Company Litigation Study... Is the transferee shareholder who has withdrawn the capital contribution jointly and severally liable for the company's debts?
Published:
2020-12-01
Article 18 of the (III) of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Company Law (hereinafter referred to as the "Judicial Interpretation (III) of the Company Law") stipulates that the shareholders of a limited liability company transfer their equity if they fail to perform or fully perform their capital contribution obligations. The transferee knows or should know this. If the company requests the shareholder to perform the capital contribution obligation and the transferee bears joint and several liability for this, the people's court shall support; where the creditors of the company file a lawsuit against the shareholder in accordance with the second paragraph of Article 13 of these provisions, and at the same time request the aforementioned transferee to bear joint and several liability for this, the people's court shall support it. If the transferee, after assuming liability in accordance with the provisions of the preceding paragraph, recovers from the shareholder who has not fulfilled or has not fully fulfilled the obligation of capital contribution, the people's court shall support it. However, unless otherwise agreed by the parties.
This provision sets up a direct right of joint and several recourse for the company and the company's creditors against the shareholders and transferees who transfer the shares, but according to the literal meaning of the provision, the provision applies only if the shareholders fail to perform or fail to fully perform their capital contribution obligations. If in practice it is encountered that a shareholder has made a full capital contribution and then evades the capital contribution, and transfers the equity after the evasion of the capital contribution to the transferee, can the company and the company's creditors require the transferee to bear joint and several liability in accordance with Article 18 of the (III) for Judicial Interpretation of the Company Law?
Case Guide]
Case 1: Tang Jiannan and Jiangxi Pinggang Industrial Co., Ltd. Dispute over the Right of Recovery [(2018) Supreme Fa Min Shen No. 2986]]
The court held that, in the theory of company law, the failure of shareholders to fulfill or fully fulfill their capital contribution obligations can be further refined into three situations: false capital contributions, false capital contributions and evasion of capital contributions. In this case, Pingyu Company falsely increased its capital by 9 million yuan through an intermediary. After completing the capital verification procedures, the capital increase of 9 million yuan was immediately transferred back to the intermediary. The then shareholder of Pingyu Company did not fulfill the obligation to make up for the capital increase. According to this, the original judgment found that Yang Heping, the then shareholder of Pingyu Company, constituted a withdrawal of capital contribution, and Yang Heping's withdrawal of capital contribution was 4.5 million yuan, which was in line with the Supreme People's Court's Decision on Application<中华人民共和国公司法>The provisions of article 12 of the (III) on a number of issues. After the capital increase of Pingyu Company, Yang Heping held 50% of the equity, and the subscribed capital contribution was 5 million yuan, of which 4.5 million yuan of equity did not fulfill the capital contribution obligation. Yang Heping transferred 5% of his equity to Tang Jiannan, but did not agree on the transfer price. According to this, the original judgment determined that the transferee Tang Jiannan knew or should have known that the transferor Yang Heping had not fulfilled or fully fulfilled his capital contribution obligations, and ordered him to jointly bear joint and several liabilities with Yang Heping to Pinggang Company, the creditor of the company, within the scope of 450000 yuan of the withdrawal capital contribution corresponding to the 5% equity, not only in line with the actual situation of the case, but also in line with the provisions of the aforementioned judicial interpretation. The applicant's application reason that Yang Heping's withdrawal of capital contribution does not constitute "failure to fulfill or fully fulfill the obligation of capital contribution" cannot be established, and this court will not support it.
Case 2: Case of Dispute over Capital Contribution between Dongping Zhonglian Meijing Cement Co., Ltd. and Liaocheng Meijing Zhongyuan Cement Co., Ltd. [Supreme People's Court (2013) Minshen Zi No. 1795]]
The court held that the literal meaning of Article 19 of the (III) for Judicial Interpretation of the Company Law (2010) only stipulates that after the original shareholder transfers the equity with false capital contribution, the transferee shall bear joint and several liability to the company if he knows or should know. It is not clear whether the responsibility for the withdrawal of the original shareholders is also borne by the transferee shareholders. From the perspective of the (III) of Judicial Interpretation of the Company Law (2010), the relevant provisions involving false capital contributions and evasion of capital contributions are not all provided as the same provision, nor are they based on the relationship of mutual inclusion and only one situation is listed. Therefore, it is more in line with the spirit of the provision in strict accordance with the literal understanding. From the consequences of withdrawing capital and false capital contribution, both lead to the company not owning this part of the registered capital, but there is a difference in connotation. False capital contribution is the unilateral behavior of shareholders before the establishment of the company, because the company has not yet been established, so the company can not express negative will, the responsibility lies with the shareholders, the new shareholders after the transfer in principle to the company to assume the obligations of the original shareholders, at this time can be said that the company has no fault. The withdrawal of capital contribution occurs after the establishment of the company. Any shareholder who has withdrawn capital must go through the relevant procedures by the company. From a formal point of view, the company has made the meaning of "consent". At this time, it is presumed that the company is at fault. After the transfer of shares, the company cannot claim responsibility to the new shareholders on the premise of agreeing to the withdrawal of the original shareholders. Otherwise, it is against honesty and credit. Therefore, the second-instance court's interpretation of Article 19 of the "(III) for Judicial Interpretation of the Company Law (2010)" does not include the situation where shareholders withdraw their capital contributions, and the conclusion that Liaocheng Meijing Company should not bear joint and several liability is correct.
