Corporate Litigation Study... Corporate litigation rules of the company's capital reduction dispute.

The company's capital reduction dispute refers to the civil dispute caused by the company's reduction of registered capital in violation of legal procedures and conditions, which harms the interests of the company's shareholders or creditors. Capital reduction disputes are mainly divided into several categories: 1. Company shareholders file a lawsuit to confirm that the company's capital reduction is invalid or cancel the company's capital reduction resolution, which belongs to the company resolution dispute in the company dispute; 2. Company creditors file a lawsuit to require the company to pay off its debts or provide corresponding guarantee, which belongs to other disputes in the commercial field; 3. Due to the illegal capital reduction procedure, the company's creditors sued the capital reduction shareholders to assume supplementary liability for the company's debts within the scope of the capital reduction, and this type of dispute is a typical capital reduction dispute. By combing the relevant laws, supplemented by typical cases, this paper tries to clarify the relevant legal provisions and judicial rules for reference.

1. the People's Republic of China Civil Procedure Law

Article 26 Litigation arising from disputes over the establishment of a company, confirmation of shareholder qualifications, distribution of profits, dissolution, etc., shall be under the jurisdiction of the people's court of the place where the company is domiciled.

2. Company Law of the People's Republic of China

Article 177 When a company needs to reduce its registered capital, it must prepare a balance sheet and an inventory of its property. The company shall notify the creditors within 10 days from the date of making the resolution to reduce the registered capital, and make a public announcement in the newspaper within 30 days. The creditor shall have the right to require the company to pay off its debts or provide corresponding guarantee within 30 days from the date of receipt of the notice, or within 45 days from the date of announcement if the notice is not received.

1. Circular of the Supreme People's Court of China, on Printing and Issuing the Revised Provisions on the Cause of Action in Civil Cases (2011)

21. Disputes related to the company

281. Company capital reduction dispute

2. Interpretation of the Supreme People's Court on the Application of the the People's Republic of China Civil Procedure Law

Article 3 The domicile of a citizen refers to the place where the citizen's household registration is located, and the domicile of a legal person or other organization refers to the place where the main office of the legal person or other organization is located.

If the location of the principal office of a legal person or other organization cannot be determined, the place of registration or registration of the legal person or other organization shall be the place of domicile.

Article 22 Jurisdiction shall be determined in accordance with the provisions of Article 26 of the Civil Procedure Law for lawsuits arising from disputes over records in the register of shareholders, requests for changes in company registration, shareholders' right to know, company resolutions, company mergers, company division, company capital reduction, company capital increase, etc.

3. (III) of the Provisions of the Supreme People's Court on Several 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.

Article 14 Where a shareholder withdraws his capital contribution, the people's court shall support the request of the company or other shareholders to return the principal and interest of the capital contribution to the company, and other shareholders, directors, senior managers or actual controllers who assist in the withdrawal of capital contribution shall bear joint and several liability for this.

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.

Notice of the Supreme People's Court on Issuing the Minutes of the National Courts Conference on Civil and Commercial Trials (Law [2019] No. 254)

2. on the trial of company dispute cases

(I) on the validity and performance of the "gambling agreement".

5. ["Gambling" with the target company] If the "gambling agreement" concluded between the investor and the target company does not have any statutory reasons for invalidity, if the target company claims that the "gambling agreement" is invalid only on the grounds of the existence of equity repurchase or monetary compensation agreement, the people's court will not support it, but the investor claims that it is actually performed, the people's court shall examine whether it complies with the mandatory provisions of the Company Law on "shareholders shall not withdraw their capital contributions" and share repurchase, and whether the judgment supports their claims.

If the investor requests the target company to buy back its shares, the people's court shall examine it in accordance with the mandatory provisions of Article 35 of the Company Law on "shareholders may not withdraw their capital contributions" or Article 142 on share repurchase. After examination, if the target company has not completed the capital reduction procedure, the people's court shall reject its claim.

