Viewpoint... Legal risk analysis and recommendations for the transfer of shares of non-listed non-public joint-stock companies.
Published:
2020-12-18
As more and more companies listed on the New Third Board are delisted, and the number of companies listed on the regional equity trading market is increasing, there are more and more disputes over the transfer of shares of such non-listed non-public joint-stock companies, and there are also greater disputes in judicial practice. Based on the judicial case, this paper discusses the risks that need to be paid attention to in the transfer of shares of non-listed non-public companies, and provides some legal risk prevention suggestions.
1. what is an "unlisted non-public joint-stock company"
At present, China's law does not have a clear definition of "non-listed non-public company", from the literal meaning, it is generally recognized that non-listed non-public companies are ordinary limited companies other than the above-mentioned listed companies and non-listed public companies.
Listed companies, as the name implies, are what we call joint-stock companies listed and traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange. An unlisted public company, according to the provisions of Article 2 of the Measures for the Supervision and Administration of Unlisted Public Companies, refers to a joint stock limited company whose shares are issued or transferred to a specific target, resulting in a total of more than 200 shareholders and whose shares are not listed on the stock exchange. The common ones are companies listed on the New Third Board or joint-stock companies with more than 200 shareholders through targeted issuance of shares to employees.
2. on the risks associated with the transfer of shares of unlisted non-public joint-stock companies.
(I) industrial and commercial registration is not filed, the shareholders of the joint stock company change.
According to Article 9 of the Regulations on the Registration of the People's Republic of China Companies, the registered items of a company include the names of the shareholders of a limited liability company or the promoters of a joint stock limited company. It can be seen that the necessary matters for the registration of a joint stock company only require the name of the promoter, and the promoter is a shareholder at a specific point in time of the company's shareholding system reform, and the identity is specific. Therefore, the industrial and commercial change registration does not record the change of shareholders of the joint stock company.
In practice, if investors participate in the fixed increase of listed companies or companies listed on the new third board or transfer shares in the secondary market, their shareholder identity is generally confirmed through the shareholder register issued by the zhongdeng settlement system. If investors purchase or transfer shares of companies listed in local property rights trading centers, companies listed on the fourth board will generally trust the shares in the trading center, and the trading center will issue stamped documents to confirm. However, if the investor purchases or transferees the shares of the joint-stock company other than the above-mentioned circumstances, not only is there no certification document issued by the third-party stock exchange market, but the Market Supervision Administration also does not make shareholder change registration.
In (II) judicial practice, there are different judgments in the same case for the effective elements of share transfer.
Due to the lack of laws and regulations related to the transfer of shares of non-listed non-public companies in China, and some courts do not clearly understand what is a non-listed non-public joint-stock company, there are different judgments in the same case for the effective elements of the transfer of shares of non-listed non-public companies in judicial cases, and no authoritative conclusion has been formed.
For example, in the second-instance civil judgment of Mao Dibin and Chen Liming's equity transfer dispute ((2017) Xiang Min Zhong No. 340) issued by the Hunan Provincial Higher People's Court, the Hunan Provincial Higher People's Court held that when Mao Dibin and Chen Liming transferred the shares of the target company, Dakang's shares were not yet listed, and the transfer did not apply the provisions of Article 39 of the Securities Law, that is, there is no need to list and trade on a stock exchange established in accordance with the law or transfer on other securities trading venues approved by the State Council; and the above-mentioned share transfer agreement does not violate the prohibitive provisions of the Notice of the General Office of the State Council on Severely Cracking down on Illegal Issuance of Shares and Illegal Securities Business (No. 99 [2006] of the State Council), and does not need to be reported to be approved by the securities regulatory authorities; in addition, according to the provisions of the company law, the amendment of the articles of association or the filing of industrial and commercial registration is not an effective element of the share transfer contract of a joint stock limited company. Therefore, it is determined that the transfer of shares between the two parties is the true intention of both parties, and the oral transfer agreement is legal and valid. However, the (2013) Shanghai No. 1 Zhongmin 4 (Shang) Zhongzi No. 668 civil judgment made by Shanghai No. 1 Intermediate People's Court held that since the target company was a non-listed joint-stock company, Wang Moumou transferred the shares of the target company to Zhao Moumou. Because he did not trade on the designated stock exchange and did not follow other methods prescribed by the State Council, it was finally determined that he violated the prohibitive provisions of Article 139 of the Company Law of the the People's Republic of China, it is an illegal share transfer.
