Viewpoint... An analysis of the limitation of the company's surplus distribution claim rights of shareholders who have not fulfilled their capital contribution obligations.

The right of claim for the distribution of surplus of the company, which is equivalent to the right of first subscription of new shares and the right of claim for the distribution of surplus property, is the property right enjoyed by shareholders. After the company makes profits, some shareholders hope to retain earnings to expect higher returns, and some shareholders hope to obtain income in time to seek short-term benefits. The Company Law stipulates that shareholders of the company have the right to asset income according to law, but there is no mandatory regulation on how the company distributes profits. In principle, this belongs to the scope of business judgment and autonomy of the company. The company can adopt articles of association, resolutions of shareholders (large) meeting and other forms according to actual needs, make a profit distribution agreement that is conducive to the establishment of a cooperative relationship between shareholders.

Capital contribution is the most basic and important obligation of shareholders, the company's registered capital is the basis of the company's operation and capital maintenance, the company's profits depend on the shareholders' capital contribution, at the same time, the company's public registered capital is also an important basis for others to examine the strength of the company. The failure of shareholders to fulfill their capital contribution obligations not only infringes the interests of the company and other shareholders, but also deceives the company's creditors and infringes the interests of creditors. In practice, the disputes arising from shareholders' capital contribution are diverse and complex, which deviates from the company's capital system. Therefore, the Company Law and relevant judicial interpretations not only stipulate that shareholders who have not fulfilled their capital contribution obligations make up their capital contributions and bear the liability for breach of contract to shareholders who have made full capital contributions, but also stipulate that the company can reasonably restrict the shareholders' rights such as the right to request profit distribution, the right to subscribe for new shares, and the distribution of surplus property. This paper will make a brief analysis of the limitation of the company's surplus distribution claim of shareholders who have not fulfilled their capital contribution obligations.

Article 4: The shareholders of the company shall, in accordance with the law.Income from assetsThe right to participate in major decisions and choose managers.

Article 13: In cases where a shareholder requests a company to distribute profits,The company should be listed as the defendant.. Before the conclusion of the court debate of the first instance, if other shareholders request the distribution of profits based on the same distribution plan and apply to participate in the litigation, they shall be listed as co-plaintiffs.

Article 34 stipulates:Shareholders receive dividends in proportion to their paid-in capital contributions.When the company adds new capital, the shareholders shall have the right to pay the capital contribution in accordance with the proportion of the paid-in capital contribution. But,All shareholders agreed not to share dividends in proportion to their capital contributions.Or not in accordance with the proportion of capital contribution priority to pay the capital contribution,.

Paragraph 4 of Article 166 stipulates that the after-tax profits remaining after the company has made up its losses and withdrawn its provident fund shall be distributed by a limited liability company in accordance with the provisions of Article 34 of this Law;A joint stock limited company shall be distributed in proportion to the shares held by its shareholders, except where the articles of association of the joint stock limited company stipulate that the distribution shall not be based on the proportion of shares held.

The first paragraph of Article 13 stipulates that if a shareholder fails to perform or fails to fully perform the obligation of capital contribution,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 should support it.

Article 16 stipulates:If a shareholder fails to perform or fully perform his or her capital contribution obligations or evades his or her capital contribution, the company shall have the right to claim profit distribution in accordance with the articles of association or the resolution of the shareholders' meeting.The rights of shareholders, such as the right to subscribe for new shares, the right to request the distribution of surplus property, etc.Make reasonable restrictions accordinglyIf the shareholder requests that the restriction be found invalid, the people's court shall not support it.

Article 14 stipulates:The shareholders shall submit a valid resolution of the shareholders' meeting or the general meeting of shareholders with a specific distribution plan.If the company is requested to distribute profits, the company refuses to distribute profits and its defense of being unable to enforce the resolution is not tenable, the people's court shall decide that the company shall distribute profits to shareholders in accordance with the specific distribution plan set out in the resolution.