If the investor requests the target company to assume the obligation of monetary compensation, the people's court shall conduct a review in accordance with the mandatory provisions of Article 35 of the Company Law on "shareholders may not withdraw their capital contributions" and Article 166 on profit distribution. If, after examination, the target company has no profit or is not profitable enough to compensate the investor, the people's court shall reject or partially support its claim. In the future, when the target company has profits, the investor may also file a separate lawsuit based on that fact.

1. Guiding Opinions of the Higher People's Court of Jiangxi Province on Several Issues Concerning the Trial of Cases of Company Disputes (2008 No. 4)

On the Dispute of 2. Shareholder's Capital Contribution

12. When the company is established, if the promoter makes a false capital contribution, the other promoters shall bear the joint and several liability for the payment. This liability is not waived by the transfer of equity by other promoters.

If a shareholder withdraws his capital contribution, the shareholders, directors, managers and other senior management personnel who help to withdraw their capital contribution shall be jointly and severally liable.

When the company increases its capital, if the shareholders make false capital contributions, the responsible shareholders, directors, managers and other senior managers shall bear joint and several liability.

After the responsible person stipulated in the above three paragraphs has assumed responsibility, he may recover the compensation from the promoter or shareholder of the defective capital contribution, or he may demand from other jointly and severally responsible persons to pay off his share.

18. If the company fails to notify the creditors in accordance with the provisions of Article 178 of the Company Law, or fails to pay off the debts or provide corresponding guarantees in accordance with the requirements of the creditors, the company's creditors may require the shareholders to recover their respective capital contributions. Within the scope of the company's debts before the capital reduction, it shall jointly and severally bear supplementary liability for compensation.

2. Guidelines for the Judgment of the Second Civil Division of the Higher People's Court of Guangxi Zhuang Autonomous Region on Several Issues Concerning the Trial of Company Dispute Cases (Guigao Fa Min II [2020] No. 19)

The effectiveness of the capital system of 1. companies.

2. [Capital Maintenance in Shareholder Withdrawal] Shareholder withdrawal involves the withdrawal of capital contribution and further the reduction of the company's capital. Therefore, based on the protection of creditors' interests, the company's capital system places certain restrictions on shareholder withdrawal:(1) Shareholders agree to withdraw their shares through the resolution of the company's shareholders' meeting, or withdraw their shares through claiming the right of repurchase of dissenting shareholders (Article 74 of the Company Law), the interests of creditors of the company shall be protected through legal capital reduction procedures (Article 177 of the Company Law);(2) If shareholders withdraw their shares through dissolution of the company, they shall protect the interests of creditors of the company through legal liquidation procedures (Article 183 of the Company Law);(3) Shareholders withdraw from the company by transferring all their shares, which does not involve the reduction of the company's capital and is not subject to the company's capital control, however, if the transferring shareholder transfers the equity without making a full capital contribution, he still bears the obligation to make up the capital contribution (Article 18 of Interpretation III of the Company Law).

2. the legal effect of the articles of association

Review of the validity of 9. gambling agreements.

45. [Nature of Repurchase Clause] If the gambling agreement mode is adopted in the equity transfer transaction, the repurchase clause is usually set to withdraw the investment, I .e. to recover the "loan" or "financing fund". The people's court shall conduct a review at the level of the company's capital system, I .e. whether the repurchase complies with the statutory capital reduction procedure, so as to ensure that the interests of all parties behind the withdrawal of capital contribution or recovery of "financing fund" are fairly protected.

However, if the investor requests the target company to repurchase its shares and at the same time appeals to the target company to perform the capital reduction procedure, the people's court will not support it because the company's capital reduction procedure is a matter of corporate autonomy and the judiciary will not intervene.

The plaintiff:Creditors

The accused:All or part of the shareholders (according to: the provisions of the Supreme People's Court on the application of the the People's Republic of China Company Law (III) Article 13, 14)

Jurisdiction:Under the jurisdiction of the people's court of the company's domicile (based on: Article 26 of the Civil Procedure Law and Article 22 of the Interpretation of the Supreme People's Court on the Application of the the People's Republic of China Civil Procedure Law)

Litigation request:

1. Request to order the defendant x x x to bear supplementary liability for the part of x x company's debt that cannot be paid off by the plaintiff within the scope of the capital reduction of x x yuan;

2, the case acceptance fee, preservation fee and other litigation costs are borne by the defendant.

