Corporate Litigation Study. After the death of a prominent shareholder, can an anonymous shareholder claim a name?

Foreword

The company is an indispensable economic subject in the modern economic society, with the rapid development of China's economy, the dispute between the prominent shareholders and the hidden shareholders caused by the shareholding agreement has gradually become a common type of corporate litigation. Through the study of typical cases, this paper combs the relevant laws involved in the dispute of shareholder qualification confirmation, and tries to clarify the relevant legal provisions and judicial rules for readers' reference.

Typical case

Dispute over Shareholder Qualification Confirmation between Tianjin Honglian Venture Capital Co., Ltd. and Tianjin Anjie Hospital Co., Ltd.

Case No.:(2018) Jin Min Zhong No. 361

Trial Summary

1. After the death of a prominent shareholder, the legal heir of the prominent shareholder may inherit his qualification as a shareholder without other provisions in the articles of association of the company.

2. The effect of the proxy shareholding agreement is limited only to the named shareholder and the anonymous shareholder, and cannot bind other shareholders of the limited liability company. The conversion of an anonymous shareholder into a prominent shareholder requires the consent of more than half of the other shareholders of the company, otherwise the equity remains vested in the prominent shareholder. After the death of the named shareholder, the named shareholder who claims to be named as a result of the shareholding agreement shall not be supported by the other shareholders of the limited liability company.

Parties

Appellant (plaintiff in the original trial): Tianjin Honglian Venture Capital Co., Ltd. Legal Representative: Zhuang Ting, General Manager.

Appellee (Defendant in the Original Instance): Tianjin Anjie Hospital Co., Ltd. Legal Representative: Wu Guoqiang, General Manager. Appellee (defendant in the original trial): Han Jinyu.

Appellee (defendant in the original trial): Wuzhou.

Appellee (defendant in the original trial): ma rongju.

Appellee (defendant in the original trial): Tang Yunzhen.

Appellee (defendant in the original trial): Ma Yufen.

The third person in the original trial: Tianjin Yade Real Estate Development Group Co., Ltd. Legal Representative: Wang Shuyun, Chairman of the Board. The third person in the original trial: Wang Jiayuan.

The third person in the original trial: Li Shuren.

Brief of the case

On November 19, 2011, Honglian Company, as Party A and Wu Guoqiang, an outlier of Plan B, signed a "Entrusted Shareholding Agreement". The agreement stipulates that Party A entrusts Party B to accept the equity transfer of the original shareholders of Anjie Hospital in the name of Party B. After accepting the transfer, Party B will hold 86% of the equity of Anjie Hospital in the name of a natural person. All ownership, income and disposal rights of 86% of Anjie Hospital held by Party B are owned by Party B; from the date when Party B holds the above shares, all the benefits and risks arising from the above shares shall belong to Party A and have nothing to do with Party B; from the date when Party B holds the above shares, any major matter of Anjie Hospital shall be subject to the written authorization of Party A before Party B can make a resolution on behalf of the shares; from the date when Party B holds the above shares, Party B shall not interfere with the production and operation activities of Anjie Hospital, if Party A, party B shall intervene on behalf of Party A after authorizing Party B in writing; Party B shall obtain all the licenses and seals of Anjie Hospital as soon as possible from the date of holding the above shares, and deliver all the licenses and seals to the designated person of Party A for safekeeping. The licenses and seals of Anjie Hospital shall be used only with the consent of the designated person of Party A, and Party B shall not dispose on behalf of them. On August 7, 2013, Wu Guoqiang, who was outside the case, died of illness. Ma Rongju is the mother of Wu Guoqiang, Han Jinyu is the wife of Wu Guoqiang, and Wuzhou is the son of Wu Guoqiang. According to the industrial and commercial registration data, Anjie Hospital applied for establishment on June 18, 2003. The enterprise type is a limited liability company, and the initial shareholders are composed of four natural persons: Xia Jinsheng, Ma Yufen, Li Shuren and Tang Yunzhen. Since then, the shareholders of Ansett Hospital have been changed many times, and the shareholding structure of the current industrial and commercial registration is as follows: the shareholders are composed of three natural persons, Wu Guoqiang, Ma Yufen and Tang Yunzhen, of which Wu Guoqiang holds 86%, Tang Yunzhen holds 13% and Ma Yufen holds 1%. Tang Yunzhen and defendant Ma Yufen both stated in the trial that they did not agree that Honglian Company became a shareholder of the company and did not agree to go through the formalities for the change of shareholding. Honglian Company filed a lawsuit and requested the court to order: 1. Honglian Company is a dormant shareholder of Anjie Hospital, and 86% of the shares of Anjie Hospital held by Han Jinyu's husband, Wu Zhou's father and Ma Rongju's son Wu Guoqiang belong to Honglian Company; 2. Anjie Hospital and Han Jinyu, Wuzhou and Ma Rongju assisted Honglian Company in handling the registration procedures for industrial and commercial changes of shareholders; 3. litigation costs in this case by Anjie hospital. On May 13, 2015, Honglian Company applied to change the litigation request and applied to cancel the second litigation request. During the second trial, the parties did not submit new evidence. The second instance shall confirm the facts ascertained by the court of first instance.

