Legal Analysis of Company Shareholder Exit Mechanism

Legal Analysis of Company Shareholder Exit Mechanism

As far as China's current corporate law and judicial practice are concerned, the company's shareholder exit methods include equity transfer (including transfer, company repurchase, company capital reduction), company liquidation (including dissolution of the company, bankruptcy liquidation, merger and cancellation, etc.) .

1. Equity transfer.

1. Equity transfer is the most convenient way to withdraw. If the transferee is a shareholder of the company, it can be transferred directly. If it is a third party other than the company's shareholders, more than half of the company's other shareholders are required to agree. Under the same conditions, the company's shareholders also have the right of first refusal. According to judicial experience, as long as someone is willing to act as a transferee, there is no legal barrier to equity transfer.

2. The company repurchases and withdraws the capital contribution from the shareholders. Requiring the company to repurchase shares held by shareholders at a reasonable price needs to meet the requirements of Article 75 of the Company Law. For A, the company does not distribute profits to shareholders for five consecutive years, and the company shall continue to make profits for five years and comply with the provisions of this Law. B. The conditions for the distribution of profits; B. The company merges, separates, and transfers the main assets; C. The expiration of the business period stipulated in the company's articles of association or other dissolution reasons stipulated in the articles of association, and the shareholders' meeting approves the company to survive.

3. The company reduces capital. The company purchased the shareholder's capital with its reduced registered capital to achieve the withdrawal of shareholders. At least two-thirds of the shareholders' consent is required for the company's capital reduction. At the same time, the company's capital reduction procedures are more complicated, and it is necessary to prepare a balance sheet, a list of assets, an announcement, and a creditor to negotiate debt repayment or guarantee matters, etc., and the cycle is relatively long.

Second, dissolve the company.

1. The shareholder requests the people's court to dissolve the company. Article 183 of the "Company Law": "The company has serious difficulties in its operation and management. If it continues to survive, it will cause significant losses to shareholders' interests. If it cannot be resolved through other means, shareholders who hold 10% of the voting rights of all shareholders of the company may request the people's court. Dissolve the company." Therefore, if the shareholders fail to cooperate or disappear, they cannot start the ordinary liquidation procedure; if they fail to meet the bankruptcy conditions and cannot initiate the bankruptcy proceedings, they may consider requesting the people's court to dissolve the company. The Judicial Interpretation II of the Company Law also has detailed provisions on this. The specific requirements are:

(1) The company is unable to hold a shareholders' meeting or a general meeting of shareholders for more than two years, and the company's operation and management are seriously difficult;

(2) When the shareholders vote, they cannot reach the statutory or the proportion stipulated in the company's articles of association. For more than two years, no effective shareholders' meeting or general meeting of shareholders can be made, and the company's operation and management are seriously difficult;

(3) The company's directors have long-term conflicts and cannot be resolved through the shareholders' meeting or the shareholders' meeting. The company's operation and management are seriously difficult;

(4) Other serious difficulties occurred in the operation and management, and the continued existence of the company will result in significant losses to the shareholders' interests.

2. Bankruptcy liquidation exit. Article 2 of the Bankruptcy Law stipulates: "If an enterprise legal person is unable to pay off the debts due and the assets are insufficient to pay off all the debts or the apparent lack of liquidity, the debts shall be cleared in accordance with the provisions of this Law." According to Article 7 of the Bankruptcy Law The main body that can file a bankruptcy application is: the creditor, the debtor, and the person responsible for liquidation according to law.