Corporate Litigation Study... Does the number of shareholders exceed the quorum and the shareholders who contribute less have the right to claim that their names are recorded on the register of shareholders?

The register of shareholders is a book in which the company records the status of the shareholders and their shareholdings, and is also the basis for the exercise of the rights of the shareholders of the company. When a shareholder transfers an equity or other shareholder or change of equity occurs, a dispute over the record of the shareholder's register may occur if the transferor or the company neglects to perform the change of information on the register of shareholders. In the case of enterprise restructuring, the number of shareholders exceeds the quorum, whether the shareholders with less capital contribution have the right to claim to record their names on the register of shareholders? This paper tries to clarify the problem through typical cases, supplemented by relevant legal basis, for readers' reference.

Typical case

Chen Weixian and Guangxi Zhuang Autonomous Region Guigang Food Co., Ltd. Register of Shareholders Record Disputes

Case No.:(2019) Gui 0802 Minchu No. 447

Trial Summary

1. In the process of restructuring a state-owned enterprise into a limited company, it should be confirmed that the shareholders who contribute less have the status of actual investors.

2. In the event that the number of shareholders of a limited liability company exceeds a quorum, representatives of shareholders may be elected on the basis of the autonomy of the company, but information on other shareholders who are not representatives of shareholders shall still be fully recorded in the internal register of shareholders.

3. In the case that the number of shareholders of a limited liability company does not exceed the quorum, the claim of other shareholders who are not representatives of shareholders to register the names of shareholders with the company registration authority shall be supported.

Parties

Plaintiff: Chen Weixian.

Defendant: Guigang Food Co., Ltd., Guangxi Zhuang Autonomous Region.

Legal Representative: Ning Lian, Manager.

Brief of the case

Chen Weixian filed a claim: 1. Order the defendant to record the name and address of the plaintiff, the amount of capital contribution and the number of the capital contribution certificate in the register of shareholders and register the name of the plaintiff (shareholder) with the company registration authority; 2. The litigation costs in this case shall be borne by the defendant. Facts and reasons: The plaintiff, as an employee of the former Guigang Food Corporation, was transformed into a food company. The plaintiff contributed 3000 yuan to the food company and held 3000 shares. On November 18, 2003, the food company issued a capital contribution certificate to the plaintiff, which recorded the amount of the plaintiff's capital contribution and the number of shares. Since the defendant did not notify the plaintiff to attend the shareholders' meeting for many years, he did not pay dividends to the plaintiff. For this reason, the plaintiff went to the company registration authority to inquire and found that in the company's information records, the investor item did not have the plaintiff's name. The plaintiff held that, as a contributor to the defendant's company, he had the right to require the defendant to record the name and address of the plaintiff, the amount of capital contribution and the number of the capital contribution certificate in the register of shareholders and to register the name of the plaintiff (shareholder) with the company registration authority in accordance with Article 32 of the Company Law.

The food company argued that on June 10, 2003, the company had integrated the shares of employees, requiring employees who contributed less than 30000 yuan to exercise their rights and obligations recommend a shareholder representative. The plaintiff had received the notice, and the plaintiff and six other employees also recommend Ye Yucai as the shareholder representative to exercise their rights and obligations. In 2012, the company issued a power of attorney entrusting Ye Yucai with full authority to exercise the rights and obligations of shareholders. On August 5, 2014, shareholder representative Ye Yucai transferred the shares of seven shareholders to He Fuguang, who in turn transferred his own shares to He Quan. Therefore, the defendant believed that the plaintiff had fully entrusted Ye Yucai to transfer his equity to He Fuguang. Therefore, the plaintiff's claim had no factual and legal basis, and suggested that the court reject the plaintiff's claim.

The court found the facts as follows: on may 10, 2002, Guigang food company was restructured to establish a food company. Chen Weixian contributed 3000 yuan to subscribe for 3000 shares of the food company. On November 18, 2003, the food company issued a capital contribution certificate to Chen Weixian.