Article 15 stipulates:Shareholders fail to submit a resolution of the shareholders' meeting or general meeting containing a specific distribution plan.If the company is requested to distribute profits, the people's court shall reject its claim,However, the abuse of shareholders' rights in violation of the law results in the company's non-distribution of profits, except for losses to other shareholders.

Article 91 provides that:A listed company shall specify in its articles of association the specific arrangements and decision-making procedures for the distribution of cash dividends,The right to return on assets of shareholders is protected in accordance with the law. If the listed company has a surplus after making up its losses and withdrawing its statutory provident fund,Cash dividends shall be distributed in accordance with the provisions of the articles of association.

Regarding the determination of whether the right to request profit distribution of shareholders who have not fulfilled their capital contribution obligations can be restricted, the main legal basis is Article 16 of the Interpretation III of the Company Law. The applicable conditions of this clause are two: First, shareholders have not fulfilled or have not fully fulfilled their capital contribution obligations., Or there is an act of evading capital contribution; second, restrictions should be made in accordance with the company's articles of association or the resolution of the shareholders meeting. It can be seen that the law gives the company or the shareholders' meeting the right to limit part of the self-interest of shareholders who have not fulfilled their capital contribution obligations, but does not give other shareholders the same rights, so other shareholders do not have the substantive rights to restrict the rights of shareholders who have not fulfilled their capital contribution obligations, and they do not have the right to directly claim the right to limit the profit distribution of shareholders who have not fulfilled their capital contribution obligations.

However, in judicial practice, other shareholders usually claim that shareholders who have not fulfilled their capital contribution obligations fully perform their capital contribution obligations to the company in accordance with the first paragraph of Article 13 of the Interpretation III of the Company Law, and at the same time require restrictions on their right to claim profit distribution. When deciding that shareholders fulfill their capital contribution obligations, they also made judgments on the litigation claims of shareholders who have not fulfilled their capital contribution obligations.

When other shareholders as plaintiffs bring up the right to restrict the profit distribution claim of shareholders who have not fulfilled their capital contribution obligations, there are also different views on the choice of defendants: there are separate listed shareholders who have not fulfilled their capital contribution obligations as defendants, there are separate listed companies as defendants, there are cases where the company and shareholders who have not fulfilled their capital contribution obligations are listed as co-defendants, and there are cases where the company is listed as defendants and shareholders who have not fulfilled shareholders who have not fulfilled their capital contribution obligations as third parties. However, the majority of the court held that if the shareholders who have not fulfilled their capital contribution obligations are the defendants alone, the request to restrict their right to claim profit distribution will not be supported.

As a shareholder, one of the most important purposes of investing in a company is to make the company profitable and receive dividends through its operations. In practice, there are many manifestations of shareholders' failure to fulfill their capital contribution obligations, such as putting money into the company's account and then transferring it out in order to meet the capital verification, and making capital contributions in kind or assets but not going through the formalities of transfer or transfer of property rights. These acts directly lead to the reduction of the company's disposable cash, adversely affect the company's capital turnover and management, and are not conducive to the security of transactions and the protection of creditors' interests. Therefore, in principle, the right of shareholders who have not fulfilled their obligations to obtain property benefits should be limited by the degree of their actual contribution. However, the distribution of dividends of the company belongs to the category of corporate autonomy, and shareholders can agree on the distribution of dividends separately, so the company will have to carry out the distribution in accordance with the agreement if it is otherwise agreed.

Article 34 of the Company Law makes more flexible provisions on the proportion of dividends for shareholders of limited liability companies. In principle, shareholders share dividends according to the proportion of paid-in capital. However, based on the private law attribute of the Company Law and the personality of limited liability companies, the law makes a special provision that all shareholders can share dividends by agreement not according to the proportion of capital contribution, thus giving shareholders the right to autonomy in the distribution of surplus profits.

