Point of View... In the event that the company's debt is not paid off, the shareholder is responsible for the transfer of equity before the period of capital contribution.
Published:
2024-04-29
The newly revised "Company Law" in 2023 clearly stipulates this issue. This article will sort out the relevant regulations on the transfer of equity by shareholders who have not reached the investment period, and combine the views of the courts in dealing with this kind of cases in practice. After the implementation of the "Company Law", shareholders who transfer their equity before the investment period will bear what responsibilities when the company's debts are not paid off.
Since the Company Law, as amended in 2013, established the registered capital contribution system, the enjoyment of the benefits of the capital contribution period has become the legitimate rights and interests of shareholders by law. The transfer of shares by shareholders before the expiration of the capital contribution period is not prohibited by law, and in practice it often happens that the creditors of the company, when they are not paid off, list the former shareholders of the company as co-defendants or add to the executor, while the former shareholders will raise a defense on the grounds that they enjoy the benefits of the capital contribution period. There is a certain conflict between the protection of the interests of shareholders and the protection of the interests of the company's creditors, and the decisions made by various courts in the face of this situation are also different. The newly revised "Company Law" in 2023 clearly stipulates this issue. This article will sort out the relevant regulations on the transfer of equity by shareholders who have not reached the investment period, and combine the views of the courts in dealing with this kind of cases in practice. After the implementation of the "Company Law", shareholders who transfer their equity before the investment period will bear what responsibilities when the company's debts are not paid off.
Relevant provisions of existing 1. law
From the content of the above-mentioned relevant laws and regulations, the creditors of the company may request the shareholders who "fail to fulfill or fail to fully fulfill the obligation of capital contribution, I .e. transfer the equity" to bear supplementary liability or joint and several liability for the debts of the company within the scope of the unfunded capital contribution. However, in the case of shareholders enjoying the interests of the term, it is difficult to determine that the shareholders of the transfer of shares belong to the situation of "failure to fulfill the obligation of capital contribution.
The View of Judgment in 2. Judicial Practice
Shareholders who transfer their shares before the (I)'s capital contribution period do not fall under the statutory circumstances of "failure to fulfill or fully fulfill their capital contribution obligations" and are not subject to supplementary liability for the company's debts.
This view is the view of most courts in judicial practice, the specific reason is that under the capital contribution system, shareholders enjoy the interests of the term, there is no actual obligation to contribute before the expiration of the period of capital contribution, and the transfer of equity before the expiration of the period of capital contribution does not belong to the obligation of capital contribution. Unless the shareholder maliciously evades the debt or makes zero contribution in the case of low registered capital and sets an ultra-long period of contribution.
For example, in the dispute over the liability of shareholders such as Wang Liren and Mao Yafen for harming the interests of the company's creditors [(2023) Zhejiang No. 0281 Minchu No. 1932], the court held that if creditors are allowed to recover from the former shareholders after many transfers of the company's shares, the accumulated liability of the current shareholders and the former shareholders may be much higher than the registered capital of the company. In the case of Zhu mou 1 and sun mou 1, Zhang mou 1 and sun mou 2 shareholders who damage the interests of the company's creditors [(2023) Shanghai 0117 Minchu No. 21463], the court held that the defendants Zhang mou 1 and sun mou 2 are not shareholders of the company now, and their capital contribution period has not expired at the time of equity transfer. The transfer of equity by a shareholder before the period of capital contribution does not constitute a "transfer of equity without performance or full performance of capital contribution obligations", except for the transfer of shareholders who have maliciously extended the period of capital contribution and maliciously evaded debts.
