A, a limited liability company and a joint stock limited company are companies, with some characteristics of * * * company, the difference between the two is mainly manifested in:
(1) is a joint venture or a joint venture. Limited liability company is produced on the basis of absorbing the advantages of unlimited company and joint stock limited company. On the one hand, its shareholders are limited to the amount of capital contribution, enjoy rights and bear responsibilities, which is different from unlimited companies. On the other hand, because of its non-public offering, shareholders are closely related and have certain humanity, so it is different from a joint stock limited company. A company limited by shares is a complete joint venture. Its own composition and credit basis is the company's capital, which has nothing to do with the personal nature (reputation, status and prestige) of shareholders, and shareholders are not allowed to invest in personal credit and services. This complete capital combination is different from unlimited companies and limited liability companies.
(2) Whether the shares are equal. All the assets of a limited liability company do not need to be divided into equal shares, and shareholders only need to contribute according to the proportion of capital contribution determined in the agreement, and enjoy rights and assume obligations according to this proportion. Generally speaking, a joint stock limited company must convert its shares into equal shares, which is different from a limited liability company. This feature also ensures the universality, openness and equality of the joint stock limited company.
(3) Number of shareholders. Limited liability company should not have too many shareholders because of its certain humanity and trust among shareholders. China's company law stipulates 2-50 people. There are upper and lower limits for the number of shareholders in a limited liability company, while there is only a lower limit for a joint stock limited company, that is, only the minimum number of promoters is stipulated, but only the minimum quorum of shareholders is stipulated, but the upper limit of shareholders is not stipulated. This makes the shareholders of a joint stock limited company have the greatest universality and considerable uncertainty.
(4) Whether the public offering is open or closed. A limited liability company can only offer shares within the scope of investors, and the company may not offer shares to the public. The investment certificate issued by the company for the investor is also different from the stock, and may not be circulated and transferred in the market. The closed nature of raised funds determines that the financial accounting of a limited liability company does not need to be disclosed to the public. Different from the closed nature of limited liability companies, the way of public fund-raising by joint stock limited companies is open. No matter whether it is initiated or raised, it must be made public or raise funds within a certain range. Public offering and financial operation are also open.
(5) Freedom of share transfer. The capital contribution certificate of a limited liability company shall not be transferred or circulated. The capital contribution of shareholders can be transferred between shareholders or to people other than shareholders; However, due to human nature, it is decided that its transfer should be strictly restricted. According to the Company Law, the transfer must be approved by more than half of all shareholders. Under the same conditions, other shareholders have the preemptive right. The shares of a joint stock limited company take the form of shares. Generally speaking, this kind of negotiable securities, which represents certain value in economy and embodies certain qualifications and rights and obligations in law, has no specific connection with the holder himself. If the law allows it to be freely transferred, it will inevitably strengthen the activity and competitiveness of the joint stock limited company, and it will also inevitably lead to its blindness and speculation.
(6) establish the principle of combining leniency with severity. Because of its economic status and the characteristics of its organization and activities, the state must manage and supervise it by legal means, set a series of legal conditions for its establishment and perform strict legal procedures. In China, the establishment of a joint stock limited company must be approved by the relevant departments. Limited liability companies are mostly small and medium-sized enterprises, and because of their closeness and humanization, the legal requirements are not as strict as those of joint-stock companies, and some of them can be simplified and have certain arbitrary choices.
Second, the meaning, * * * the similarities and differences between a limited liability company and a joint stock limited company
(a) the meaning of limited liability company and joint stock limited company
1. The meaning of limited liability company: the so-called limited liability company, also known as limited company, is called a closed company or a private company in Britain and America. It refers to an enterprise legal person established in accordance with the conditions stipulated by law, which is jointly funded by two or more shareholders and bears limited liability for the company's operation with the subscribed capital contribution. The company is responsible for its debts with all its assets.