The judgment case of Shanghai Delixi Group Co., Ltd. v. Jiangsu Boenshitong High-tech Co., Ltd., Feng Jun and Shanghai Boenshitong Optics Co., Ltd. in the 11th issue of the Bulletin of the Supreme People's Court in 2017 equated the nature of illegal capital reduction with the withdrawal of capital contribution. The Supreme Court heard the dispute over the loan contract between Anhui Xinji Coal and Electricity (Group) Co., Ltd., Rudong County Rural Credit Cooperative Association and Shanghai Hengde Zhidi Co., Ltd. [(2010) Min Ti Zi No. 79], the Supreme Court clearly put forward this point of view for the first time.

There are different views that illegal capital reduction is equivalent to the nature of capital withdrawal, which will inappropriately expand the scope of liability, and will extend the scope of liability to other shareholders, directors, senior managers or actual controllers who assist in the withdrawal of capital, and will improperly amplify the "harmfulness" of illegal capital reduction, Because in civil cases, it may involve the crime of withdrawing capital in criminal cases.

Case 1: Shanghai Delixi Group Co., Ltd. v. Jiangsu Boenshitong High-tech Co., Ltd., Feng Jun and Shanghai Boenshitong Optoelectronic Co., Ltd. Case of Dispute over Purchase and Sales Contracts [Supreme Court Gazette Case 2016 Hu 02 Min Zhong No. 10330]]

The court held that the shareholders of Jiangsu Boen Company formed resolutions of the shareholders' meeting on August 10 and September 27, 2012 on the reduction of the company's capital. At this time, the creditor's rights of Delixi Company had already been formed. As shareholders of Jiangsu Boen Company, Shanghai Boen Company and Feng Jun should know clearly. However, in this case, Shanghai Boen Company and Feng Jun still agreed to Feng Jun's request for capital reduction through the resolution of the shareholders' meeting, and did not directly notify Delixi Company, which not only damaged the solvency of Jiangsu Boen Company, but also infringed on the claims of Delixi Company, and should bear corresponding legal liability for the debts of Jiangsu Boen Company.

When the company fails to notify known creditors of a capital reduction, the situation is not essentially different from the substance of the shareholder's illegal withdrawal of capital and the effect on the damage to the creditors' interests.Therefore, although our law does not specify the liability of shareholders in the event of damage to the interests of creditors as a result of a company's failure to comply with the statutory procedures for capital reduction, it can be determined by reference to the relevant principles and provisions of the company law. Due to the defects in the capital reduction behavior of Jiangsu Boen Company, the company's claims formed before the capital reduction cannot be paid off after the capital reduction, Shanghai Boen Company and Feng Jun, as shareholders of Jiangsu Boen Company, shall bear supplementary liability for the non-payment of the debts of Jiangsu Boen Company within the scope of the amount of the company's capital reduction.

Case 2: Dispute over Loan Contract between Anhui Xinji Coal and Electricity (Group) Co., Ltd. and Rudong County Rural Credit Cooperative Association and Shanghai Hengde Real Estate Co., Ltd. [(Supreme People's Court (2010) Min ti Zi No. 79)]]

The court held that the withdrawal of the coal power company from Hengde had violated the statutory procedures for capital reduction,Should be identified as the name of capital reduction, in fact, the nature of the withdrawal of capital contributions.The Coal and Electricity Company shall be jointly and severally liable for the guaranteed debts of Hengde Company within the scope of its capital contribution of 25 million yuan.