Article 166, paragraph 4, of the Company Law also provides for the proportion of profits distributed to shareholders of a joint-stock company, and unless otherwise provided for in the articles of association, the company distributes profits in proportion to the shares held by shareholders, which reflects the characteristics of the capitalization of a joint-stock company. At the same time, Article 91 of the Securities Law stipulates that the articles of association of listed companies shall specify the specific arrangements and decision-making procedures for the distribution of cash dividends.

According to the above provisions, it can be seen that compared with limited companies, the autonomy of profit distribution of joint-stock companies is smaller, listed companies are mainly regulated by the CSRC, in practice, the company's surplus distribution disputes are mainly concentrated in limited companies. If the shareholders of a limited company fail to fulfill their capital contribution obligations, unless otherwise provided in the articles of association, they shall not affect their right to claim profit distribution, but shall, in accordance with the provisions of Article 34 of the Company Law, share dividends in proportion to the paid-in capital contribution, unless all shareholders have signed the relevant contract, which shall be dealt with in accordance with the contract.

According to the principle of "capital majority decision", the resolution of the company's shareholders' meeting is often controlled by the majority shareholder, and in reality there are frequent disputes in which the majority shareholder uses the dividend policy to harm the interests of small and medium-sized shareholders. According to the provisions of Articles 14 and 15 of the Interpretation IV of the Company Law, shareholders requesting the company to distribute profits shall, in principle, submit an effective resolution of the shareholders meeting or shareholders meeting that specifies the specific distribution plan; if the resolution is not submitted, the shareholders shall not Request the distribution of profits, but if the abuse of shareholder rights in violation of the law causes the company not to distribute profits and causes losses to other shareholders, shareholders can directly request the company to distribute profits. It can be seen from Article 16 of the Interpretation III of the Company Law that the company may make "reasonable restrictions" on the self-interest rights of shareholders who have not fulfilled their capital contribution obligations, rather than depriving them of their shareholders' rights altogether, so that shareholders who have not fulfilled their capital contribution obligations as shareholders of the company may request the company to distribute profits.

In judicial practice, there are different views on whether the inter-shareholder agreement can be used as the basis for distribution. The majority view is that the inter-shareholder agreement can be used as the basis for the distribution of profits until the company's shareholders' meeting or general meeting has made an effective resolution on the specific plan for profit distribution. However, there are also views that before the profit distribution plan is made, there is uncertainty about the amount of distribution requested by shareholders, and the court cannot make business judgments and choices on behalf of the company, and the shareholders' claims should be rejected. However, after the effective resolution is made, there are two completely different views, some scholars believe that shareholders should request the company to distribute profits according to the resolution, and some scholars believe that specific analysis should be carried out according to the time and effect of the resolution and the agreement between shareholders. The company's resolution to distribute profits shall be open to all shareholders, and if the company pays dividends to individual shareholders alone, it is judged that it constitutes a withdrawal of capital contributions.

Basic case:Yihu Company (the third party in the first instance) is a Sino-foreign joint venture company. Its shareholders are Yizhong Company (the plaintiff in the first instance and the appellee in the second instance), Lesheng Nanao Company (the defendant in the first instance and the appellee in the second instance) and Chenghai Second Construction Company (the third party in the first instance). Lesheng Nanao Company should contribute 9.3 mu of land use right, but the company has not fully fulfilled its contribution obligations. On March 30, 2012, Yihu Company held a board meeting and formed a resolution. Because Lesheng Nanao Company failed to fulfill its capital contribution obligations, Lesheng Nanao Company did not enjoy the right to request profit distribution, the right to subscribe for new shares, and the right to request the distribution of surplus property. And other shareholder rights. Yizhong Company filed a claim to confirm that Lesheng Nanao Company has not fulfilled its capital contribution obligations, and Lesheng Nanao Company does not have the right to claim profit distribution, the right to subscribe for new shares, the right to claim the distribution of surplus property and other shareholder rights.

