Study On The Validity Of The Restriction On The Equity Transfer In The Articles Of Association Of Limited Liability Company

Article 71 of the company law allows equity to be transferred freely among shareholders,without considering the possible changes in equity structure caused by equity transfer among shareholders,and fully respects and trusts the autonomy of shareholders.Regarding the equity transfer to the external party,the company law adopts the legislation model of legal restriction and “other provisions” in the articles of association,allowing the articles of association to exclude the legal rules and make "other provisions".In practice,the "otherwise provisions" herein usually set stricter limitations on the equity transfer,especially the amendments to the articles of association in the form of capital majority without the agreement of minority shareholders.In this case,the conflict and contradiction between "otherwise provisions” in the articles of association and the shareholders’ right to dispose the private property is fierce.Therefore,the "other provisions" in the articles of association have been queried by the academic and judicial practice circles on the legitimacy of restricting shareholders’ private rights in long term.The academic circles have discussed the nature of the company law and the boundary of the autonomy of the articles of association for a long time,but it is still difficult to determine the boundary of the restrictions in the articles of association on the equity transfer.The existing company law and relevant judicial interpretations have not made further detailed provisions and interpretations on Article 71,which leads to the lack of a unified judicial review standard on such disputes by courts in long-term judicial practice,and the phenomenon of "same case with different judgments" has existed for a long time and is becoming more and more severe.After the preliminary analysis of relevant cases,it is discovered that,the judicial disputes mainly focus on the following three aspects regarding the effectiveness of "other provisions" in the articles of association: First,whether the articles of association with compulsory equity transfer are effective;Second,whether the articles of association can further restrict or even prohibit the transfer of equity or relax the restrictions on a basis of legal restrictions;Third,whether the amendment to the articles of association is effective for shareholders who oppose or do not participate in the resolutions.In this regard,the Supreme Court issued the guidance case No.96 Song Wenjun v.Xian Dahua Catering Co.,Ltd.Shareholder Qualification Confirmation Case on June 20,2018,which put forward three reasons,in order to provide reference for the subsequent disputes.Although the guiding case No.96 introduced the contract theory,which provides a worthy of reference for such disputes,there are still many problems to be discussed.This paper attempts to construct the review path regarding reviewing the validity of “otherwise provisions” in the articles of association by combing the legal basis of the restriction on the transfer of shares in the articles of association,combining the corporate law of the United States and Germany,to establish a feasible review path for discussion and reference.This paper is mainly divided into four chapters,the main contents are as follows:The first chapter is “The Judicial Status of Restrictions on Equity Transfer in the Articles of Association of Limited Liability Company”.With the help of case search tool,it is searched that the cases involve the validity of restrictions on the transfer of shares in the articles of association in the past ten years,then the cases are sorted out and summarized according to the types of articles of association.On this basis,the author makes a further detailed analysis on the disputes and the judgment of local courts,so as to find and reflect on the problems and difficulties existing in the judicial practice of such disputes.The second chapter is “The Boundary Analysis of Restrictions on Equity Transfer in the Articles of Association”.From the perspective of legal theory,this paper analyzes the legal basis behind the restrictions on equity transfer in the articles of association,which mainly includes the following aspects: First,it is discussed that the nature of the company law and the logical relationship between various terms in Article 71 of the company law,so as to discuss the autonomous scope of the articles of association granted by Article 71 of the company law;Second,it is analyzed that the nature of the articles of association,the scope of the autonomy of the articles of association and whether to distinguish between the initial articles of association and the amendment to the articles of association.The third chapter is “The Validity of the Restrictions on the Equity Transfer in the Articles of Association under Extraterritorial Perspective”.By using the method of comparative study,this paper analyzes the standards of restrictions on equity transfer in articles of association under the corporate law of the United States and Germany,and then discusses the feasibility of the relevant standards applicable to the judicial practice in China.The fourth chapter is “The Review Path of Determining the Validity of Restrictions on Equity Transfer in the Articles of Association”.Based on the problems discovered in the first chapter,combining with the theory analysis of the boundary of the restrictions on equity transfer in the articles of association in the second chapter,and the company law of the United States and Germany,which are mentioned in the third chapter,the review path of determining the validity of restrictions on equity transfer in the articles of association is put forward for reference and discussion.