Point of View... Is the shareholder liable for the liquidation of the company's debts before the transfer?
Published:
2022-12-26
Brief of the case Zhang, Wang and Zeng are shareholders of Company A, Zeng is a major shareholder accounting for 70% of the shares, Zhang and Wang each accounting for 15%. Later, Zeng signed an Equity Transfer Agreement with Shandong Company B, agreeing that Zeng would transfer 70% of his equity in Company A to Shandong Company B at a price of 3.5 million yuan. On December 2, 2015, Zeng registered 70% of the equity change to Shandong B Company. However, Shandong B Company only paid 1.2 million yuan and the balance of 2.3 million yuan has not been paid. Feng Mou 1 and Feng Mou 2, the original shareholders of Shandong B Company, were transferred to the company on January 19, 2017 and April 26, 2017 respectively, and the subscription period was December 31, 2024. The latter two registered their equity changes in Shandong B Company under Zhang and Wei on December 12, 2017 and November 6, 2018 respectively. Now Zeng filed a lawsuit with the court, requesting Shandong B Company to pay 2.3 million yuan for the equity transfer and liquidated damages for overdue payment, and requiring Feng 1 and Feng 2 to bear supplementary compensation liability for the above debts. After hearing, the court held that although Zeng had the right to require Shandong B Company to pay the remaining equity transfer money and late payment of liquidated damages, it did not have the right to require Feng 1 and Feng 2 to bear supplementary liability for the above-mentioned money. Views of the Court The core legal issue of this case is whether the transfer of equity by shareholders before the expiration of the capital contribution period constitutes the situation of "transfer of equity without performance or full performance of capital contribution obligations" as stipulated in Article 13, paragraph 2 and Article 18 of the (III) for Judicial Interpretation of the Company Law, so as to bear the supplementary repayment responsibility for the accelerated maturity of capital contribution for the company's debts before the transfer. After hearing the case, the people's court held that shareholders should be recognized and protected to enjoy the "time limit interests" of capital contribution. Therefore, the transfer of equity by Feng 1 and Feng 2 before the expiration of the time limit for capital contribution does not constitute the situation of "transfer of equity without performance or full performance of capital contribution obligations" stipulated in Article 13, paragraph 2, and Article 18 of the (III) of the Supreme People's Court on Several Issues, thus, Feng 1, Feng 2 do not bear supplementary liability for the part of Shandong B company debt can not be paid off. Lawyer's Views and Suggestions The provisions of Article 13, paragraph 2, and Article 18 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 shall not apply to the act of "transferring equity without fulfilling or fully fulfilling the obligation of capital contribution. In this case, the Supreme Court held that the shareholders enjoyed the "term benefit" of the capital contribution, and that the creditors of the company had the opportunity to examine whether to conduct a transaction with the company on the basis of reviewing the credit information such as the time of the shareholders' capital contribution, and that the creditors' decision on the transaction should be bound by the time of the shareholders' capital contribution. The act of transferring equity before the expiration of the period of capital contribution by shareholders does not constitute the situation of "transferring equity without performance or full performance of capital contribution obligations" as stipulated in Article 13, paragraph 2 and Article 18 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. Creditors have no right to require shareholders to bear supplementary compensation liability for accelerating the expiration of the company's debts within the scope of the principal and interest of the unpaid capital contribution. Therefore, the parties should pay attention to the following matters when entering into equity transactions: 1. In order to avoid disputes after the transfer of shares, the shareholders who purchase the shares held by the shareholders who have not expired shall be required to pay the registered capital before the transfer of the shares. 2. Before cooperating with the company or contracting, the parties shall investigate the paid-in registered capital of the target company, the time of shareholders' capital contribution and other information, assess the potential risks brought about by factors such as the debtor's registered capital has not been paid, the period of shareholders' capital contribution has not expired, and require the debtor to provide and increase other forms of performance guarantee.