The Court of First Instance (Intermediate People's Court of Shantou City, Guangdong Province) held that:The prerequisite for shareholders to enjoy the rights of shareholders is to assume the obligations of shareholders, and the rights of shareholders such as the right to request profit distribution, the right to subscribe for new shares, and the right to request the distribution of surplus property correspond to the obligation of capital contribution, and the above-mentioned shareholders' rights shall be exercised in proportion to the capital contribution paid.In this case, the fact that Lesheng Nanao Company did not fulfill its capital contribution obligations is clear, and the exercise of its shareholders' rights should be restricted.

Therefore, Lesheng Nanao Company argued that the procedure and content of the restriction notice made by Yihu Company were illegal, and the reason was not valid and would not be adopted. Yizhong Company requested the court to confirm that Lesheng Nanao Company does not enjoy the shareholders' rights of profit distribution, new shares of priority subscription, surplus property distribution and other shareholders' rights to Yihu Company, which are reasonable and lawful.

The Court of Second Instance (Guangdong Higher People's Court) held that:The facts found in the original trial were clear, the applicable law was correct, and the handling was appropriate.

The retrial court (the Supreme People's Court) held that:One of the focus of the dispute in this case is whether the company should be restricted the corresponding shareholder rights. First of all, Lesheng South Australia Company has not failed to fulfill its capital contribution obligations, but has not fully fulfilled its capital contribution obligations. Secondly, the articles of association of Yihu Company do not specify that shareholders who fail to fully fulfill their capital contribution obligations will be restricted in their rights. Third, since the legislation of China's Foreign Investment Enterprise Law predates the legislation of the Company Law, the the People's Republic of China Law on Sino-Foreign Joint Ventures and its implementing regulations do not provide for shareholders' meetings in the governance structure of joint ventures, and the corresponding duties of shareholders' meetings are actually exercised by the board of directors. After investigation, the resolution of the board of directors of Yihu Company on March 30, 2012 was invalid because it did not reach the approval ratio stipulated in the articles of association of Yihu Company.

According to Article 16 of the "Judicial Interpretation III", restrictions on shareholders' rights such as the right to request profit distribution, the right to subscribe for new shares, and the right to request the distribution of surplus property shall meet the following conditions at the same time: First, shareholders have not fulfilled or have not fully fulfilled their capital contribution obligations, Or there is an act of evading capital contribution; second, restrictions should be made in accordance with the company's articles of association or resolutions of shareholders.

Therefore, the request of Yizhong Company and Yihu Company to restrict the corresponding shareholder rights of Lesheng Nanao Company according to the resolution of the board of directors of Yihu Company cannot be supported. The second-instance judgment of the 1. found that Lesheng Nan'ao Company did not enjoy the shareholder rights of Yihu Company, such as the right to request profit distribution, the right to subscribe for new shares, and the right to request the distribution of surplus property, which lacked factual and legal basis and should be corrected.

Basic case:On February 10, 2004, the plaintiff Gao, the defendants Lin Chunhua, Zheng Yuzan and Wen Jibin invested in the establishment of Handan Anfu Company. On December 30, 2009, because the company did not go through the annual inspection, the Shexian County Administration for Industry and Commerce made an administrative penalty decision No. 446 (2009), revoking the business license of Handan Anfu Company as an enterprise legal person, and requiring Handan Anfu Company to liquidate and cancel its registration. On November 20, 2010, all shareholders of Handan Anfu Company held an interim shareholders' meeting in Hangzhou, which decided to set up a liquidation group in order to dissolve Handan Anfu Company in accordance with the law. On August 8, 2011, Gao Qi received a "resolution of the shareholders' meeting" of Handan Anfu Company unilaterally made by Wen Jibin, Zheng Yuzan and Lin Chunhua, denying the fact of Gao Qi's capital contribution and thus denying the company's shareholder qualification. The high-term prosecution requested the defendant to return the registered capital and profit share.