It can be seen that in judicial practice, there are different judgments in the same case for the effective elements of the transfer of shares of non-listed non-public joint-stock companies.
How to fight the problem of bona fide third party in the transfer of (III) shares
The Chongqing Higher People's Court issued a civil judgment of second instance on the objection to the execution of outsiders in the (2016) Yu Min Zhong No. 205 case. The Chongqing Higher People's Court held that Article 17 of the Provisions of the Supreme People's Court on Seizure, Seizure and Freezing of Property in Civil Execution of the People's Court stipulates that "if the third party has paid all the price and actually possesses it, but has not gone through the transfer registration procedures, if the third party registration, the" registration procedure "in the provision that the people's court may not freeze, seize or freeze" shall be understood as a registration act that can cause the effect of a change in biological rights and does not cover all registration acts. In that case, the court did not stereotype that changes in equity must be registered by the registry, but rather that registration as a register of shareholders would have the effect of a change in the ownership of shares. Therefore, before the transfer of shares has changed the register of shareholders, the people's court may freeze the shares of the target company held by the original transferor on the basis of the creditor's application. It can be seen that the proof of shareholder's identity is based on whether it is recorded in the register of shareholders, and if it is not registered in the register of shareholders, it will not be effective against third parties, but the case does not state whether it is effective against third parties if it is registered in the register of shareholders.
3. Legal Suggestions on the Transfer of Shares of Non-listed Non-public Joint Stock Companies
(I) as soon as possible to improve the legislation and related supporting system
In view of the fact that the current laws and regulations do not have clear provisions on the transfer of shares of non-listed non-public companies, the market supervision and management departments at all levels are unable to handle the registration of the transfer and change of shares of non-promoter shareholders, and the share trusteeship is not enforced, which leads to the subsequent share changes of joint-stock companies without public publicity, and the share identity information registered by the Market Supervision Administration is seriously out of line with the actual situation, which seriously affects the credibility of the share transfer. Therefore, it is recommended to improve the relevant legislation as soon as possible, and the Market Supervision Administration will issue supporting measures to improve the registration of changes in the transfer of shares of non-listed non-public companies, regulate the pledge of shares involving the above-mentioned companies, and protect the rights and interests of the transferee shareholders.
(II) regulating the transfer of shares of non-listed non-public companies.
1. Improve the internal governance of the Company, improve the management system of the Company, especially the management of the register of shareholders, strictly implement the procedures for changing the register of shareholders when it comes to the transfer of shares, and improve the information of the register of shareholders, including but not limited to the registration of the name of the shareholders, the number of shares held, the number of shares held and the address of the shareholders. The transfer of shares of a non-listed non-public company between shareholders shall also notify the target company at the first time, and the transferee shall ensure that the target company cooperates with the issuance of the changed register of shareholders before signing the relevant share transfer agreement and paying the transfer price.
2. Under the permission of the local market supervision and administration bureau, when the shares of non-listed non-public companies are involved in changes, the content of "the latest shareholder structure of the target company" shall be added to the articles of association, and the latest shareholder structure, shareholder name and shareholding of the company shall be clarified. Quantity, in order to enhance the effectiveness of publicity by filing in the articles of association of the Market Supervision and Administration Bureau, so as to achieve the purpose of fighting against bona bona bona third party.
3. Limit the relevant rights and interests of the transferor by setting installment payment and other conditions, so as to reduce the risk of defects in the shares of the non-listed non-public joint stock company acquired by the transferee or subsequent seizure due to the inability to register.
(III) regulating the custody of shares of non-listed non-public companies
If the number of shareholders of non-listed non-public companies is large, it is recommended to choose the regional equity trading center or Shandong property rights trading center for share custody, so as to protect the legality and effectiveness of share transfer and avoid related risks.
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