The trial court held

Honglian claimed the relevant rights on the grounds that it was the actual funder of Ansett Hospital, so this case is a dispute over the confirmation of shareholders' qualifications. The Supreme People's Court on the application<中华人民共和国公司法>Article 24, paragraph 3, of the (III) on Certain Issues stipulates that "the people's court shall not support the actual investor's request to the company to change its shareholders, issue a certificate of capital contribution, record it in the register of shareholders, record it in the articles of association of the company and register it with the company registration authority without the consent of more than half of the other shareholders of the company". In this case, Tang Yunzhen and Ma Yufen, as shareholders of Ansett Hospital, did not agree that Honglian Company became a shareholder of Ansett Hospital. Therefore, Honglian Company's request to confirm the shareholder's qualification and change the equity involved in the case to the relevant litigation request under its name was not supported.

The court of second instance held

The main dispute focus of the case is whether Honglian Company has the right to change to a shareholder of Ansett Hospital.

First of all, the Supreme People's Court on the application<中华人民共和国公司法>Article 24, paragraph 3, of the (III) on Certain Issues stipulates: "The people's court shall not support the actual contributor's request to the company to change its shareholders, issue a certificate of capital contribution, record it in the register of shareholders, record it in the articles of association of the company and register it with the company registration authority without the consent of more than half of the other shareholders of the company." The judicial interpretation of this article is the provision on the acquisition of shareholder status by the actual contributor of the company. In the event of inconsistency between the nominal shareholder of the company and the actual contributor, the agreement between the actual contributor and the nominal shareholder regarding the investment interest is an internal agreement between the parties and is binding only on both parties to the contract. If the actual contributor advocates that the company handle the change of shareholders, issue a certificate of capital contribution, etc., its request breaks through the scope of the contract between the two parties. In order to ensure the human nature of limited liability companies and maintain mutual understanding and trust between shareholders, the Supreme People's Court on the application of<中华人民共和国公司法>The (III) of Provisions on Certain Issues makes restrictive provisions on the issue of the prominence of the actual contributor, I .e. the transformation of an anonymous shareholder into a prominent shareholder, requiring the consent of more than half of the other shareholders of the company. If a majority of the other shareholders do not agree, the equity remains vested in the original prominent shareholder. The purpose of this provision is to maintain a good relationship of trust between the shareholders of a limited liability company and to protect the cooperation between the shareholders of a limited liability company and the daily operation and sound operation of the company.

Secondly, the Entrusted Shareholding Agreement signed between Honglian Company and Wu Guoqiang, an outside person, is only legally binding on Honglian Company and Wu Guoqiang, and cannot bind other shareholders of the company other than the parties to the agreement. Honglian Company now requests confirmation of shareholder qualifications and registration procedures after Wu Guoqiang's death on the grounds that it is the actual investor of Ansett Hospital. It still needs to perform legal procedures in accordance with the law. When Ma Yufen and Tang Yunzhen, other shareholders of Anjie Hospital, clearly expressed their disagreement, Honglian's claim lacked legal basis and was not supported.

