Research On Limited Liability Company Repurchasing Its Own Shares

As for the share repurchase of limited liability company,the Company Law only provides for the repurchase of dissenting shareholders’ equity.There is no systematic arrangement for other situations of stock repurchase,which leads to the frequent contradiction in the application of the law in judicial practice.There are two kinds of positions to support and not to support the share repurchase of limited liability company.This paper thinks that we should support the share repurchase and hold an open attitude to the share repurchase of limited liability company.If it is in the interests of creditors to allow a limited liability company to buy back its shares,the improvement of the system can effectively prevent shareholders from withdrawing their capital contributions,protect the interests of creditors,and give the company flexibility in operation.This paper first discusses the basic problems of stock repurchase of the limited liability companies,mainly from the concept,characteristics,types and legislative status quo,summarizes the four characteristics of limited liability company,and divides the share repurchase into two types: legal and agreed according to the different reasons for the occurrence of the share repurchase.It refers to the occurrence of Company Law that does not make specific provisions on the legal active share repurchase of the company,nor does it regulate the share repurchase stipulated in the articles of association and agreement.Through the summary of the judicial cases of stock repurchase in 2020,it is concluded that there are three phenomena in judicial practice,such as different judgments in the same case,confusion of the limited liability companies and joint stock limited companies,and differences in understanding of capital maintenance principles,which results in different judgment results.Through these three phenomena,it highlights the deficiencies in the Company Law in the share repurchase of the limited liability companies.There are seven deficiencies the systematization of share repurchase of limited liability company,the provisions of the articles of association,the conditions of share repurchase,the price and financial resources of the repurchase,the responsibilities of shareholders and directors and the relief methods of the relevant subjects.The frequent occurrence of various phenomena in the judicial system makes the stock repurchase system of limited liability company need to be improved.From the perspective of legal theory,the equity repurchase of limited liability company is in line with the theory of contract,balance of interests and theory of shareholders’ expectation.From the perspective of capital maintenance,it is unreasonable to oppose the repurchase of shares of the limited liability companies on the basis of capital maintenance principle,and the principle of capital maintenance does not conform to the current situation of the company’s operation,and can not effectively protect the creditor’s rights.The share repurchase of limited liability company is beneficial to the survival of the company and is more in the interest of creditors.Through the discussion of practice and theory,and referring to the experience from abroad,the paper mainly puts forward some suggestions for the deficiency in the stock repurchase of limited liability company.First,in order to solve the problem of the integrity of the equity repurchase system,the paper puts forward to release the restrictions on limited liability company,and forms a complete and systematic system of share repurchase by regulating the decision-making organ and the company’s repurchase notice obligation and the way of disposal of the repurchased shares.Second,in view of the fact that there are a large number of cases of equity repurchase agreement,and the equity repurchase agreement involves company law and contract rules,the determination of the effectiveness of equity repurchase agreement should be considered from three dimensions: contract rules,voting of shareholders’ meeting,and the company’s operating conditions,so as to solve the problem of fuzzy determination standard of equity repurchase agreement.Third,the legislation allows the articles of association to stipulate the situation of share repurchase,so as to resolve the embarrassment of judicial walking before legislation.Fourth,the company should be restricted by the remaining assets when repurchase the equity.The repurchase shares should be restricted by the capital contribution,quantity and holding period,so as to specify the conditions of the repurchase of shares to ensure the realization of creditor’s rights.Fifth,the price of share repurchase shall be evaluated by a qualified third party in principle;The court shall decide the price of the agreed equity,so as to ensure the fairness of the repurchase price.For the problem of financial sources of share repurchase,this paper holds that there is no need for regulation.Sixth,the responsibilities of directors in the share repurchase are discussed in different situations.Shareholders should be restricted by the share repurchase agreement in the share repurchase,but they should pay attention not to transfer the obligation of share repurchase to shareholders,so as to avoid the infringement of the interests of the company by shareholders and directors.Seventh,give the company and creditors cancellation right,so as to ensure the interests of the company and creditors.In case of the damage to the interests of the shareholders of the repurchased shares,the shareholders can recover the interests of the shareholders within a certain period of time and protect their own interests.