Case 3: Xiangtan Dahan Iron and Steel Trading Co., Ltd. and Hu Zhi and Liang Shuai Company's Capital Reduction Dispute heard by Xiangtan Intermediate People's Court [(2014) Tan Zhongmin Erchu Zi No. 20]]

The court held that: Jinrong Company did not notify the known creditor Dahan Company when reducing its capital, resulting in Dahan Company not knowing about its capital reduction, nor could it ask it to pay off its debts or provide guarantees in advance, the capital reduction procedure was flawed and had no legal effect on Dahan Company. Although the company law stipulates that the notice obligor when the company is reducing its capital is the company, the company's capital reduction is the result of the resolution of the shareholders' meeting, and whether and how to reduce the capital depends entirely on the will of the shareholders. As the shareholders of Jinrong Company, Hu Zhi and Liang Shuai still reduced the company's registered capital through the resolution of the shareholders' meeting even though they knew that the company's external liabilities had not been paid off. Subjectively, there was a fault, which objectively damaged the solvency of Jinrong Company and endangered the realization of the creditor's rights of Dahan Company. In essence, it caused the same consequences as the withdrawal of capital contribution, therefore, we should refer to the second paragraph of 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 Law". The people's court shall support the shareholders who request the company's creditors to withdraw their capital contributions to bear supplementary compensation 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 withdrawing capital contributions shall bear joint and several liability for this; the shareholders who have withdrawn their capital contributions have already assumed the above-mentioned responsibilities. If other creditors make the same request, the people's court will not support the "treatment, I .e. the defendants Hu Zhi and Liang Shuai shall, within the scope of capital reduction, bear supplementary compensation liability for the payment obligations of Jin Rong Company as determined in the civil mediation document No. 43 of Tanzhong Min Er Chu Zi of our hospital (2012).

Case 4: Cai Ruixian et al. v. Shanghai Yongdian Garment Technology Co., Ltd. Shareholder's Capital Contribution Dispute [(2014) Hu Yi Zhong Min Si (Shang) Zhong Zi No. 462]]

The court held that, according to the provisions of the current company law, shareholders have the obligation to effectively perform their capital contributions in accordance with the articles of association of the company, and at the same time have the responsibility to maintain the company's registered capital. The company's capital reduction should be subject to legal procedures in accordance with the law to ensure that the company's creditors have the opportunity to make appropriate trade-offs and actions before the company's property is reduced. According to the effective judgment, Jinse Company's debts to Yongdian Company have not been fully paid off. Since then, Jinse Company has made a capital reduction, only making an announcement in relevant newspapers and not notifying known creditors Yongdian Company. As a result, Yongdian Company has no way of knowing about its capital reduction and cannot require it to pay off its debts or provide guarantee in advance. This violates the provisions of the the People's Republic of China Company Law on capital reduction of the company. Jinse Company's capital reduction procedure is flawed. Although the company law stipulates that the notice obligor when the company reduces its capital is the company, the company's capital reduction is the result of the resolution of the shareholders' meeting, and whether and how to reduce the capital depends entirely on the will of the shareholders. In this case, the seven appellants, knowing that Jinse Company's external debts had not been paid off, still reduced the company's registered capital through a resolution of the shareholders' meeting and issued a false statement to the industrial and commercial registration department. Subjectively, there was a fault, which objectively damaged the solvency of Jinse Company. Therefore, the behavior of the capital reduction shareholders constituted a third party infringing on the creditor's rights.The reduction of capital due to procedural defects, which has no legal effect on known creditors, essentially has the same consequences as the withdrawal of capital contributions by shareholders,Therefore, the original trial court, with reference to the relevant provisions of the (III) on the Application of Certain Issues of the Supreme People's Court on the withdrawal of capital contributions, found that it was not improper for the seven appellants to bear joint and several supplementary liability for the debts of Yongdian Company borne by Jinse Company within the scope of their respective capital reductions. In addition, even if some shareholders have transferred their shares in Jinse to outsiders, it does not affect their liability for defective capital reduction prior to the transfer.

