interpretation IV(quantity of shares,price,payment term and performance deadline),and focuses on whether the other important factors that cannot be specifically quantified(identity relationship,liability for breach of contract,business opportunity promised by the external assignee)and are not listed in the Company Law Interpretation IV should be included in the same conditions.Chapter ? The Inherent Logic of Rescission and The Nature of The Shareholder's Preemptive Right analyzes the reasons for stipulating rescission in Article 20 of the Company Law Interpretation IV,and enumerates the previous cases to explain the affirmation of rescission in judicial practice.The remaining problem is that the past doctrine usually believes that the existence of rescission proves that the shareholder's preemptive right is a right of claim,but other shareholders' the exercise of the preemptive right as stipulated in Article 21 of the Company Law Interpretation IV proves that it should be a right of formation.The inherent logic has to be clarified.Through the analysis of the right of claim and the right of formation,it is considered that the shareholder's preemptive right should be a right of formation.The exercise of rescission by the transfer shareholder should be a kind of breach of the equity transfer contract established between the transfer shareholder and other shareholders who exercise the preemptive right.Chapter ? Validity of The Equity Transfer Contract and Bona Fide Acquisition of Equity summarizes various viewpoints on validity of the equity transfer contract that infringes the shareholder's preemptive right in the judicial practice,analyzes various theories,and combines the provisions of the Contract Law regarding theinvalidity of the contract.It is considered that the equity transfer contract shall be valid in principle unless the contract is deemed as invalid according to the relevant provisions of the Contract Law regarding invalid contract.On the premise that the equity transfer contract is valid,and based on the relevant provisions of the Property Law,it analyzes the reasons that bona fide acquisition should be applied after the equity change registration,and the conditions for the external transferee to defend himself by bone fide acquisition.