referee point of view]
According to the above-mentioned cases of the Supreme Law, there is still a great controversy in judicial practice as to whether Article 18 of the (III) for Judicial Interpretation of the Company Law includes the withdrawal of capital contributions:
Viewpoint 1: Article 18 of the (III) for Judicial Interpretation of the Company Law should include the withdrawal of capital contributions. First of all, from the analysis of the meaning of the violation of the shareholder's capital contribution obligation, according to the size of the concept, the withdrawal of capital contribution should be included in the scope of the non-performance or non-full performance of the capital contribution obligation. Secondly, from the analysis of the legal consequences arising, the withdrawal of capital contributions and non-performance or non-full performance of capital contributions have eroded the company's capital and reduced the company's solvency, its essence and illegality and non-performance or non-full performance of the capital contribution obligations are not fundamentally different, or even more serious. Finally, from the perspective of legislative purpose, if it does not include the situation of withdrawal of capital contribution, the lack of transfer of shareholders to withdraw capital contribution in the case of the protection of the company and the company's creditors, and the legislative intent is inconsistent.
Viewpoint 2: Article 18 of the (III) for Judicial Interpretation of the Company Law should not include the withdrawal of capital contributions, and should not be interpreted in an expanded manner to include "withdrawal of capital contributions" in that article ". Judging from the interpretation of the text, articles 16, 17 and 19 of the (III) for Judicial Interpretation of the Company Law all stipulate "failure to fulfill or fully fulfill the obligation of capital contribution" and "withdrawal of capital contribution" in parallel. Only article 18 lists "failure to fulfill or fully fulfill the obligation of capital contribution". Therefore, article 18 does not specify "withdrawal of capital contribution" as a legislative omission. From the essence of the two, the failure to fulfill the capital contribution or the failure to fully fulfill the capital contribution obligation refers to the situation in which the shareholders fail to pay the amount of capital contribution stipulated in the articles of association on time and in full, and its essence is the act of improper performance of the capital contribution obligation. The withdrawal of capital contribution refers to the withdrawal of the capital contribution paid by the shareholders without legal procedures, the essence of which is the withdrawal of the independent property of the company after the shareholders have fulfilled their capital contribution obligations, thus infringing on the property rights of the company. Although both have caused the consequences of the company's capital hole, but can not be confused about the essence of the two, that there is a relationship between the two contained and contained.
Lawyer's View]
The author prefers the second view. The protection of the company and its creditors must not excessively damage the rights and interests of the equity transferee, otherwise it will increase the obstacles to equity transactions, reduce the liquidity of the equity trading market, and thus cause great damage to the fairness, security and stability of the equity market. Article 18 of the (III) for Judicial Interpretation of the Company Law shall not include the case of withdrawal of capital contributions, I .e. joint and several liability for the transferee shall be limited to the case where the shareholder fails to perform or fully performs the capital contribution, and shall not be extended to the case where the shareholder withdraws the capital contribution. However, the transfer of equity after the withdrawal of capital contributions does not apply to the above provisions, which does not mean that the rights and interests of the company and its creditors are not protected. For the damage caused by the transfer of shares to the company and the company's creditors after the shareholders withdraw their capital contributions, more responsibility should be placed on the shareholders who withdraw their capital contributions. As mentioned above, the withdrawal of capital contributions violates the principle of capital enrichment and infringes on the company's property rights and interests, and the shareholders who withdraw their capital contributions are not relieved of their liability to the company and the company's creditors as a result of the subsequent transfer of their shares. The company and its creditors may require the shareholder to bear the corresponding liability in accordance with Article 14 of the (III) on Judicial Interpretation of the Company Law.
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