Research On The Effectiveness Of Equity Transfer Contracts That Infringe On The Right Of Preemption

Shareholders' right of first refusal means that in a limited liability company,when shareholders transfer equity to a person other than the company's shareholders,the other shareholders have the right to preferentially purchase their shares under the same conditions.However,in judicial practice,infringement of shareholders' preemptive rights occurs from time to time.A third party other than the transferring shareholder and other shareholders concludes a contract for the transfer of equity,so as to achieve the purpose of the transfer of equity by means of non-performance of the notification obligation stipulated in the Company Law.Determining the validity of the contract infringing on the right of preemption to transfer equity to foreign countries is related to the balance of rights and interests between the third party outside shareholders,the shareholders with the right of preemption and the protection of the human union of the limited company.It has become an important issue in the academic and judicial circles.The Company Law and the Supreme Court's Provisions on the Application of the Company Law of the People's Republic of China(4)don't have clear provisions on the validity of the contract of transfer of shares against shareholders' preemptive right.The academic community has a lot of controversy about the effectiveness of such contracts.There are mainly five viewpoints:revocable,statutory conditions,effectiveness,pending,invalid and effective.In judicial practice,the validity of equity transfer contract infringing preemptive right has not formed a unified standard of identification and judgment.This paper tries to analyze the validity of such contracts from the perspective of the principle of distinction and the mandatory provisions of Article 71 of the Company Law.The principle of distinction divides the process of equity transfer into two stages:the conclusion of equity transfer contract and the registration of equity change.The validity of equity transfer contract should be judged by the Contract Law.Because Article 71 of the Company Law is a mandatory administrative provision,the violation of this provision will not result in the invalidity of the contract.Therefore,for the effectiveness of the contract of transfer of equity against shareholders' preemptive right,this paper argues that we can adopt the "limited validity" theory,that is,the contract is valid in principle,but invalid in the case of violation of the Contract Law.