On June 10, 2003, the Food Company issued a notice to its corporate body on the recommend of shareholder representatives, stating that after the restructuring of the company, there were 286 existing shareholders, and the number of shareholders exceeded the quorum, requiring the recommend of shareholder representatives among all shareholders. A shareholder with a capital contribution of 30000 yuan will naturally become a shareholder. If the capital contribution does not reach 30000 yuan, a shareholder representative of 30000 yuan to 60000 yuan (excluding 60000 yuan) shall be recommend to exercise the rights and obligations of shareholders for a period of one year.

On March 16, 2012, Chen Weixian, Dong Shikao and other six people entrusted Ye Yucai as the shareholder representative to handle matters related to the election of the fourth shareholder representative.

On November 6, 2012, the company's articles of association recorded 41 shareholders such as why fuguang, the company's registered capital of 1.62 million yuan.

On February 5, 2013, the food company held a shareholders' meeting. According to the records of the meeting, 41 shareholders should attend the meeting and 35 shareholders actually attended the meeting. Resolution of the meeting: Agree to transfer the shares of the company held by 39 shareholders such as Bin Yemao and Ye Yucai to He Fuguang; Confirm that the company acquired all the shares of Wei Chang, Wu Aiqi and Huang Qiurong to He Fuguang in April 2012. After the equity transfer, He Fuguang accounted for 94.26 per cent of the registered capital and Hu Zhilin for 5.74 per cent of the registered capital.

On February 5, 2013, the articles of association of the company recorded why the shareholders of the company were Fuguang and Hu Zhilin.

On February 6, 2013, the shareholders of the company held a shareholders' meeting. He Fuguang's equity transfer to He Quan; Hu Zhilin's equity transfer to He Quan and He Wu.

The court held

According to Article 32 of the Company Law, a limited liability company shall keep a register of shareholders, and the shareholders who record the register of shareholders may claim to exercise the rights of shareholders in accordance with the register of shareholders. The company shall register the names of the shareholders with the company registration authority; if the registration items are changed, registration shall be carried out. If the registration is not registered or the registration is changed, it shall not be used against a third party. This case is a food company in the government-led restructuring, due to the confirmation of the company's shareholder qualifications and disputes. In this case, in order to confirm the shareholder qualification of the limited liability company, in addition to the relevant provisions of the company law, it is also necessary to comprehensively consider the relevant policies and regulations of government departments on the restructuring of state-owned enterprises. According to the approval of Guigang Municipal People's Government, Chen Weixian subscribed for 3000 yuan of state-owned assets of Guigang Food Corporation. After Guigang Food Corporation was restructured and renamed as a food company, Chen Weixian should be confirmed as the actual investor and shareholder of the food company. As the law stipulates that the registered shareholders of a limited liability company are less than 50 and the provisions of food companies, only those with a capital contribution of more than 30000 yuan are registered as shareholders of the company. When the food company was established, the actual funder reached 286, Chen Weixian's capital contribution was 3000 yuan, according to the internal regulations of the food company, Chen Weixian failed to register as a nominal shareholder of the food company, but the food company should record Chen Weixian as a shareholder of the company in the register of shareholders. According to the industrial and commercial registration information, the nominal shareholders registered by the food company are Ning Yuanming and Guigang Bandung Building Materials Trading Co., Ltd. In the case of no more than 50 nominal shareholders, the food company shall apply to the industrial and commercial registration department for registration of Chen Weixian as a shareholder of the company. Therefore, the court supported Chen Weixian's request.

Chen Weixian and others entrusted Ye Yucai as an agent to participate in the fourth shareholders' representative election meeting of the food company, and the entrustment authority does not include the transfer of the company's equity. Chen Weixian did not transfer the shares he held in the company, nor did he receive the company's profit dividends is proved by the effective court judgment documents. If the food company fails to provide evidence sufficient to disprove the facts, it shall accept the plaintiff's claim and confirm the facts. Therefore, the defense of the food company that Chen Weixian has entrusted Ye Yucai to transfer the equity to He Fuguang is not accepted.