Case 5: Yu Yue v. Zhang Peijin, Li Xiaoying and the third party Tianjin Weihao Real Estate Consulting Co., Ltd. Capital Reduction Dispute [(2018) Jin 02 Min Zhong No. 361]]

The court held that the procedure for capital reduction of the company was clearly stipulated in Article 177 of the the People's Republic of China Company Law. However, the law of our country does not explicitly stipulate what kind of legal consequences will be produced by the company's capital reduction in violation of legal procedures, nor does it explicitly stipulate what kind of legal responsibilities the relevant personnel should bear. In this case, the third party Weihao Company, knowing that the plaintiff is its creditor and has clear contact information, did not inform the plaintiff by other means than public announcement after making the capital reduction resolution, and failed to perform the legal procedure of notifying creditors. Therefore, the third party Weihao Company's capital reduction procedure is illegal, and it should be determined that the capital reduction behavior of the corresponding shareholders constitutes capital evasion. The shareholders of the company's creditors who request the withdrawal of capital contributions shall bear supplementary liability for the part of the company's debts that cannot be paid off 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, and the people's court shall support it. Therefore, the plaintiff's claim complies with the law and the court supports it.

Case 6: Guangdong Qiulu Industrial Co., Ltd. and Taihua High-tech Dyeing and Finishing (Jiaxing) Co., Ltd. Dispute over Sales Contracts [(2017) Zhejiang 04 Minzong No. 405]]

The court held that Jinxiao Company was the investor of Kael Company. Kael Company reduced its registered capital by 8 million yuan on January 28, 2015, but did not notify Taihua Company. According to Article 177 of the the People's Republic of China Company Law, "When a company needs to reduce its registered capital, it must prepare a balance sheet and a list of property. The company shall notify the creditors within 10 days from the date of making the resolution to reduce the registered capital, and make a public announcement in the newspaper within 30 days. Creditors have the right to require the company to pay off debts or provide corresponding guarantees within 30 days from the date of receiving the notice, and within 45 days from the date of announcement if they fail to receive the notice. The capital reduction is defective in the procedure, but the capital reduction is different from the withdrawal of capital. The capital reduction is a substantial reduction of the company's capital or a formal capital reduction. Taihua Company has not submitted evidence to prove it, therefore, the request of Taihua Company for Jinxi Ao Company to assume responsibility for the debts of Kael Company is not supported.

Case 7: Agricultural Bank of China Changshu Branch and Li Chao, Suzhou Kexin Non-financing Guarantee Co., Ltd. and other financial loan contract dispute case No.: [(2016) Su 0581 Minchu 8409]]

The court held that, according to the relevant laws and regulations, when a company needs to reduce its registered capital, it must prepare a balance sheet and a list of property. The company shall notify the creditors within 10 days from the date of making the resolution to reduce the registered capital, and make a public announcement in the newspaper within 30 days. The creditor shall have the right to require the company to pay off its debts or provide corresponding guarantee within 30 days from the date of receipt of the notice, or within 45 days from the date of announcement if the notice is not received. And the people's court shall support the request of the creditors of the company that the shareholders who have not fulfilled or have not fully fulfilled their capital contribution obligations shall bear supplementary 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. In this case, the capital reduction of the defendant Suzhou Kexin Non-financing Guarantee Co., Ltd. occurred after it guaranteed the defendant Li Chao, and the plaintiff should be its known creditor; the defendant Suzhou Kexin Non-financing Guarantee Co., Ltd. did not directly notify the plaintiff when it made the capital reduction, and only published the capital reduction announcement in the local Zhangjiagang Daily, which failed to ensure that the plaintiff knew effectively, as a result, the plaintiff missed the right to require the defendant Suzhou Kexin Non-financial Guarantee Co., Ltd. to pay off debts or provide corresponding guarantees; the capital reduction of the defendant Suzhou Kexin Non-financial Guarantee Co., Ltd. has led to the original registered capital and the capital contribution after the capital reduction. There is a big difference between the performance ability and the plaintiff's trust interest. Its behavior is equivalent to the shareholder failing to fully perform the capital contribution obligation. According to relevant laws and regulations, the Court supports the plaintiff's claim that the defendant Xu Ke and Shen Lin cannot perform part of the liability within the scope of the capital reduction of the defendant Suzhou Kexin Non-Financial Guarantee Co., Ltd. in 87.504 million yuan and 12.376 million yuan respectively.