2. The meaning of a joint stock limited company: A joint stock limited company is also called a joint stock company. Britain and the United States are called public companies or public companies, which means that the registered capital consists of equal shares, and shareholders raise capital by issuing shares. China's "Company Law" stipulates: "A joint stock limited company refers to an enterprise legal person whose capital is divided into equal shares, and the shareholders are liable to the company to the extent of their shares, and the company is liable to the company's debts with all its assets."
(2) Similarities between limited liability companies and joint stock limited companies.
The basic feature of the company system is that many shareholders jointly contribute their shares to form a company system. As the joint-stock company is a typical joint venture company, it pays attention to the stability of capital in order to maintain external credit and realize dividend benefits. Therefore, the similarities between a limited liability company and a joint stock limited company are as follows:
1. Implemented the Three Principles of Capital. The first is the principle of capital determination. When a company is established, the total fixed capital of the company must be determined in the articles of association and fully subscribed. Even if the capital is increased, it must be subscribed in full. The second is the principle of capital maintenance. During the existence of a company, it is necessary to maintain the property equivalent to its capital in order to prevent the capital from being greatly reduced and ensure the interests of creditors. At the same time, it also prevents shareholders from demanding too much profit distribution and ensures the normal operation of the company. The third is the "principle of constant capital". Once the company's capital is determined, it shall not be changed at will except in strict legal procedures, otherwise it will harm the interests of shareholders and creditors. As shareholders, they have the right and freedom to transfer shares, but they are not allowed to withdraw their share capital. The company's capital increase or capital decrease must be carried out in strict accordance with legal conditions and procedures.
2. The principle of "separation of two powers" was implemented. The separation of corporate property rights and shareholders' capital contribution property rights is as follows: firstly, according to the provisions of China's Company Law, "after the company is registered, shareholders may not withdraw their capital contribution and no longer directly control and dominate this part of the property"; Second, "separation of powers" is not a mutual denial between the two. Because once the shareholder's property is invested in the company, it constitutes the company's legal person property, and the ownership of the shareholder's property is transformed into equity in the company. However, shareholders will not lose their investment property rights, they still enjoy the owner's right to benefit from assets, the right to income, the right to vote on decentralization and major issues, and the right to choose managers. At the same time, they can freely transfer their shares according to law, and enjoy the final ownership of the remaining property when the company terminates.
3. Implement the principle of "limited liability". A limited liability company shall bear limited liability to the company to the extent of its capital contribution, and the company shall bear limited liability to its debts with all its assets. In a joint stock limited company, the shareholders are limited to the shares they hold, and the company is limited to the debts of all its assets to the company.
4. All companies have legal personality. In accordance with the provisions of the law or the articles of association of the enterprise, those who exercise their functions and powers on behalf of the enterprise as a legal person are called legal representatives. An enterprise as a legal person refers to an economic entity that has obtained legal person status, operates independently and is responsible for its own profits and losses. Legal person is a social organization with civil rights and subjects.
(C) the difference between a limited liability company and a joint stock limited company
As a legal person and market subject, joint-stock companies bear civil liability for their production and business activities. The property right relationship of a joint-stock company determines the interests of shareholders, risks and the operating mechanism of the company's own profits and losses. Therefore, the main difference between a limited liability company and a joint stock limited company lies in:
1. The number of shareholders is different. The company laws of most countries in the world stipulate that a limited liability company has at least two shareholders and at most 5O shareholders (there are also provisions for 3O shareholders). There is no need to set up a shareholders' meeting because there are few shareholders. However, there is no limit to the number of shareholders of a joint stock limited company, and some large companies have hundreds of thousands or even millions of people. Different from a limited liability company, it is necessary to set up a general meeting of shareholders, which is the highest authority of the company.
