The so-called corporate deadlock refers to the state in which all decision-making and management mechanisms are paralyzed due to conflicts and contradictions between shareholders or company managers in the process of corporate internal governance, the shareholders' meeting or the board of directors cannot be held because the other party refuses to attend, the proposal of either party is not accepted or recognized by the other party, or even if a meeting can be held, any resolution cannot be passed because of disagreement among all members. The principle of prudence should be followed to resolve the deadlock of the company. Strictly grasp the boundary between judicial power and corporate autonomy judicial power. As long as the company still has hope of survival, the people's court should not easily decide to dissolve the company. As an independent social and economic entity, the company involves the size of social relations, and the social cost of dissolving the company is high. Individual shareholders are not allowed to destroy it at will through judicial means. Therefore, there are two factors that determine the deadlock of the company, both of which are indispensable. First, management needs serious difficulties. The serious difficulty in management is abstract judgment. The general court takes the company's bankruptcy as the specific judgment standard. Second, exhaust other remedies. Article 5 of the Supreme People's Court's Provisions on Several Issues Concerning the Application of the Company Law of People's Republic of China (PRC) (II) stipulates that the people's court should pay attention to mediation when trying the company dissolution lawsuit. If the parties agree through consultation that the company or shareholders will become shareholders, and the company exists in the form of capital reduction, which does not violate the mandatory provisions of laws and administrative regulations, the people's court shall support it.
Legal basis:
Provisions of the Supreme People's Court on the Application of Certain Issues (II) Article 1 Where a shareholder who holds 10% or more of the voting rights of all shareholders of the company alone or in aggregate brings a lawsuit to dissolve the company for one of the following reasons, which is in line with the provisions of Article 183 of the Company Law, the people's court shall accept it: (1) The company has been unable to convene a shareholders' meeting or a shareholders' meeting for more than two years, and the company's operation and management has encountered serious difficulties; (2) Shareholders fail to reach the proportion stipulated by law or the articles of association when voting, and cannot make effective resolutions at the shareholders' meeting or shareholders' meeting for more than two years, resulting in serious difficulties in the operation and management of the company; (3) The directors of the company have long-term conflicts, which cannot be resolved through the shareholders' meeting or shareholders' meeting, resulting in serious difficulties in the company's operation and management; (4) There are other serious difficulties in operation and management, and the continued existence of the company will cause great losses to the interests of shareholders. The people's court will not accept a lawsuit for dissolution of the company filed by shareholders on the grounds that their rights and interests such as the right to know and the right to claim profit distribution have been damaged, or that the company has suffered losses and its property is insufficient to pay off all debts, and that the company's Business License as an Enterprise Legal Person has been revoked and has not been liquidated. Article 182 of the Company Law requires the court to dissolve the company. If serious difficulties occur in the operation and management of the company, and the continued existence will cause great losses to the interests of shareholders, which cannot be solved by other means, shareholders holding more than 10% of all shareholders' voting rights of the company may request the people's court to dissolve the company.