Referee result

The court ruled as follows in accordance with the law: the defendant Guigang Food Co., Ltd. of Guangxi Zhuang Autonomous region recorded the name, capital contribution and capital contribution certificate number of the plaintiff Chen Weixian in the register of shareholders within 15 days from the effective date of the judgment of this case, and applied to the company registration authority for the registration of the plaintiff Chen Weixian as a shareholder of Guigang Food Co., Ltd. of Guangxi Zhuang Autonomous region. The cost of accepting the case shall be borne by the defendant.

Legal basis

Article 23 The establishment of a limited liability company shall meet the following conditions:

(I) the number of shareholders meets the quorum;

The (II) has the amount of capital contribution subscribed by all shareholders in accordance with the provisions of the articles of association;

(III) shareholders to jointly formulate the articles of association;

The (IV) has a company name and establishes an organizational structure that meets the requirements of a limited liability company;

(V) have company domicile.

2. Article 24 of the Company Law A limited liability company shall be established by less than fifty shareholders.

Article 25 The articles of association of a limited liability company shall specify the following:

Name and domicile of the (I) company;

Business scope of the (II) company;

(III) the registered capital of the company;

the name of the (IV) shareholder;

The method, amount and time of capital contribution of the (V) shareholders;

The organization of the (VI) company and the method for its establishment, powers and rules of procedure;

The legal representative of the (VII) company;

(VIII) other matters deemed necessary by the shareholders' meeting.

The shareholders shall sign and seal the articles of association.

4. Article 32 of the Company Law A limited liability company shall keep a register of shareholders, which shall record the following matters:

the name and domicile of the (I) shareholder;

Capital contribution of (II) shareholders;

No. of (III) capital contribution certificate.

Shareholders recorded in the register of shareholders may claim to exercise their rights in accordance with the register of shareholders. The company shall register the names of the shareholders with the company registration authority; if the registration items are changed, the change registration shall be carried out. If the registration is not registered or the registration is changed, it shall not be used against a third party.

5. The Supreme People's Court on the application.<中华人民共和国公司法>Article 24 of the (III) of Provisions on Certain Issues After the parties have fulfilled their capital contribution obligations in accordance with the law or have acquired equity in accordance with the law, the company has not issued a capital contribution certificate in accordance with the provisions of Articles 32 and 33 of the Company Law and recorded it in the register of shareholders And register with the company registration authority, the people's court shall support the request of the parties to perform the above obligations.

Lawyer's Comments

This case is a food company in the government-led restructuring, because of the company's shareholder register records and disputes, this case has three core issues. First, in the confirmation of shareholder qualification, we should not only take into account the actual capital contribution factors, but also refer to the relevant policies of the restructuring of local state-owned enterprises. The food company in this case has been approved to restructure and the plaintiff in this case has actually paid the capital contribution, it should be affirmed that the plaintiff has the status of the actual investor. Second, in the process of restructuring, the number of shareholders exceeds the quorum limit and thus the validity of the resolution of internal selection of representatives. Company law is private law, the principle of autonomy is the cornerstone of private law theory, in theory and practice, it is believed that how shareholders select representatives to exercise their voting rights should fall within the scope of shareholder autonomy, should be negotiated between shareholders, or through the general meeting of shareholders or through the articles of association of the company. Therefore, the resolution of electing shareholder representatives on the basis of autonomy of the will should be valid. Third, whether other shareholders who are not representatives of shareholders have the right to have the relevant information recorded in the register of shareholders or to make industrial and commercial registration. First, according to article 32 of the Companies Act, all shareholders should be recorded in the register of shareholders and should not be distinguished by the amount of capital contribution. Secondly, in the case that the number of shareholders of a limited liability company does not exceed the quorum limit of 50, it shall also enjoy the right to register the relevant shareholder information with the registration authority.