2. The registered capital is different. Limited liability companies require less minimum capital, and the standard of registered capital varies according to the nature and scope of production and operation. China's company law stipulates that the registered capital shall not be less than the following minimum:
(1) 500,000 yuan for companies mainly engaged in production and operation;
(2) 500,000 yuan for companies mainly engaged in commercial wholesale;
(3) 300,000 yuan for companies mainly engaged in commercial retail;
(4) 654,380,000 yuan for science and technology development and consulting service companies; Where the minimum registered capital of a limited liability company in a specific industry is higher than the above provisions, it shall be separately stipulated by the State Council.
The minimum registered capital of a company limited by shares stipulated in China's Company Law is100000 yuan, and the registered capital of some companies limited by shares allowed by other laws or administrative regulations can be higher than100000 yuan, for example, the total share capital of a listed company is not less than 50 million yuan.
3. Share capital is divided in different ways. The shares of a limited liability company may not be divided into equal shares, and its capital shall be divided according to the capital contribution subscribed by shareholders. The shares of a joint stock limited company must be equal, its share capital is divided into smaller shares, and the amount of each share is equal.
4. Sponsors raise funds in different ways. Limited liability companies can only raise funds from sponsors, but not from the public, and their shares cannot be publicly issued, let alone listed and traded, while joint stock limited companies can raise funds from the society through sponsorship or fund-raising, and their shares can be publicly issued and traded.
5. The conditions of equity transfer are different. Shareholders of a limited liability company may freely transfer all or part of their share capital according to law; When a shareholder transfers its share capital to a person other than the company according to law, it can only be implemented with the consent of more than half of the shareholders; Other shareholders of the company have the preemptive right under the condition of equal transfer of share capital. Shares held by shareholders of a joint stock limited company can be traded and transferred, but they cannot be withdrawn.
6. The authority of the company organization is different. A limited liability company has a small number of shareholders and a simple organization. It can only set up a board of directors, not a shareholders' meeting and a board of supervisors. Therefore, the board of directors is often held by individual shareholders, which has greater flexibility. The establishment procedure and organization of a joint stock limited company are complicated, and the number of shareholders is relatively large and scattered. Therefore, the authority of the shareholders' meeting is restricted to a certain extent, and the authority of the board of directors is concentrated.
7. The forms of proof of equity are different. The equity certificate of a limited liability company is the capital contribution certificate issued by the company; The stock certificate of a joint stock limited company is the stock issued by the company.
8. Different degrees of financial disclosure. The financial status of a limited liability company only needs to be handed over to shareholders within the time limit stipulated in the company's articles of association, and there is no need to announce and consult, and the financial status is relatively confidential; Limited by Share Ltd is difficult to operate and keep secret because of its complicated establishment and the need to publish its financial status regularly.
Compare the differences and connections between a limited liability company and a joint stock limited company.
Keywords: transaction cost limited liability company
I introduction and related explanations
As we know, China's contemporary economy is developing rapidly, with active economic activities and complex economic organization. Various corporate systems inevitably involve economic and legal factors. The comparative analysis of two typical corporate forms and their governance structures, "limited liability company" and "joint stock limited company", is based on Coase's "transaction cost" theory, which is a research angle of law and economics. This is because I came into contact with some knowledge of legal economics some time ago, and I want to try this new thinking angle from a purely legal point of view. Moreover, I think that within the corporate governance structure, such as studying "how to realize the balance and restriction of rights and obligations between shareholders and the company or shareholders", these problems can only be met by analyzing the requirements of real economic activities. If we only analyze them from the perspective of the traditional pure law-right conceptual framework, it is really "fair and reasonable and difficult to implement" "Transaction cost theory" can provide a bridge here. Of course, the main object of analysis and comparison should be the specific institutional details of the two companies. However, due to my limited theoretical ability, I can't conduct in-depth and detailed research, so this paper only makes a rough comparative analysis of the above two forms of enterprises.