referee rules]

From the above-mentioned local jurisprudence, the views of local courts on this issue are controversial: in the case of the company law has not yet provided for civil liability for illegal capital reduction, creditors require illegal capital reduction shareholders to bear responsibility, the court can only look for a reference to the applicable basis of the right of claim, that is, in accordance with Article 14 of the "Interpretation III of the Company Law", that is, "The shareholders who request the company's creditors to withdraw their capital contributions shall bear supplementary compensation 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, and senior management who assist in the withdrawal of capital contributions. If the personnel or actual controller bear joint and several liability for this, the content, the people's court shall support. However, some courts hold that the illegal capital reduction of shareholders can also be regarded as the failure of shareholders to fully fulfill their capital contribution obligations. With reference to the second paragraph of Article 13 of the interpretation of the Company Law, "if the creditors of the company request that the shareholders who fail to fulfill or fully fulfill their capital contribution obligations 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 capital contribution, the people's court shall support, The shareholders shall be investigated for the supplementary repayment.

1. Because of the cases of the Supreme Court and the Supreme Court bulletin, most courts will be the nature of the illegal reduction of capital equivalent to the withdrawal of capital.

2. From the point of view of civil liability alone, if all shareholders of the company have capital reduction, whether the nature of the illegal capital reduction is equivalent to the withdrawal of capital contributions has no effect on the liability of shareholders, and each shareholder shall bear supplementary liability for the part of the company's debt that cannot be paid off within the scope of the capital reduction. If only some shareholders have reduced their capital, and the remaining shareholders agree to reduce their capital through resolutions of shareholders' meetings, etc., the nature of the illegal capital reduction is equivalent to the withdrawal of capital contributions, and the shareholders who have reduced their capital shall bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the capital reduction, and the remaining shareholders who have not reduced their capital shall also bear joint and several liability. If the nature of the illegal capital reduction is only determined to be that the capital contribution is not in place, only the shareholders who need to reduce the capital shall bear supplementary liability for the part of the company's debt that cannot be paid off within the scope of the capital reduction.

Case 1: Wuhan sunshine nit intelligent technology co., ltd., pan Jinhai, Shenzhen junpeng wulian technology co., ltd. second instance civil judgment on contract dispute [(2019) e 01 min zong no 6203]]

The court held that Shenzhen Junpeng IOT Technology Co., Ltd. made a capital reduction resolution on January 13, 2017 and went through the industrial and commercial change registration on March 20, 2017, while the agreement of Wuhan Sunshine Nit Intelligent Technology Co., Ltd. expired on September 27, 2017. Whether Wuhan Sunshine Nit Intelligent Technology Co., Ltd. has creditor's rights to Shenzhen Junpeng IOT Technology Co., Ltd. can only be determined after the expiration of the agreement period between the two parties, therefore, when Shenzhen Junpeng IOT Technology Co., Ltd. made a capital reduction resolution, Wuhan Sunshine Nite Intelligent Technology Co., Ltd. was not a known creditor.

Case 2: Plaintiffs Tang Xu, Huang Fang and Tang Xinyu v. Defendants Shanghai Aijia Investment Holding Co., Ltd. and the third party Shanghai Youxing Investment Management Co., Ltd. in the first instance of capital reduction dispute [(2017) Shanghai 0115 Minchu No. 26021]]

The court held that the plaintiff's creditor's rights to the third party were determined by the effective judgment, and the third party's overdue application of the small property certificate confirmed by the civil judgment lasted until June 30, 2014. Therefore, the third party was aware of the plaintiff's default creditor's rights when the third party reduced its capital. Now the third party has no evidence to prove that it had notified the plaintiff directly during the capital reduction process, and there is no evidence to prove that the plaintiff cannot be direct service, therefore, the third party is at fault and its capital reduction procedure does not fully comply with the above-mentioned legal provisions.

