Viewpoint... A brief analysis of the dispute over the liability of shareholders harming the interests of the company's creditors.
Published:
2023-12-13
The dispute over the liability of shareholders for damaging the interests of the company's creditors is a new item under the third level of the provisions on the causes of civil cases revised in 2020. The dispute over the liability of shareholders for damaging the interests of the company's creditors refers to the civil disputes in which the shareholders of the company abuse the independent status of the company's legal person and the limited liability of shareholders, evade debts, seriously damage the interests of the company's creditors and bear the liability for the company's debts.
1. cause and definition
The dispute over the liability of shareholders for damaging the interests of the company's creditors is a new item under the third level of the provisions on the causes of civil cases revised in 2020. The dispute over the liability of shareholders for damaging the interests of the company's creditors refers to the civil disputes in which the shareholders of the company abuse the independent status of the company's legal person and the limited liability of shareholders, evade debts, seriously damage the interests of the company's creditors and bear the liability for the company's debts.
Legal provisions
Article 20, paragraph 3, of the the People's Republic of China Company Law, if the shareholders of a company abuse the independent status of the company as a legal person and the limited liability of shareholders to evade debts and seriously harm the interests of the company's creditors, they shall be jointly and severally liable for the debts of the company.
Common situations in which 2. shareholders harm the interests of the company's creditors.
In disputes over liability for shareholders to harm the interests of the company's creditors, the following are common situations:
(I) shareholders fail to fulfill their capital contribution obligations;
(II) shareholders to withdraw their capital contributions;
(III) shareholders abuse the independent status of the company as a legal person and the limited liability of shareholders to evade debts.
1. Personality mix
(1) Horizontal personality mixing: several companies controlled by the same parent company or controller are mixed in terms of property, business, personnel, etc;
(2) Vertical personality mix: two companies, the same set of managers.
Excessive Domination and Control
Common situations in practice include:
(1) Transfer of benefits between parent and subsidiary companies or between subsidiaries;
(2) Transactions between parent and subsidiary companies or subsidiaries, the proceeds go to one party, but the losses are borne by the other party;
(3) first withdraw funds from the original company, and then set up a company with the same or similar business purpose, to avoid the debts of the original company;
(4) Dissolve the company first, and then set up another company with the original company's premises, equipment, personnel and the same or similar business purposes to avoid the debts of the original company;
(5) Other situations of excessive domination and control.
3. Significant undercapitalization
Significant undercapitalization means that the amount of capital actually invested by shareholders in the company in the course of its operations after its establishment does not match the risks implied by the company's operations. The use of less capital by shareholders to engage in operations beyond their means indicates that they do not have the sincerity to engage in the operation of the company, and in essence, they are maliciously using the independent personality of the company and the limited liability of shareholders to transfer the investment risk to creditors. Since the criteria for determining a significant undercapitalization are highly ambiguous, especially as they are to be distinguished from the company's "small and broad" normal mode of operation, they should be applied with great caution and should be combined with other factors.
(IV) shareholders maliciously dispose of the company's property after the dissolution of the company, or neglect to perform liquidation obligations or false liquidation resulting in the impairment of the company's property, to the detriment of the interests of the company's creditors.
Legal provisions
1. Article 20 of the the People's Republic of China Company Law The shareholders of a company shall abide by the laws, administrative regulations and the articles of association of the company, exercise the rights of shareholders in accordance with the law, and shall not abuse the rights of shareholders to harm the interests of the company or other shareholders; the independent status of the company as a legal person and the limited liability of shareholders shall not be abused to harm the interests of the company's creditors.
If a shareholder of a company abuses his rights as a shareholder and causes losses to the company or other shareholders, he shall be liable for compensation in accordance with the law.
If the shareholders of the company abuse the independent status of the company as a legal person and the limited liability of shareholders to evade debts and seriously harm the interests of the company's creditors, they shall bear joint and several liability for the debts of the company.
2. Article 21 of the the People's Republic of China Company Law, the controlling shareholders, actual controllers, directors, supervisors and senior managers of a company shall not use their related relationships to harm the interests of the company.
Anyone who violates the provisions of the preceding paragraph and causes losses to the company shall be liable for compensation.
3. (III) of the Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the the People's Republic of China Company Law Article 13 If a shareholder fails to perform or fails to fully perform its capital contribution obligations, and the company or other shareholders request it to fully perform its capital contribution obligations to the company in accordance with the law, the people's court shall support it.
If the creditors of the company request that the shareholders who have not fulfilled or fully fulfilled their capital contribution obligations shall bear supplementary compensation liability for the part of the company's debts that cannot be paid off within the scope of the principal and interest of the unfunded capital contribution, the people's court shall support it; the shareholders who have not fulfilled or fully fulfilled their capital contribution obligations have already undertaken the above-mentioned responsibilities, and other creditors make the same request, the people's court shall not support it.