It should be noted that this paper only selects limited liability companies in the usual sense, excluding wholly state-owned limited liability companies and wholly foreign-owned limited liability companies. Because from the perspective of equal market dominant position, they deserve almost the same treatment. For example, under the trend of economic globalization, the treatment of wholly foreign-owned enterprises should be in line with international practices, which obviously involves economic security issues in national economic policies.
Second, the relationship between the two forms of enterprise
Coase mentioned in "The Nature of Enterprise" that the enterprise is an important subject of the market economy because in the free market transaction, the cost of people seeking exchange is greater than the internal management cost of the enterprise, so the enterprise is produced. Posner made some economic analysis on the emergence of this special enterprise form, which he thought was to reduce the discomfort of the partnership form to the market requirements. [1] Therefore, it can be said that the emergence of limited liability companies and joint stock limited companies is precisely due to the requirement of reducing transaction costs in market competition.
(A) "separation of the two powers"
Two ownership refers to the ownership of capital contribution and the ownership of company assets. Article 3 of the Company Law stipulates that a company is an enterprise legal person with independent legal person property and legal person property rights. Of course, the ownership of shareholders' capital contribution can be realized through Article 4, which stipulates that "the shareholders of the company enjoy the right to return on assets, participate in major decision-making and choose managers".
From the perspective of transaction cost, in order to promote market transactions and reduce transaction costs, companies must have their own independent legal personality. Because, in market transactions, those enterprises that reduce market transaction costs can offer prices lower than the average market price, and counterparties are bound to be more willing to trade with these enterprises in order to maximize their own interests. However, in order to reduce the opportunistic risks brought by these enterprises that can offer the lowest prices, it is necessary to know more about their operations or other situations. However, in a complex market, such information collection needs to pay huge money and time costs. Therefore, an enterprise with its own independent personality and stable assets must ensure the transaction safety of its counterparties, that is, the separation of the ownership of the company (no matter what kind of company) from the ownership of the investors is the requirement of reducing transaction costs in market competition.
"limited liability" principle
Judging from the history of limited liability, limited liability first appeared in joint-stock companies. "Because the company's shareholders must bear unlimited responsibility for the company's business risks, investors can't rest assured to invest. Since the establishment of the limited liability system, joint-stock companies have developed in the direction of popularization, and the shares of the company have been freely circulated and transferred in principle, which has enabled joint-stock companies to raise a large amount of capital in a period of time, thus greatly promoting modern mass production. " [2]
To discuss the emergence of limited liability companies, we should mention the fact that "before, Germany had regulations on joint-stock companies and joint-stock companies, and the joint-stock company law was reformed in 1883. The purpose of this law is to establish an enterprise form between large joint-stock companies and small partnerships for those small and medium-sized enterprises. That is to say, a limited liability company should not only absorb the advantages of the limited liability system of joint-stock companies, but also adopt the characteristics that partnership investors personally participate in enterprise management. " [3]
From the perspective of transaction cost, the principle of limited liability can reduce the risks that shareholders bear on the company's operation, make shareholders no longer limited to a few businessmen who are familiar with each other and have special knowledge, expand the scope of shareholders, stimulate investors' investment enthusiasm, and gather a large number of idle funds in society, thus achieving the effect of optimizing resource allocation. Corresponding to the transaction cost of seeking trading opportunities in the market, it is also necessary to carry out cost management within the enterprise. The emergence of limited liability companies just shows that some markets need a "joint venture" company to reduce their management costs, thus reducing the total cost of market transactions.
Third, the difference between the two enterprise forms.
(A) the difference between investment models
Generally speaking, the two forms of corporate investment mainly have the following differences:
1. The registered capital requirements are different; The minimum registered capital of a limited liability company is RMB 30,000, and that of a joint stock limited company is RMB 5 million. [4]
2. The number of shareholders is different; A limited liability company shall be established by capital contribution of shareholders with less than 50 persons. The establishment of a joint stock limited company shall have two or more promoters, of whom more than half of the promoters shall have their domicile in China. Moreover, a joint stock limited company can infinitely increase the number of shareholders through equity transfer and new share issuance, and is called a "popular company".
