Viewpoint... How to deal with the property rights and interests enjoyed by the company after its cancellation.

On this issue, the following documents are currently available for reference:

1. The Shanghai Higher People's Court's "Answers to Several Questions on How to Deal with the Property Rights and Interests of the Company after it is Cancelled in accordance with the Law". The answer indicates that if a shareholder discovers that the company has a claim or other property interest in the company after the cancellation of the company, he or she may bring a lawsuit in his or her own name in accordance with the law to claim his or her rights, without the need for all shareholders to act as co-plaintiffs.

2. Reply of the Beijing Higher People's Court on whether the original shareholders of the company can claim the creditor's rights or other rights and interests of the original company from the debtor after the cancellation of the company. The reply indicates that after the company has been registered and canceled and the company's legal personality has been terminated, the original shareholders of the company may claim rights to claims that have not been processed in liquidation.

3. The Beijing Higher People's Court's "Opinions on Handling Several Issues Concerning the Unknown, Closed, Cancelled, Revoked Business License, Subject of Litigation and Civil Liability after Cancellation (Trial)". Article 26 of the opinion stipulates: "If the enterprise whose registration has been canceled is a creditor, if it has the right and obligation to accept, it may directly change it as the subject of litigation on its application." It can be seen that although the company's legal personality has been eliminated after its cancellation, the company's claims are not lost by the elimination of its subject. According to the principle of succession of rights in civil law, all shareholders become the subject of rights, and the original shareholders of the company can still claim their rights as general creditors.

4. Paragraph 1 of Article 123 of the the People's Republic of China Enterprise Bankruptcy Law: "Within two years from the date of termination of bankruptcy proceedings in accordance with the provisions of Paragraph 4 of Article 43 or Article 120 of this Law, creditors may request the people's court to make additional distribution in accordance with the bankruptcy property distribution plan under any of the following circumstances: (1) It is found that there is property that should be recovered in accordance with the provisions of Articles 31, 32, 33 and 36 of this Law." It can be seen that if the recoverable company property is found within two years after the end of the bankruptcy proceedings of the enterprise, additional distribution can be made, considering that the company should go through the cancellation registration within ten days after the end of the bankruptcy proceedings, the vast majority of such recoverable property in the bankruptcy proceedings is essentially the property rights and interests of the company after the cancellation, from the legislative spirit of this provision, it can be reflected that the emerging legislation is more inclined to leave institutional space and remedies for the treatment of property rights and interests after the cancellation of the company.

Although the above-mentioned documents answer the question of how to deal with the property rights and interests enjoyed by the company after its cancellation, and the principles and spirit embodied in them have certain guiding significance for judicial decisions, the court generally does not take the reply of the local court or the spirit of legislation as the basis for direct decisions. In this case, the analysis and summary of relevant cases will help us to refine the judicial practice of the courts around the way of thinking.

It can be seen that, although there is no clear legal basis, the application of legal principles by local courts supports the right of the original shareholders to claim the legacy of the company, as follows:

1. The principle of succession of civil law rights.The deregistration of a company deprives the company of the subject qualification to claim the company's legacy claims or other interests in the name of the company, but it does not directly deny the objective existence of the entity right itself of the legacy claims or other interests. According to the principle of inheritance of rights in civil law, the legal consequences of inheritance of rights and obligations will occur after the death of a natural person or the division or merger of a company. For a company that has been deregistered, if there are objectively remaining claims or other rights and interests, the legal consequences of inheritance of rights and obligations can also occur. Starting from the relationship between shareholders and the company in the company law system and the principle of "who contributes, who benefits", after the company is deregistered, unless otherwise agreed, the original shareholders of the company shall be the successors of the rights of course. Therefore, in the case of the company's legacy claims or other interests, the original shareholders of the company have the right to sue directly as plaintiffs in their own name as successors of the company's rights.

2, the company's shareholders' rights and obligations of the principle of reciprocity.The Supreme People's Court on the application <中华人民共和国公司法> Articles 19 and 20 of the (II) on Certain Issues stipulate that even if a company has been written off, the creditors of the original company may claim their rights against the shareholders of the original company on the grounds that the shareholders of the original company are prejudicial to the interests of the creditors, and the shareholders become the subject of the obligations of the written-off company. According to the principle of reciprocity of civil rights and obligations, the original shareholders of the company should also have recourse to the legacy claims or other interests of the company after cancellation.

3. The principle of fairness.If the original shareholders of the company cannot claim rights such as the remaining claims after the company's cancellation, it is equivalent to the original company's debtor automatically forgiven the debt and obtained the original company's property and unjust enrichment, which not only infringes the legitimate rights and interests of shareholders, but may also infringe the interests of other potential creditors of the company, contrary to the basic principle of fairness.

The Shanghai Higher People's Court's "Answers to Several Questions on How to Deal with the Property Rights and Interests of the Company after its Cancellation" holds that, in view of the fact that shareholders claim the creditor's rights or property rights and interests of the original company to the outside world, the distribution of the company's remaining property is a different legal relationship with shareholders, so unless all shareholders of the original company are willing to file a lawsuit as co-plaintiffs, the court generally does not need to add all shareholders to the lawsuit as co-plaintiffs. In the case <9>, the Yantai intermediate people's court held that part of it stated: "the reason why the appellant China construction fifth bureau claimed that gong jianwei and other six people were unqualified was that Shandong TV cable factory, the major shareholder of force tong management company, did not file a lawsuit. In this regard, the Court is of the view that the the People's Republic of China Company Law and its related interpretations do not have restrictive provisions that should be sued by all shareholders, and that the relationship between Litong Management Company as a creditor and the debtor in this case is an external legal relationship, and the shareholders of the company are internal legal relations, which do not affect each other. Therefore, the appellant's claim is not supported." In practice, it is true that some shareholders are unwilling to participate in litigation or are unable to get in touch with each other. At this time, it is necessary to add other shareholders to participate in litigation as co-plaintiffs, which is not only objectively difficult to operate, but also hinders the litigation process. Therefore, the view that any shareholder has the right to sue is more reasonable. However, considering that the current judicial practice has not yet reached an agreement on this point of view, in order to reduce the risk of litigation, if conditions permit, as far as possible by all the original shareholders as the plaintiff, if one of the original shareholders as an authorized representative to claim rights, should try to get other shareholders to issue a certificate of authorization, and signed by all the original shareholders to confirm.

