Research On The Exercise Of Shareholders' Preemptive Right

Article 71 of the "Company Law" establishes basic rules for the system of preemptive right of shareholders of limited liability companies,but the principle of the law provides for the frequent occurrence of judicial practice,the requirements for the exercise and the effect of the exercise are not clearly defined.Inadequate legislation has led to confusion in judicial practice,and different judgments in the same case occur from time to time,which is not conducive to the protection of the interests of the parties,but also damages the stability of the judicial order.Although the legal and practical circles have devoted great efforts to the resolution of the above problems,there are always divergent opinions and no consensus can be reached.In view of the frequent occurrence of these problems in practice,a clear definition and unified specifications are urgently needed,so it is necessary to continue research and discussion..The basic exercise of shareholders' preemptive rights needs further examination.Firstly,Regarding the subject requirements,the shareholders who previously agreed to the transfer and the anonymous shareholders should rule out,the defective shareholders should be restricted by the actual capital contribution ratio.Secondly,as for the prerequisite,the external transfer of equity,involves the issue of whether the external transfer in some special circumstances is a qualified external transfer of equity,and thus whether the shareholder's right of first refusal is applicable.First,the "repentance" of the transfer shareholders.The "Judicial Interpretation of the Company Law(4)" stipulates that the legitimate basis of the "right to regret" lies in the freedom of shareholders to dispose of equity,and at the same time it is beneficial to balance the interests of all parties.Therefore,in principle,after the transfer of the shareholder "repentance",other shareholders can no longer exercise priority purchase Rights,but the "right to regret" is also restricted accordingly.According to Article 21 of the judicial interpretation,the shareholders can still exercise their "right to regret" when the transfer shareholder fails to be notified in accordance with the procedures or there is fraud,malicious collusion,etc.Second,the gift situation.In this case,the application of the right of first refusal should be allowed,which is beneficial to maintaining the human nature of the company.At the same time,the transfer shareholder can transfer the obtained consideration to the grantee.The benefit of the grantee will not suffer substantial losses.Conversely,if it is not allowed,it may induce the two parties to collude to use the gift method to evade the priority purchase right.Third,indirect acquisitions.In this case,the third party actually acquired control of the target company by acquiring the equity of the upper company,and the target company's own equity structure has not changed.This "indirect transfer" behavior is not covered by Article 71 of the Company Law,the shareholder's preemptive right cannot be applied.In addition,in the case of indirect acquisitions,it is not appropriate to place too much emphasis on protecting the "human nature" of a limited liability company and ignore the more worthy protection of equity transfers and the freedom to choose a transaction model.Otherwise,it will greatly increase the transaction costs of corporate mergers and reduce transaction efficiency.Finally,for the substantive requirements-the identification of "equal conditions",the general conditions and special conditions of equity transfer should be distinguished.The general conditions such as the main conditions of the contract such as quantity,price,payment method,and term must be absolutely equal for other shareholders.For other special conditions,such as payment obligations,if they can be converted into money,the equivalent conditions are considered to be satisfied when the converted transfer price is reached.In addition,unlike paid transfers in general,there are no general conditions such as price,payment method,and term in the gift.Therefore,it is necessary to discuss how to determine the "equal conditions" from the the "real purpose",consideration for other benefits or special emotions.Under the principle of distinction,the exercise effects of the shareholders' preemptive right is divided into the effects of the burden of entering into equity transfer contracts between the two parties and the effects of disciplinary actions that cause substantial changes in equity.On the one hand,the shareholders' right of first purchase should be characterized as the right of formation.Other shareholders can unilaterally express their intention to form a transfer contract with the transferee with the same conditions as a third party.The issue of effectiveness should be adjusted by contract law,and shareholders' right of first refusal will not affect it.On the other hand,according to the formalist equity change model,the exercise of the shareholder's preemptive right leads to the entry into force of the equity transfer contract,but the entry into force of the contract does not necessarily result in a substantial change in equity.If the transferring shareholder chooses to transfer the equity to a third party and has registered for a change in equity,other shareholders cannot claim that the transfer is invalid,and can only claim against the transferring shareholder for non-performance of the debt.