3. The sponsors raise funds in different ways; For the two establishment modes, the limited liability company can only adopt the former, and the joint stock limited company can choose one.
From points 1 and 2, it can be seen that the difference of company size is a key that cannot be ignored. It can be said that the size of the company is the dividing point between the two forms of companies to give full play to their respective advantages and characteristics, which is determined by the "transaction cost". Modern mass production puts forward higher requirements for the company scale, and the requirement for the company scale is the requirement for the asset scale, which inevitably requires that the investment of a joint stock limited company is far greater than that of a limited liability company, so the number of investors will inevitably increase accordingly. At the same time, its establishment procedure is bound to be much stricter than that of a limited liability company. This has been explained above, in order to reduce the investment risk of investors who may not know each other. The third point refers to the different ways of raising funds when the company is established. From the above, we can know that the limited liability company is produced by absorbing the advantages of partnership and joint stock limited company, so the exciting and flexible establishment can reduce the cost of setting up a company. In addition, other differences in the establishment of the two corporate forms not mentioned in this paper are also aimed at reducing transaction costs. These measures to reduce transaction costs are more suitable for the requirements of fierce market competition. [5]
Textbooks briefly say that limited liability companies and joint-stock companies are suitable for small and medium-sized enterprises and large enterprises or enterprise groups respectively. Conversely, we can see that the market competition is fierce, and only the latter has the institutional nature of expanding the scale of enterprises. However, in Coase's real economic activities where transaction cost is positive, the company form of joint-stock company can't expand the company scale unscrupulously, because the management cost also increases with the expansion of the company scale, and the internal governance cost of the company is equal to the market transaction cost, which is the boundary of the largest enterprise. On the other hand, analyzing the limited liability company, under certain circumstances, compared with the joint stock limited company, the limited liability company has the characteristics of lower management cost.
(B) differences in corporate governance structure [6]
Under the requirement of reducing transaction costs, investors' security considerations for capital contribution and requirements for management costs have led to various corporate governance structures. "Socialized mass production requires modern enterprises to separate the shareholders' rights of investors from the corporate ownership of the company, so as to promote corporate management to meet the needs of specialization and improve the efficiency of corporate asset management. The limited responsibility system reduces the cost of this separation of functions and professional management in many ways. " [7]
1. Company organizations have different permissions; The organizational structure of a limited liability company is relatively simple, and only the board of directors can be set up, without the shareholders' meeting and the board of supervisors. The board of directors is often held by individual shareholders, which is more flexible. The authority of the shareholders' meeting of a joint stock limited company is limited to a certain extent, because the scale of the company has expanded, and managers with professional knowledge are needed for special management. The company's property ownership and management rights are relatively separated, and the actual operation of the company is in the hands of the company's asset managers. According to the transaction cost theory, reducing the cost of corporate governance can increase its market competitiveness, but pursuing economies of scale can also increase its market competitiveness. This shows that under the requirements of market competition, limited liability companies and joint stock limited companies play their own characteristics to reduce the total transaction costs.
2. Different degrees of financial disclosure; The financial status of a limited liability company only needs to be handed over to shareholders within the time limit stipulated in the company's articles of association, and there is no need for announcement and inspection. The financial status is relatively confidential, so there is a saying that the company is closed; Limited by Share Ltd, because its investors are scattered, investors can only know the company's operating conditions through its financial statements, so it is also called an open company. However, it is difficult to require the company to publish its financial status regularly, which is also one of the management costs brought by the company's expansion. In fact, although the management cost of the company has increased, it may be reduced for the whole transaction cost. Because the investors of a joint-stock limited liability company may know little about the company, in real life, in order to ensure the safety of funds, it will cost a lot of money, time and other costs to obtain information about the company's operating conditions.
