Professional perspective | Shareholders writing off a company without liquidation may not be jointly and severally liable for the company's debts
Published:
2022-06-16
Brief case] A mechanical and electrical Co., Ltd. (hereinafter referred to as "mechanical and electrical company") was established in 2010 with a registered capital of 10 million yuan. Among them, shareholder Zhang holds 30% and shareholder Li holds 70%. In 2018, the mechanical and electrical company ceased operations after being sued for an external debt of 5 million yuan, and the court ruled that it was finally executed because it had no property to enforce. After the shareholders, shareholders Zhang and Li wrote off the mechanical and electrical company without liquidation. Later, the creditors demanded that the shareholders Zhang and Li be liable for compensation on the grounds that the shareholders were "idle in fulfilling their liquidation obligations. focus of controversy] If a limited liability company meets the conditions for liquidation, should the shareholders be liable for liquidation if they cancel the company without liquidation (neglecting to fulfill their liquidation obligations)? legal analysis] ▶Article 183 of the Company Law stipulates that "...... the liquidation group of a limited liability company shall be composed of shareholders, and the liquidation group of a joint stock limited company shall be composed of directors or persons determined by the general meeting of shareholders", and the Supreme People's Court's Rules on the Application<中华人民共和国公司法>Article 18 of the (II) on Certain Issues stipulates that "the shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to set up a liquidation group to start liquidation within the statutory time limit, ...... the shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to perform their obligations ......", and the liquidation obligor of a limited liability company is "shareholder", the liquidation obligors of a joint stock limited company are "directors and controlling shareholders". According to the Supreme People's Court's Application.<中华人民共和国公司法>Article 18 of the (II) on Certain Issues stipulates: "The shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to establish a liquidation group within the statutory time limit to start liquidation, resulting in the devaluation, loss, damage or loss of the company's property. If the creditor claims that it is liable for compensation for the company's debts within the scope of the loss caused, the people's court shall support it in accordance with the law. If the shareholders of a limited liability company, the directors and controlling shareholders of a limited liability company fail to perform their obligations, resulting in the loss of the company's main property, account books, important documents, etc., and the liquidation cannot be carried out, and the creditors claim that they are jointly and severally liable for the company's debts, the people's court shall support it in accordance with the law." referee gist] (2021) Lu Min Zhong No. 1937 The shareholders of a limited liability company are negligent in fulfilling their liquidation obligations and are jointly and severally liable for the company's debts: (1) The shareholders are negligent in fulfilling their obligations; (2) The company's main property, books, important documents, etc. are lost and cannot be liquidated; (3) There is a causal relationship between the failure of shareholders to perform their obligations and the inability to liquidate the loss of the company's main property, books, important documents, etc. In this case, there is a causal relationship between the non-payment of the creditor's claim and the fact that the electromechanical company has no property to enforce. Even if the liquidation and cancellation procedures of the electromechanical company are flawed or even illegal, it cannot be concluded that there is a causal relationship between the non-payment of the creditor's claims involved and the failure of the shareholders of the electromechanical company to fulfill their liquidation obligations. Creditors should be well aware that even if the shareholders of the electromechanical company fulfill their liquidation obligations or they receive the liquidation notice of the electromechanical company and they declare their claims in accordance with the law, it will be difficult to be paid off. Therefore, in the absence of the element of causality, creditors claim that shareholders Zhang and Li should be liable for the debts owed by the mechanical and electrical company, without factual and legal basis. Lawyer Advice] When there is a reason for dissolution of a limited liability company, the shareholders fail to set up a liquidation group in time, resulting in devaluation, loss, damage or loss of the company's property, loss, damage or loss of the company's main property, account books, important documents, etc., and the liquidation cannot be carried out, the shareholders abuse the independent status of legal person and the limited liability of shareholders to seriously infringe the interests of creditors, creditors can pierce the legal person veil and require shareholders to bear joint liability for the company debts. However, if there is no causal relationship between the loss of the company's property or the company's inability to pay off its debts and the failure of the shareholders to set up a liquidation group in time and to fulfill their liquidation obligations, the shareholders may not be liable for compensation. Recommendations: A shareholder of a limited liability company shall, in order to avoid being claimed, do the following in the event of a dissolution of the company: 1. Establish a liquidation group in time; 2, to protect the company's property, to avoid the loss of company property; 3, after the establishment of the liquidation group to actively fulfill the liquidation obligations; 4, save the company's books, important documents; 5, shall not take advantage of the power to accept bribes or other illegal income, shall not embezzle the company's property; 6. If the company's property is found to be insufficient to pay off its debts, it shall apply to the court for bankruptcy in accordance with the law.</中华人民共和国公司法></中华人民共和国公司法>
brief case]
A mechanical and electrical Co., Ltd. (hereinafter referred to as "mechanical and electrical company") was established in 2010 with a registered capital of 10 million yuan. Among them, shareholder Zhang holds 30% and shareholder Li holds 70%. In 2018, the mechanical and electrical company ceased operations after being sued for an external debt of 5 million yuan, and the court ruled that it was finally executed because it had no property to enforce. After the shareholders, shareholders Zhang and Li wrote off the mechanical and electrical company without liquidation. Later, the creditors demanded that the shareholders Zhang and Li be liable for compensation on the grounds that the shareholders were "idle in fulfilling their liquidation obligations.