The Court of First Instance (the People's Court of Cangnan County, Zhejiang Province) held that:The subject of the obligation of the company's right to claim surplus distribution can only be the company, the shareholders of the company can only bring a lawsuit against the company for surplus distribution, and there is no right and obligation of surplus distribution between the shareholders of the company and between the directors of the company and the shareholders of the company.The parties involved in this case are all shareholders of the company and have no obligation to refund the share capital and distribute profits to each other. Therefore, the request of Wen Jibin, Zheng Yuzan and Lin Chunhua to refund the share capital and bear the responsibility of surplus distribution lacks legal basis. The nature of the legal relationship in this case and the inqualification of the defendant's main body are not suitable. After the court explained to the high stage, the high stage still does not change. Therefore, the court does not support.

The Court of Second Instance (Wenzhou Intermediate People's Court of Zhejiang Province) held that:The facts found in the original judgment are clear, the trial procedure is legal, and the applicable law is correct.

Basic case:Ye Siyuan (the defendant) and Chen Yahui (the third party) entered into the "Shareholder Cooperation Agreement" in 1999 and established Hualong Company (the plaintiff). In 2006, Ye Siyuan and Chen Yahui signed the "Shareholder Resolution V" and agreed on the cooperation projects between the two parties. Ye Siyuan could get five sets of stores, and the two signed the "Shareholder Resolution VI" in the same month. It was decided to sell the project building to Ye Siyuan and Chen Yahui at cost price according to the sales contract. Subsequently, Hualong Company as the seller and Ye Siyuan as the buyer signed the "Commercial Housing Sales Contract" for five sets of stores. In 2008, Xiamen Local Taxation Bureau determined that the five sets of stores obtained by Ye Mouyuan were dividends and should be withheld according to the dividends. In 2009, the Fujian High Court ruled that Ye Siyuan should fulfill the obligation of capital contribution to Hualong Company. The plaintiff sued for the defendant's return of dividends on the grounds that the defendant had not fulfilled its obligation to contribute and was not entitled to a profit dividend.

The court of first instance (Xiamen Huli District People's Court) held that:Ye Siyuan in 2006 from Hualong Company to obtain five sets of stores, by the Xiamen Local Taxation Inspection Bureau identified as a dividend, that is, from Hualong Company to obtain profits.Although Ye Siyuan failed to fulfill his capital contribution obligations during his tenure as a shareholder of Hualong Company, the self-interest rights of shareholders who requested the distribution of profits in accordance with the law will be subject to corresponding restrictions. However, the restriction of the law on the self-interest right of shareholders who have not fulfilled their capital contribution obligations is to safeguard the rights and interests of other shareholders who have fulfilled their capital contribution obligations in accordance with the contract and to ensure the adequacy of the company's capital, and through this means to encourage shareholders who have not fulfilled their capital contribution obligations to pay capital to the company in a timely manner in accordance with the contract between shareholders.According to the provisions of Article 34 of the Company Law, shareholders who have actually made capital contributions may waive the restriction on the right of unfunded shareholders to request the distribution of profits, and as long as all shareholders make an effective decision on the distribution of the company's profits, it shall be implemented in accordance with that decision. In this case, Ye Siyuan obtained five sets of stores in litigation according to the conclusion of "Shareholder Resolution V" and "Shareholder Resolution VI" between Ye Siyuan and Chen Yahui in 2006. The acquisition was based on the new agreement formed by Hualong Company's meaning organ, that is, all shareholders did not distribute the profits according to the proportion of capital contribution or whether the actual capital contribution was in place. There was no evidence to show that the agreement was defective in effect, it is binding on Chen Yahui, Ye Siyuan and Hualong Company, so the plaintiff's claim is rejected.

The Court of Second Instance (Xiamen Intermediate People's Court of Fujian Province) held that:The judgment of the first instance is clear in finding the facts and applying the law correctly and should be upheld.

