As stipulated in the Company Law in China, shareholders’ preemptive right means that the shareholders of a limited company shall have priority in the purchase of equity under the same conditions, which protects the interests of other shareholders and third parties and the attribute of the cooperation among shareholders in a limited company. The importance of this right has also been fully reflected in judicial practice of which the interpretative approach suitable for “equal conditions” judgment is worth exploring. Based on the above background, this paper first raises problems when determining “equal conditions” in the shareholders’ preemptive right of a limited company in China. Second, it discusses “equal conditions”, “number”, “share price”, “method of transaction”, and “time limit” from perspectives of textual and teleological interpretations. Third, it explores the most reasonable interpretative approach of “equal conditions” and its elements suitable for judgment. It is hoped that better applying confirmation rules of “equal conditions” in shareholders’ preemptive right of a limited company in practice to solve practical problems in the process of equity transfer in a limited liability company and protect the vested interests of remaining shareholders except for transferring shareholders, thereby maximizing the value gained through equity transfer by transferring shareholders.

Xinyi Dong. Interpretation of “Equal Conditions” in the Preemptive Shareholders' Right in a Limited Company. International Journal of Frontiers in Sociology (2023), Vol. 5, Issue 10: 6-10. https://doi.org/10.25236/IJFS.2023.051002.

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