3. The conditions of equity transfer are different; Chapter III of the Company Law makes detailed provisions on the equity transfer of a limited liability company, and shareholders can freely transfer all or part of their share capital according to law. When a shareholder transfers its share capital to a person other than the company according to law, it can only be implemented with the consent of more than half of the shareholders; Other shareholders of the company have the preemptive right under the condition of equal transfer of share capital. However, in view of the problem that "big shareholders bully small shareholders" in China, small shareholders can't quit the company. Article 75 stipulates that shareholders of a limited liability company can request the company to buy their shares at a reasonable price. Shareholders of a joint stock limited company can basically trade and transfer their shares freely, but they cannot withdraw their shares, except that the promoters and internal personnel of the company, such as directors, supervisors and senior managers, restrict the transfer of shares. It can be seen that the limited liability company has very strict requirements for the transfer of shareholders' equity, while the limited liability company has obviously lower requirements for this. From the perspective of transaction cost, there is a strong personal credit relationship between shareholders of a limited liability company, that is, the color of "human cooperation", so it is necessary to prevent individual shareholders from violating this "obligation" after the company is established. It should be noted that legal provisions increase the cost of opportunism to some extent, but the cost input stipulated by this law will lead to a greater reduction in transaction costs, because potential investors with lower capital contribution ability can set up companies with others at ease. I think we should properly handle the situation of "one share dominates" and "big shareholders bully small shareholders" in domestic limited companies, and form more potential investors with low capital contribution ability, so as to curb the above situation and form a more favorable situation for shareholders. Otherwise, it can only be a vicious circle. A company limited by shares is different. The transfer of shares by its shareholders will not have a great impact on the company, and even reduce the time and other costs caused by the restrictions of potential investors on the transfer of their capital contribution, thus attracting more potential investors.
4. Different requirements for the increase or decrease of shares; Article 35 of the Company Law stipulates that when a limited liability company increases its capital, in principle, shareholders have the priority to subscribe for the capital contribution in proportion to the paid-in capital contribution. Article 134 stipulates that the issuance of new shares by a joint stock limited company shall be decided by the shareholders' meeting or the board of directors in accordance with the articles of association. With regard to capital reduction, Article 178 stipulates that when a company needs to reduce its registered capital, it must prepare a balance sheet and a list of assets. The company shall notify the creditors within ten days from the date of making the resolution to reduce the registered capital, and make an announcement in the newspaper within thirty days. Creditors have the right to require the company to pay off debts or provide corresponding guarantees within 30 days from the date of receiving the notice, or within 45 days from the date of announcement if they have not received the notice. The registered capital of the company after capital reduction shall not be lower than the statutory minimum. As can be seen from the above, the protection of the original shareholders of a limited liability company plays an important role in its corporate governance, as does a joint stock limited company. Its capital increase and capital decrease give priority to the interests of minority shareholders, with the same purpose of attracting more potential investors. As for these two corporate forms, the same concern is the protection of corporate creditors. Posner mentioned that due to limited liability, the company pays higher interest to creditors, so that creditors can fully compensate the risks brought by the company's default. [8] Then, if the company reduces the risks brought by registered capital, it will inevitably produce the same risk compensation, that is, the increase of transaction costs. Then, in order to protect the transaction security and reduce the transaction risk of counterparties or other possible creditors, that is, reduce the transaction cost of the company.
Four. Conclusion and others
Through the above rough comparison, it is better to say that the limited liability company meets the needs of large enterprises and enterprise groups than the small and medium-sized enterprises. It is better to say that the requirement of reducing transaction costs in market competition determines two different corporate forms, so that when we further examine the market demand, we can further improve these two corporate governance structures.
I think it can be said that domestic limited companies and joint-stock limited liability companies in China are generally in line with the international trend, but there are many different situations in China, so we need to study and try various solutions according to these actual situations. As for limited liability companies and joint stock limited companies, we should not only strengthen their respective advantages, but also strengthen their inevitable congenital defects.