Brief of the case
Zhang, Wang and Zeng are shareholders of Company A, Zeng is a major shareholder accounting for 70% of the shares, Zhang and Wang each accounting for 15%. Later, Zeng signed an Equity Transfer Agreement with Shandong Company B, agreeing that Zeng would transfer 70% of his equity in Company A to Shandong Company B at a price of 3.5 million yuan.
On December 2, 2015, Zeng registered 70% of the equity change to Shandong B Company. However, Shandong B Company only paid 1.2 million yuan and the balance of 2.3 million yuan has not been paid. Feng Mou 1 and Feng Mou 2, the original shareholders of Shandong B Company, were transferred to the company on January 19, 2017 and April 26, 2017 respectively, and the subscription period was December 31, 2024.
The latter two registered their equity changes in Shandong B Company under Zhang and Wei on December 12, 2017 and November 6, 2018 respectively. Now Zeng filed a lawsuit with the court, requesting Shandong B Company to pay 2.3 million yuan for the equity transfer and liquidated damages for overdue payment, and requiring Feng 1 and Feng 2 to bear supplementary compensation liability for the above debts.
The court held that although Zeng had the right to require Shandong B Company to pay the remaining equity transfer money and late payment of liquidated damages, it did not have the right to require Feng 1 and Feng 2 to bear supplementary liability for the above-mentioned money.
Views of the Court
The core legal issue of this case is whether the transfer of equity by shareholders before the expiration of the capital contribution period constitutes the situation of "transfer of equity without performance or full performance of capital contribution obligations" as stipulated in Article 13, paragraph 2 and Article 18 of the (III) for Judicial Interpretation of the Company Law, so as to bear the supplementary repayment responsibility for the accelerated maturity of capital contribution for the company's debts before the transfer.
After hearing the case, the people's court held that shareholders should be recognized and protected to enjoy the "time limit interests" of capital contribution. Therefore, the transfer of equity by Feng 1 and Feng 2 before the expiration of the time limit for capital contribution does not constitute the situation of "transfer of equity without performance or full performance of capital contribution obligations" stipulated in Article 13, paragraph 2, and Article 18 of the (III) of the Supreme People's Court on Several Issues, thus, Feng 1, Feng 2 do not bear supplementary liability for the part of Shandong B company debt can not be paid off.
Lawyer's Views and Suggestions
The provisions of Article 13, paragraph 2, and Article 18 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 shall not apply to the act of "transferring equity without fulfilling or fully fulfilling the obligation of capital contribution.
In this case, the Supreme Court held that the shareholders enjoyed the "term benefit" of the capital contribution, and that the creditors of the company had the opportunity to examine whether to conduct a transaction with the company on the basis of reviewing the credit information such as the time of the shareholders' capital contribution, and that the creditors' decision on the transaction should be bound by the time of the shareholders' capital contribution.
The act of transferring equity before the expiration of the period of capital contribution by shareholders does not constitute the situation of "transferring equity without performance or full performance of capital contribution obligations" as stipulated in Article 13, paragraph 2 and Article 18 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. Creditors have no right to require shareholders to bear supplementary compensation liability for accelerating the expiration of the company's debts within the scope of the principal and interest of the unpaid capital contribution.
Therefore, the parties should pay attention to the following matters when entering into equity transactions:
1. In order to avoid disputes after the transfer of shares, the shareholders who purchase the shares held by the shareholders who have not expired shall be required to pay the registered capital before the transfer of the shares.
2. Before cooperating with the company or contracting, the parties shall investigate the paid-in registered capital of the target company, the time of shareholders' capital contribution and other information, assess the potential risks brought about by factors such as the debtor's registered capital has not been paid, the period of shareholders' capital contribution has not expired, and require the debtor to provide and increase other forms of performance guarantee.
Key words:
Related News
Zhongcheng Qingtai Jinan Region
Address: Floor 55-57, Jinan China Resources Center, 11111 Jingshi Road, Lixia District, Jinan City, Shandong Province