If a shareholder fails to perform or fails to fully perform the obligation of capital contribution at the time of the establishment of the company, and the plaintiff who files a lawsuit in accordance with the first or second paragraph of this article requests the promoter of the company and the defendant shareholder to bear joint and several liability, the people's court shall support it; after the promoter of the company assumes responsibility, it may recover compensation from the defendant shareholder.
If a shareholder fails to perform or fully perform the obligation of capital contribution when the company increases its capital, the plaintiff who files a lawsuit in accordance with the first or second paragraph of this article requests that the directors and senior managers who have not paid their capital contribution bear the corresponding responsibilities for failing to fulfill the obligations stipulated in the first paragraph of Article 147 of the company law, The people's court shall support it; after the directors and senior managers bear the responsibility, they may recover compensation from the defendant shareholders.
4. Article 14 of the (III) of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Company Law, if a shareholder evades his capital contribution, the company or other shareholders request him to return the principal and interest of the capital contribution to the company and assist other shareholders, directors, If the senior manager or the actual controller bears joint and several liability for this, the people's court shall support it.
The people's court shall support the shareholders who request the withdrawal of capital contributions to bear supplementary liability for the unpayable part of the company's debts within the scope of the principal and interest of the withdrawal of capital contributions, and other shareholders, directors, senior managers or actual controllers who assist in the withdrawal of capital contributions shall bear joint and several liability for this. The people's court shall not support the shareholders who have already assumed the above-mentioned responsibilities and other creditors make the same request.
3. Jurisdiction
Although the dispute over the liability of shareholders for damaging the interests of the company's creditors is the cause of the case under the dispute related to the company, it is still a tort dispute, and the jurisdiction provisions of the tort dispute shall be applied, and the people's court of the place where the tort or the defendant is domiciled shall have jurisdiction.
Legal provisions
1. Article 29 of the the People's Republic of China Civil Procedure Law of the People's Republic of China, a lawsuit brought for a tort shall be under the jurisdiction of the people's court of the place where the tort is committed or where the defendant has his domicile.
2. The Supreme People's Court on the application<中华人民共和国民事诉讼法>The place of infringement stipulated in Article 29 of the Civil Procedure Law includes the place where the infringement was committed and the place where the result of the infringement occurred.
4. Litigation Status
Article 13 of the Minutes of the National Court Conference on Civil and Commercial Trials stipulates that when the people's court hears a dispute over the denial of corporate personality, it shall determine the litigation status of the parties according to different circumstances:
(1) If the creditor's claim against the debtor company has been confirmed by the effective decision, and it files a separate lawsuit against the company's personality denial, requesting the shareholders to bear joint and several liability for the company's debts, the listed shareholders shall be the defendant and the company shall be the third party;
(2) If the creditor brings a lawsuit against the creditor's rights enjoyed by the debtor company, and at the same time files a lawsuit against the company's personality denial, and requests the shareholders to bear joint and several liability for the company's debts, the company and the shareholders shall be listed as co-defendants;
(3) If the creditor's claim against the debtor company has not been confirmed by the effective decision, and directly files a lawsuit to deny the company's personality, requesting the company's shareholders to bear joint and several liability for the company's debts, the people's court shall explain to the creditor and inform it that the additional company is a co-defendant. If the obligee refuses to make the addition, the people's court shall rule to dismiss the suit.
5. allocation of burden of proof
When hearing the case of denial of legal personality, the court will reasonably allocate the burden of proof according to the provisions of Article 7 of Several Provisions of the Supreme People's Court on Evidence in Civil Litigation, taking into account the factors such as the creditor's opaque information and the difficulty of proof, that is, under the premise that the creditor proves that the evidence of the shareholder's abuse of the independent status of the company as a legal person and the limited liability of the shareholder is reasonably doubtful, the burden of proof that there is no abuse of shareholder rights is assigned to the accused shareholder, rather than the inevitable inversion of the burden of proof. In other words, the parties need to provide evidence to the extent of reasonable doubt about the possibility of personality mixing in order to apply the principle of inversion of the burden of proof.
Legal provisions
Article 7 of the Several Provisions of the Supreme People's Court on Evidence in Civil Proceedings, where there are no specific provisions in the law, and the burden of proof cannot be determined in accordance with these provisions and other judicial interpretations, the people's court may, in accordance with the principles of fairness and good faith, take into account factors such as the parties' ability to prove evidence to determine the burden of proof.
As a creditor, you should keep the relevant evidence materials, file a lawsuit in the court in time, and require the infringer to bear the corresponding legal responsibility.
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