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Cause analysis of corporate deadlock

Author: WenYuJuan From: www.yourpaper.net Posted: 2010-01-07 07:13:08 Read:
[Abstract] corporate deadlock company operation mechanism of failure, and even paralysis of the fact that the state of the company, its shareholders and creditors have very harmful. The corporate deadlock analysis is the reason we break the deadlock on the premise deadlock causes of general, our particularity the reasons, and the reasons for capital majority, statutory capital system are leading to the impasse generated.
[Keywords] company the deadlock general reasons particularity the reasons
Company stalemate due a disagreement or dispute between shareholders, directors, or between shareholders and directors, each unwilling to compromise in the stalemate situation, can not lead to a confrontation of shareholders, board of directors and other authorities to make decisions in accordance with legal procedures, can not implement or even to make decisions, so that the company operation mechanism failed, the fact that the state and even paralysis.
Corporate deadlock against each other in the deadlock between the main company operating mechanism of a serious malfunction, persistence of deadlock, deadlock morphological complexity, and difficult predictability characteristics. And its harmfulness is very large, not only be harmful to the interests of the company, shareholders, and may be harmful to the interests of creditors, employees of the company and other stakeholders.
Analyze the reasons is the premise and necessary for us to solve the problem of accurately find the problem occurs because only we can solve the problem effectively. Similarly, we have to solve the deadlock problem in the company's practice is necessary to carry out in-depth and accurate profiling of its reasons. Cause companies deadlock for many reasons, from different perspectives can be grouped into different categories: objectivity reasons and subjective reasons, external reasons and internal reasons, institutional reasons and practical reasons, shallow reason and deep seated reasons, and so on. Here I reason more comprehensive cross-sectional new analysis from the general reason of the particularity of the generating company impasse reasons.

A general corporate deadlock

1. Majority Rule
Capital Majority, also known as the majority of shares, this principle is generally adopted the principles of the States in the Companies Act and the Articles of Association of the Company, to hold capital to determine the number voting rights size, and its essence is that the company implemented the minority is subordinate to the majority of the democratic system, so that the company in accordance with the the shareholding majority shareholder views and not the views of all shareholders to make a business judgment, the mean shareholders holding a majority of shares as the company's mean. "Reflects a reasonable relationship to the burden of how much of the investment risk and corporate affairs management rights arrangement" Majority Rule conducive investment enthusiasm to encourage shareholders to determine the proportional relationship between of shareholder investment risk and return on investment, and rationality. However, its abuse is likely to lead to a deadlock in the formation of the company. Resolution requires the consent of at least half of the voting rights or number in accordance with the Companies Act and the Articles of Association of the Company, the shareholders 'meeting, the Board adopted a resolution to amend the company's articles of association for the shareholders' meeting, the increase or decrease of the registered capital, merger, division, dissolution or change by the company in the form of resolutions, must be approved by shareholders representing more than two-thirds of the voting rights. For a resolution of the board of directors, some of the articles of association and even provides a higher voting majority. When the conflict between the shareholders or directors, any party can form a majority voting requirements of the provisions of the Companies Act or the Articles of Association, the resolution will not be able to form and lead the company into a deadlock state can not operate normally. Cite one of the most simple and typical example, the composition of the formation of the company, the shareholders' meeting by the two fifty-fifty shares of the shareholders need the consensus of the shareholders of both companies, when they are on the Board candidates or other significant matters can not reach consensus, the capital under majority rule voting mechanism is dysfunctional, to lead the company stalled state.

2. Statutory capital system
The statutory capital system to the deadlock in the formation of the company to provide a system of soil. The traditional system of corporate capital is divided into a system of statutory capital and authorized capital system, statutory capital system of civil law countries, its significance lies in the company to maintain its capital adequacy and unchanged to maintain the company's external credit. Our statutory capital system, and pursue statutory capital system capital, capital maintenance and capital constant capital three principles. In the authorized capital of the system, the company has been established capital has actually been frozen, non-strict and complicated procedures, the shareholders can not arbitrarily withdraw their capital contributions. Allows the company to shareholders through capital reduction difficult contradictions or require the company to purchase his shares to exit the company to resolve contradictions, contrary exacerbate the contradictions and conflicts, leading to the formation of deadlock.

3. Closed closed and people together
The closed company has closed nature and characteristics of people together. Restrictions of closed closed based on the transfer of shares of the company to maintain the law closed company shareholders to transfer their shares under the same conditions, the other shareholders of the company have the right of first refusal; closed internal often prohibit shareholders of the Articles of Association in the form to the transfer of shares to outside people. Outside the company because there is no public a wide range of markets, the closure of the company's shareholders to transfer their ownership in reality is limited, the difficult liquidity as the shares of public companies. In such a case, if a dispute between shareholders on the company's major resolutions at loggerheads, it will make the company's confrontation not quickly solve the smooth transfer of shares ways, leading to the company's stalled state ; people together is an important attribute of the closure of the company's emphasis on mutual trust and friendly cooperation between the shareholders is the basis of the establishment and benign operation. Between shareholders in the company's operational process is inevitable there will be friction and suspicion, once shareholders friction between damage people together, often resulting in the failure of the company's operations. The event of a serious failure of the operation, but not be able to promptly resolve within the company, it will lead to the emergence of the corporate deadlock. Second, the resulting company deadlock formation of our particularity the reasons

A lack of the Articles of Association of the impasse precautionary requirements
In common law countries, the Articles of Association attaches great importance to the relevant provisions of the corporate deadlock, formulated in the articles of association of the company to plan ahead as much as possible to avoid and deal with the corporate deadlock. While the opposite is true in the practice of our company, shareholders in the formulation of the articles of association, mostly modeled on the provisions and plagiarism law, company registration authority prepared set of articles of format, issued by the relevant authorities in the Prospectus Directive or other company's articles of association, showing a lack of personality The same tendency. Our future operating Conflict Resolution practice prescribed in the articles of association of the company almost no lack of operating conflicts should analyze and foresee the future, the lack of prevention and solutions company deadlock, there is no possible trouble, thus The effective prevention deadlock, deadlock helpless.

Shareholders quality reality
In the reality of the quality of our country, shareholders can not be optimistic. Relatively poor socio-economic and cultural conditions and the constraints of the traditional concept under the influence of the quality of the shareholders as a whole is not high, and uneven. The company management process, often because of differences in management philosophy, management ability, among themselves prone to contradictions and conflicts, leading the company stalled.

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