(1) If the company is canceled after legal liquidation and all external debts have been paid off, the company's remaining claims or other rights and interests belong to the company's remaining property, and after the shareholders acquire the rights and interests in the remaining property, they may be dealt with in accordance with the distribution agreement or with reference to the distribution of the company's remaining property as stipulated in the Company Law. However, in practice, there are often cases where a company is written off without legal liquidation, at which point the company may have both legacy claims and legacy debts. So, can the registration of cancellation without liquidation constitute an effective defense against shareholders' claims of legacy claims or other interests?

In case <6>, in response to the defense opinion of China Railway Fourth Bureau that "it is illegal to cancel the registration without liquidation, and the arrears involved in the case should be canceled by the Administration for Industry and Commerce and claimed in the name of Chenghe Company after the company is restored." Shanghai Third Intermediate People's Court held that "the cancellation of registration is not a civil action and does not fall within the scope of this case, and China Railway Fourth Bureau has not filed any relevant administrative action", this opinion is not accepted. It is generally accepted that the cancellation of the registration of a company without liquidation does not affect the right of shareholders to sue and recover legacy claims in their own name as plaintiffs. In practice, creditors of the company's legacy debt can also benefit from the recovery of the company's legacy claims or other interests by the company's original shareholders.

(2) According to the third paragraph of Article 186 of the Company Law (Article 236 of the new Company Law): "The property of the company shall not be distributed to shareholders until it has been paid off in accordance with the provisions of the preceding paragraph". In the event that the company's write-off status is irreversible and the liquidation process cannot be restarted, can the legacy claims of the company acquired by shareholders be distributed?

While companies that are written off without legal liquidation may have legacy debt, there is uncertainty about this potential debt. Considering that China's "Company Law" and its relevant judicial interpretations have set up sufficient relief channels for the original creditors of the company to cancel the company without legal liquidation, such as requesting the shareholders, directors, actual controllers, etc. of the company to pay off debts or compensate for losses, it is generally believed that when the facts such as whether the company does have unpaid debts and the specific circumstances of the company's potential creditors are still uncertain, the original shareholders of the company may distribute the confirmed legacy claims or other rights and interests of the company in advance in order to promote the effective use of social property. If there are claims by the original creditors of the company, the shareholders shall be liable for the settlement of the potential original debts of the company within the scope of the property distributed by them. For example, in case <8>, the two parties have mutual debt rights and debts. the Shanghai no 1 intermediate people's court held that "the effective judgment has determined that a company in Shanghai has the obligation to compensate the corresponding housing discount to the huihao district industry committee. a company in Shanghai cancels without paying off the debts in full. the huihao district industry committee, as a creditor, has the right to require the beneficiary shareholders to pay off the company's debts within the scope of the property interests. At present, the Huihao District Owners Committee still has nearly 16 million yuan of claims that have not been paid off... Therefore, the company in the case of not fully paid off the debt cancellation, shareholders in the company after the cancellation of the company to obtain the company's claims or property rights, creditors have the right to require the beneficiary shareholders to pay off the company's debts within the scope of the property interests. In this case, if it is found that the company also has a claim or other property interest, the interest shall first be used to pay off all creditors, and the shareholders of the company shall not have the property interest until the settlement is completed." It can be seen that the first distribution will not fundamentally cause material damage to the rights and interests of potential creditors.

In case <1>, the second intermediate people's court of Beijing held that part of it stated: "Yuan Heng Company, a shareholder of Hainan Zhongzheng Company, was canceled first, and the official seal of Yuan Heng Company was still affixed to the materials issued when handling the cancellation of Hainan Zhongzheng Company. Although there are certain flaws in the cancellation procedure of Hainan Zhongzheng Company, it cannot be used to deny the qualification of the company's shareholders to inherit the legacy claims or other rights and interests ...... Therefore, as the shareholders of Hainan Zhongzheng Company, the shareholders of Yue Xiaobo, Tianxing Company and Tang Juhuai Hainan Zhongzheng Company who have canceled their shareholders still enjoy the qualification to claim their rights to Zhongchao Guoding Company on the legacy claims or other rights and interests. The court of first instance ruled that the results of the lawsuit against Wutong Company, Yue Xiaobo, Tianxing Company and Tang Juhuai were inappropriate, and the court corrected them." It is generally accepted that the existence of defects in the cancellation procedure will not prevent shareholders from claiming legacy claims or other interests.

If there is a property right left after the cancellation of the company, the original shareholders shall first obtain the property right and then claim the protection of the property right. In case <8>, in response to Pufang Company's application for removing obstacles, the Shanghai First Intermediate People's Court held that "although a company in Shanghai has been canceled, the rights and interests of the club have not been liquidated by shareholders. Under the condition that the ownership of the club has not been confirmed according to law, Pufang Company directly claims to remove obstacles as the owner and files a lawsuit in this case, which lacks the basis of claim right and does not conform to the legal principle of property, this House cannot support it."