And how to determine the shareholders to transfer equity is for malicious debt evasion, the court usually believes that the need to combine the transfer of equity time, the transfer of the company's operating conditions, the formation of the company's debt, the transferee's ability to contribute comprehensive judgment, but in judicial practice, it is difficult for creditors to prove that the transfer of equity shareholders have malicious debt evasion. Taking the time when the company's debts were formed as an example, some courts held that even if the creditor's rights occurred during the period when the original shareholders held shares, the creditor's rights and debts between the company and the creditors had not yet been finally confirmed by the effective judgment, and the company's operation could not be determined to be abnormal. The transfer of shares by shareholders was malicious debt evasion, such as (2022) Hu 01 Min Zhong No. 971. Some courts have also held that the shareholders who transfer the shares should be aware of the company's assets, liabilities and solvency, and that it is difficult to consider the shareholders who transfer the shares to be in good faith even without a final judgment after the court's first instance judgment finds that the company has assumed the debt. Such as (2021) Beijing 03 Min Zhong No. 6203.
Even if the case reaches the execution stage, the creditor applies for adding the original shareholder as the person to be executed in accordance with Article 19 of the Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Execution. In the case of debt evasion, it is difficult to obtain the support of the court. Most courts held that article 19 of the provision applied only to shareholders who had already made their capital contributions and did not include shareholders who had not made their capital contributions, and therefore could not order additional former shareholders to be executed. Such as (2022) Lu 01 min zhong no 1342.
(II), if the creditor's rights are formed during the period of the former shareholder's shareholding, the company has faced or actually gone bankrupt, and the transferee of the equity has not fulfilled the obligation of capital contribution, the transferring shareholder shall be liable for the company's debts.
The author thinks that the premise of this view is that there is sufficient evidence that the company has the cause of bankruptcy and the transferee shareholder has not made the capital contribution on time, at this time, if the creditor's right is formed at the time of the former shareholder's shareholding, the former shareholder should be liable within the scope of its capital contribution. For example, in the case of Xu Qinqin, Changzhou Tongshun Machinery Manufacturing Co., Ltd. (hereinafter referred to as Tongshun Company) and Zhou Jieru's dispute over the processing contract with Qingdao Zhuxin Machinery Co., Ltd. (hereinafter referred to as Zhuxin Company) [(2020) Lu 02 Min Zhong No. 12403], the court held that the debt involved in the contract occurred when the appellant's former shareholders held the shares. The former shareholder enjoys the benefits brought about by the contract of sale and purchase in question for the target company, and at the time of the transfer of the shares in question, he shall be aware of the debts owed by the company; if the transferee cancels the company and fails to fulfill the obligation of capital contribution, the former shareholder shall bear joint and several liability for the debts of the company within the scope of capital contribution.
3. the new Company Law stipulates that if the transferee fails to make the full capital contribution on time, the transferring shareholder shall bear supplementary liability for the capital contribution that the transferee fails to make on time.
Article 88, paragraph 1, of the new Company Law stipulates that if a shareholder transfers an equity that has been paid but has not been paid for the period of capital contribution, the transferee shall bear the obligation to pay the capital contribution; if the transferee fails to pay the capital contribution in full and on time, the transferor shall bear supplementary liability for the capital contribution that the transferee fails to pay on time. The provision does not distinguish between the normal transfer of shares and the malicious transfer of shares, whether it can be understood that as long as the shareholders transfer the shares of the outstanding capital contribution period, and the transferee shareholders can not fulfill the capital contribution obligations, the original shareholders are subject to supplementary liability. In the event that the creditor is not paid off, the creditor may directly add the original shareholder as a co-defendant or executor, without having to prove that the original shareholder has bad faith, that the claim occurred at the time of the original shareholder's shareholding, and that the company's business conditions have deteriorated. This greatly protects the interests of creditors, effectively regulates the behavior of shareholders using the interests of the capital contribution period to transfer equity maliciously to evade the company's debts, and also puts forward higher requirements for the normal transfer of equity by shareholders, requiring the transferring shareholders to strengthen the review of the capital contribution ability of the equity transferee, otherwise, once the company faces operational difficulties and the creditors cannot be paid off, the original shareholders may bear supplementary liability.
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