Research On The Judicial Dissolution Remedy To The Shareholder Oppression In Limited Liability Companies

Shareholder oppression is a governance dilemma that is prone to occur when the forces among shareholders in a limited liability company differ greatly.There is no uniform definition of shareholder oppression.Shareholder oppression usually refers to various behaviors in which majority shareholders abuse their control position and treat minority shareholders unfairly.The judicial dissolution system can provide an effective exit mechanism for the minority shareholders in the limited liability company that are oppressed by the controlling shareholder,and is the most fundamental and thorough remedy to solve the shareholders oppression dilemma in the limited liability companies.Since China’s current judicial dissolution system cannot be applied to the situation of shareholder oppression,and there is a system vacancy in the relief of shareholder oppression,many problems of erroneous application of laws have appeared in judicial practice.Therefore,a legislative response is needed for the remedy for the shareholder oppression.On the one hand,the ownership and management rights in limited liability company are usually not separated,which is prone to the imbalance of shareholders’ interests caused by the abuse of the majority decision,and the limited exit channels for shareholders of limited liability companies make it difficult for minority shareholders to get rid of such oppression dilemma.In such situation,the judiciary should actively intervene and give necessary relief to minority shareholders.On the other hand,the performance of shareholder oppression is characterized by diversification and concealment,which cannot be effectively dealt with by the existing remedy rules for individual shareholder rights under the current company law,while the judicial dissolution,as a bottom-line remedy,can effectively cover all types of oppressive behavior to provide adequate relief to minority shareholders.It should be noted that the dissolution judgment made by the court does not necessarily result in the company being liquidated and cancelled.On the contrary,the dissolution judgment can give minority shareholders a favorable bargaining chip and create a way for them to withdraw from the company.This article discusses the necessity of providing judicial dissolution relief for shareholder oppression.Based on an in-depth analysis of the legal application issues regarding shareholder oppression in China’s judicial practice,it further analyzes the causes and performance characteristics of shareholder oppression and the relief mechanism of judicial dissolution system,draws on the experience of the United States,combines with the actual situation in China,and finally puts forward suggestions to improve current judicial dissolution system.This article is divided into four chapters: Chapter I analyzes the dilemma of shareholder oppression in the current legislation and judicial practice in China and paves the way for subsequent discussions.Chapter II discusses the unique relief function of the judicial dissolution system to the shareholder oppression,aiming to reveal that shareholder oppression has the characteristics of diversification and concealment,so the existing shareholder single rights remedy rules cannot address the issue of shareholder oppression,while the judicial dissolution relief can cover the diversified and concealed shareholder oppression phenomenon and provide a bottom-line relief and a favorable exit path for minority shareholders.Chapter III examines the different methods of judicial dissolution to resolve shareholder oppression,the definition of shareholder oppression,and the development of alternative remedies in the US statute law and case law,which provide useful experience for improving the judicial dissolution of shareholder repression in China.Chapter IV puts forward suggestions for the improvement of China’s current judicial dissolution system,advocates the inclusion of shareholder oppression into the judicial dissolution system,and expounds the basic concept of legislative improvement.