Case 3: Dispute over Capital Reduction between Plaintiff Kang Li and Defendants Shanghai Zhonghan Investment Management Center, Zhao Shaodong and Other Companies [(2018) Hu 0115 Min Chu No. 38045]]

The court held that the plaintiff lent 3,431,236.42 yuan to Yancheng Company from December 2014 to April 2015. On October 18, 2015, Yancheng Company signed a Repayment Agreement with the plaintiff to confirm the loan. Defendants Zhao Shaodong and Li Bin also signed the end of the agreement. Therefore, when Yancheng Company made the capital reduction resolution on November 5, 2015, the plaintiff's loan to Yancheng Company was a known claim, Yancheng Company should directly notify the plaintiff on the capital reduction matter, Yancheng Company only published a notice in the newspaper did not fulfill the reasonable obligation of notice, is an illegal capital reduction.

referee rules]

1. The claim of a "known creditor" must be formed within ten days before the company's capital reduction resolution is made, and the company has no direct notification obligation if the claim has not been formed before the statutory direct notification point.

2. When the resolution of the shareholders' meeting on capital reduction is made, the claim shall be known or should be known, and the knowledge or should be known of the claim may be confirmed by an effective judgment, or it may be proved by other reasonable evidence and relevant documents.

3. If there is an effective judgment instrument before the company's capital reduction, at this time the creditor's claim has been confirmed by the judicial authority, the capital reduction company of course knows its existence, its creditors can be directly identified as known creditors.

4. The repayment agreement, arrears agreement, statement and other documents have been signed before the capital reduction resolution is made, which proves that the company has confirmed the payment obligation. If the company determines that it "knows" that part of the claim because of its active confirmation, the corresponding creditor shall be directly identified as a known creditor.

Problem overview: Although the company's capital reduction has the fact of fulfilling the notice or announcement, but the method or form of the notice or announcement does not meet the statutory service standards, resulting in defects in the company's capital reduction procedures.

Case 1: Dispute over Construction Contract between Zhejiang Zhongcheng Construction Group Co., Ltd. and Dong Xiuzhen and Jiang Wenzhong [Supreme People's Court (2016) Supreme Famin Shen No. 1112]]

The court held that: Bohai Company claimed that it had orally notified Zhongcheng Company to reduce its capital, but did not provide corresponding evidence to prove it, and Zhongcheng Company did not recognize this. Therefore, it should be determined that the reduction of the registered capital of Bohai has not fulfilled the statutory procedures for notifying creditors.

Case 2: civil judgment of the appellant Nanjing shengying investment co., ltd. and the appellee huitou holding group co., ltd. and Zhuhai jinhai industrial co., ltd. in the original trial of the defendant Nanjing shengying security system engineering co., ltd. in the case of a dispute over the interests of the company's creditors [(2014) ning shang zhongzi no 424]]

The court held that on September 14, 2006, the fire fighting equipment company made a resolution of the shareholders' meeting to reduce the registered capital, and on the same day, it published a capital reduction announcement in Nanjing morning post, a newspaper in Nanjing city. since jinhai shuangying company is located at 150 youyi road, Jiyang street, Zhuji city, Zhejiang province, and the address is not in Jiangsu province, jinhai shuangying company cannot know about the announcement of the reduction of the registered capital of the fire fighting equipment company.

referee rules]

1. In judicial practice, the court's determination that "the company shall perform the obligation of direct notice to known creditors when reducing its capital" is basically unified, that is, the company shall perform the obligation of direct notice to known or should be known creditors when reducing its capital, and cannot directly replace the obligation of notice in the form of a public notice without prior notice.

2. Although the law does not specify the mode of direct notice, it cannot choose the mode of notice arbitrarily, especially in the absence of evidence that the creditor cannot be served directly, and cannot deliberately choose an invalid mode of notice to evade its obligation to notify.

3. Although the law does not specify the level and influence of the announcement newspaper, the company should choose the newspaper that can make the announcement, such as the announcement carrier and the company's business scope should match.