Basic case:The plaintiff Yu Miao is a shareholder of the defendant Pinxun Company. The original court found out after trial that Yu Zhou signed an equity transfer agreement with the outsider Wang Zhenguo on January 25, 2006, agreeing that Wang Zhenguo would transfer 12% of his shares in Pinxun Company to Yu Zhou, who contributed 1.2 million yuan. After the signing of the agreement, the business registration procedures for the change of shareholders were completed. As of November 24, 2006, Pinxun's articles of association recorded that Yu Zhou and outsiders Li Xin and Wang Hui each accounted for 12% of the company's shares, while outsiders Wang Zhenguo and Xie Shaomin each accounted for 44% and 20% of the company's shares. From May 21, 2007 to December 2010, Pinxun Company distributed profits more than 40 times. Each distribution of five shareholders signed to confirm the distribution of shares. Yu Zhou, Li Xin and Wang Hui received dividends with 10% shares each. Wang Zhenguo and Xie Shaomin received dividends with 70% of the shares. Now Yu Zhou, on the grounds that the confirmation signed by the five parties is not an agreement of the shareholders but only a dividend receipt, requires Pinxun Company to make up 497 920 yuan (until the end of August 2011) for the 2% shares still owed to Yu Zhou in accordance with the 12% shares confirmed in the articles of association.

The Court of First Instance (Shanghai Xuhui District People's Court) held that:According to the Company Law, the shareholders of a company have the right to receive dividends in proportion to their paid-in capital contribution, but how to pay dividends in what proportion should be decided by the shareholders through consultation, which is within the scope of the autonomy of the company. During the trial, there was a dispute between the parties about how much money Yu Zhou actually paid, because his actual contribution was deducted by other types of funds in advance, which were constantly rolling, and Yu Zhou himself could not provide all the financial documents of the actual contribution,Therefore, in the absence of a special audit, the amount of funds paid in Yu Temple has not been determined.Although the company's articles of association clearly state that the plaintiff's shares are 12%, in the company's dividends for more than three years and more than 40 times, Yu Zhou received 10% of the shares, while Wang Zhenguo and Xie Shaomin received 70% of the dividends. The fact that the company's five shareholders are all aware of this, moreover, Yu Zhou has never raised any objection to this distribution plan and Wang Zhenguo and Xie Shaomin's 6% bonus. Therefore,Although Pinxun Company has not made a resolution on the dividend distribution plan in the form of a shareholders' meeting, the confirmation from the five parties and the interrogation and inquiry records of Wang Hui, Li Xin and Yu Zhou in the public security organs can confirm each other that all shareholders have agreed on the dividend distribution.More importantly, the 2% dividend requested by Yu Zhou was actually obtained by Wang Zhenguo and Xie Shaomin, instead of being retained in the company's profits for redistribution. Yu Zhou knew this but did not raise any objection or lawsuit for a long time, which should be regarded as his agreement to accept the dividend according to the 10% share ratio. To sum up, the plaintiff Yu Zhou's claim was rejected.

The Court of Second Instance (Shanghai No. 1 Intermediate People's Court) held that:The judgment of the first instance is clear in finding the facts and applying the law correctly and should be upheld.

The author thinks that the company's surplus distribution should adhere to the principle of distribution according to law, the principle of capital preservation, realize the shareholders' investment rights and interests, and take into account the protection of the interests of small and medium-sized shareholders and creditors. According to Article 16 of the Interpretation III of the Company Law, when a shareholder fails to fulfill his or her obligation to contribute, his or her corresponding property rights shall be restricted, which is in line with the civil legal principle of the consistency of rights and obligations. However, the "Company Law" and its related interpretations have given all shareholders of the company more room for autonomy. In order to prevent disputes due to dividends, the company can use the articles of association, the resolutions of the shareholders (general) meeting, etc. Reasonable restrictions on the company's surplus profit distribution claim rights of shareholders to help establish a stable cooperative relationship between shareholders.