Third, Honglian Company claims that Wu Guoqiang has passed away and that the human nature of Ansett Hospital, a limited liability company, no longer exists. In this regard, the Court held that the Supreme People's Court on the application<中华人民共和国公司法>Article 24, paragraph 3, of the (III) on Certain Issues, on the consideration of human nature, is mainly to maintain the relationship of understanding and trust established between shareholders and to protect the shareholders' right to choose the opposite party of the cooperative relationship. Although Wu Guoqiang has passed away, except as otherwise provided in the articles of association, Wu Guoqiang's heirs can inherit his equity in Ansett Hospital. Ma Yufen and Tang Yunzhen also raised no objection to Wu Guoqiang's heirs inheriting the equity. Wu Guoqiang's death did not lead to the loss of the limited liability company Ansett Hospital's human nature, and Honglian's claim lacked legal basis.

In addition, Honglian claimed that Ma Yufen and Tang Yunzhen knew and did not object to Honglian's being the actual funder, but failed to provide sufficient evidence to prove it. Regarding Honglian Company's proposal that the original trial court should not add a third party, since Wu Guoqiang's 86% stake in Ansett Hospital was acquired by accepting the transfer of Wang Jiayuan and Li Shuren, the original trial court added Wang Jiayuan, Li Shuren and Yade Real Estate as third parties to participate in the lawsuit in this case in order to find out the relevant facts of the equity transfer and equity acquisition.

Referee result

The result of the first instance: the claim of Honglian Company was rejected.

The result of the second instance judgment: the appeal was rejected and the original judgment was upheld. The acceptance fee for the second instance case is 191800 yuan, which shall be borne by the appellant Tianjin Honglian Venture Capital Co., Ltd.

Legal basis

1. Article 76 of the Company Law After the death of a natural person shareholder, his legal heir may inherit the qualification of the shareholder; however, unless otherwise provided for in the articles of association of the company.

2. The Supreme People's Court on the application<中华人民共和国公司法>Article 25 of the (III) of Provisions on Certain Issues "Article 25 The actual investor of a limited liability company enters into a contract with the nominal investor, stipulating that the actual investor shall contribute and enjoy the investment rights and interests, and the nominal investor shall be the nominal shareholder, and the actual investor and the nominal shareholder If there is a dispute over the validity of the contract, the people's court shall determine that the contract is valid without the circumstances stipulated in Article 52 of the Contract Law.

If a dispute arises between the actual contributor and the nominal shareholder as stipulated in the preceding paragraph over the ownership of the investment rights and interests, and the actual contributor claims the rights against the nominal shareholder on the ground that it has actually fulfilled its obligation to contribute, the people's court shall support it. If a nominal shareholder denies the rights of an actual contributor on the grounds that the company's register of shareholders is recorded or registered by the company's registration authority, the people's court shall not support it.

If the actual investor requests the company to change shareholders, issue a certificate of capital contribution, record it in the register of shareholders, record it in the articles of association of the company and register it with the company registration authority without the consent of more than half of the other shareholders of the company, the people's court shall not support it.

Lawyer's Comments

There are two core issues in this case. The first is the question of whether the inheritance of equity by the legal heirs after the death of a shareholder affects the personability of a limited liability company. The so-called human nature of a limited liability company is mainly based on the trust relationship between shareholders, thus ensuring the shareholders' right to choose the partner. According to the relevant provisions of the Company Law, in the absence of other provisions in the articles of association, the legal heirs of a shareholder can inherit his equity after the death of the shareholder. In this case, the other shareholders of the company did not object to the act of inheriting the shares of the legal heirs of the prominent shareholders, which proved that the other shareholders had the will to continue to cooperate with the heirs of the deceased, and the personability of the limited liability company was not affected. Second, in the case of the existence of a valid shareholding agreement, the death of a prominent shareholder, whether the hidden shareholder can claim the name. The Supreme People's Court on the application<中华人民共和国公司法>The (III) of Provisions on Certain Issues makes restrictive provisions on the issue of the prominence of the actual contributor, I .e. the transformation of an anonymous shareholder into a prominent shareholder, requiring the consent of more than half of the other shareholders of the company. If more than half of the other shareholders do not agree, the shareholder's qualification still belongs to the named shareholder. In this case, the other shareholders of the company unanimously opposed the anonymous shareholder's apparent name, and the anonymous shareholder's apparent claim should not be supported.