focus of controversy]
If a limited liability company meets the conditions for liquidation, should the shareholders be liable for liquidation if they cancel the company without liquidation (neglecting to fulfill their liquidation obligations)?
legal analysis]
▶Article 183 of the Company Law stipulates that "...... the liquidation group of a limited liability company shall be composed of shareholders, and the liquidation group of a joint stock limited company shall be composed of directors or persons determined by the general meeting of shareholders", and the Supreme People's Court's Rules on the Application<中华人民共和国公司法>Article 18 of the (II) on Certain Issues stipulates that "the shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to set up a liquidation group to start liquidation within the statutory time limit, ...... the shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to perform their obligations ......", and the liquidation obligor of a limited liability company is "shareholder", the liquidation obligors of a joint stock limited company are "directors and controlling shareholders".
According to the Supreme People's Court's Application.<中华人民共和国公司法>Article 18 of the (II) on Certain Issues stipulates: "The shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to establish a liquidation group within the statutory time limit to start liquidation, resulting in the devaluation, loss, damage or loss of the company's property. If the creditor claims that it is liable for compensation for the company's debts within the scope of the loss caused, the people's court shall support it in accordance with the law. If the shareholders of a limited liability company, the directors and controlling shareholders of a limited liability company fail to perform their obligations, resulting in the loss of the company's main property, account books, important documents, etc., and the liquidation cannot be carried out, and the creditors claim that they are jointly and severally liable for the company's debts, the people's court shall support it in accordance with the law."
referee gist]
(2021) Lu Min Zhong No. 1937
The shareholders of a limited liability company are negligent in fulfilling their liquidation obligations and are jointly and severally liable for the company's debts:
(1) The shareholders are negligent in fulfilling their obligations;
(2) The company's main property, books, important documents, etc. are lost and cannot be liquidated;
(3) There is a causal relationship between the failure of shareholders to perform their obligations and the inability to liquidate the loss of the company's main property, books, important documents, etc.
In this case, there is a causal relationship between the non-payment of the creditor's claim and the fact that the electromechanical company has no property to enforce. Even if the liquidation and cancellation procedures of the electromechanical company are flawed or even illegal, it cannot be concluded that there is a causal relationship between the non-payment of the creditor's claims involved and the failure of the shareholders of the electromechanical company to fulfill their liquidation obligations. Creditors should be well aware that even if the shareholders of the electromechanical company fulfill their liquidation obligations or they receive the liquidation notice of the electromechanical company and they declare their claims in accordance with the law, it will be difficult to be paid off. Therefore, in the absence of the element of causality, creditors claim that shareholders Zhang and Li should be liable for the debts owed by the mechanical and electrical company, without factual and legal basis.
Lawyer Advice]
When there is a reason for dissolution of a limited liability company, the shareholders fail to set up a liquidation group in time, resulting in devaluation, loss, damage or loss of the company's property, loss, damage or loss of the company's main property, account books, important documents, etc., and the liquidation cannot be carried out, the shareholders abuse the independent status of legal person and the limited liability of shareholders to seriously infringe the interests of creditors, creditors can pierce the legal person veil and require shareholders to bear joint liability for the company debts.
However, if there is no causal relationship between the loss of the company's property or the company's inability to pay off its debts and the failure of the shareholders to set up a liquidation group in time and to fulfill their liquidation obligations, the shareholders may not be liable for compensation.
Recommendations:
A shareholder of a limited liability company shall, in order to avoid being claimed, do the following in the event of a dissolution of the company:
1. Establish a liquidation group in time;
2, to protect the company's property, to avoid the loss of company property;
3, after the establishment of the liquidation group to actively fulfill the liquidation obligations;
4, save the company's books, important documents;
5, shall not take advantage of the power to accept bribes or other illegal income, shall not embezzle the company's property;
6. If the company's property is found to be insufficient to pay off its debts, it shall apply to the court for bankruptcy in accordance with the law.
Key words:
Shareholders, companies, liquidation, property, limited liability, mechanical and electrical, idle, creditors, bear.
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