Perspective | In Corporate Debt Disputes, What Legal Responsibilities Do Unsubscribed Shareholders Face?

According to Article 49 of the Company Law, shareholders of limited liability companies must pay their subscribed capital contributions in full and on time. Under the current system of registered capital subscription, shareholders enjoy the "benefit of a fixed term," meaning they are not legally obligated to fully contribute their capital before the agreed-upon deadline expires. However, the adoption of a fully subscribed capital system has led some shareholders to blindly subscribe for excessively high amounts of registered capital while setting unrealistically long contribution periods, thereby undermining the trust that business counterparts place in the company’s capital strength. To strengthen protection for creditors, the newly revised Company Law addresses these issues by curtailing shareholders' rights to extend contribution deadlines and reinforcing their obligations to make timely payments. Specifically, the new law now imposes a maximum contribution period of five years, effectively limiting cases where excessively long deadlines are set. For existing companies whose contribution periods were already registered prior to the law's entry into effect but happen to exceed this new limit, the law mandates a gradual adjustment to ensure that all contributions are made within the five-year timeframe—thus better safeguarding creditors’ reasonable expectations regarding the company’s ability to meet its financial obligations.

Article 53 of the Company Law continues and strengthens the prohibition against the withdrawal of capital contributions—after a company is established, shareholders are not allowed to withdraw their capital contributions. If shareholders violate this provision by retrieving their contributions, they must return the withdrawn funds to the company. Moreover, if such actions result in losses for the company, the offending shareholder, as well as directors, supervisors, and senior executives who bear responsibility, shall jointly and severally be liable for compensating the company for those losses.

Article 23, Paragraph 1 of the Company Law stipulates that the company Corporate Personality Disregard System "Specifically: If company shareholders abuse the company's separate legal status and their limited liability to evade debts, thereby seriously harming the interests of the company's creditors, they shall bear joint and several liability for the company's debts. This provision addresses cases where shareholders exploit the company's corporate personality to engage in debt-avoidance practices—such as withdrawing capital contributions, concealing or transferring company assets, or using affiliated companies to dodge liabilities—which result in substantial losses for creditors. Once such abuse is established, creditors can directly demand that the relevant shareholders assume unlimited joint and several repayment obligations beyond their initial investment amounts, ensuring that creditors are compensated for any losses incurred due to the shareholders' improper actions. In practice, courts generally hold that when shareholders illegally reduce a company's capital while effectively retrieving their contributed funds—thereby leaving the company insolvent—they are abusing the company's separate legal status to evade debts. As a result, these shareholders should be held jointly and severally liable for repaying the company's outstanding debts."

The newly revised Company Law has refined the system of accelerated maturity for capital contributions, significantly strengthening creditors' rights to recover unpaid contributions from shareholders whose contribution deadlines have not yet arrived—particularly in cases where a company becomes insolvent. According to Article 54 of the Company Law, when a company is unable to pay its due debts, either the company itself or its creditors holding matured claims are entitled to demand that shareholders who have committed to contributing but whose payment terms have not yet expired make their payments ahead of schedule. This means that even if shareholders were originally scheduled to contribute their capital at a future date, as long as the company faces an inability to settle its maturing debts, creditors can legally invoke the "accelerated maturity" of those shareholders' capital obligations. It’s important to note that this provision explicitly hinges on the objective condition of the company being "unable to pay its due debts"—a prerequisite for triggering the acceleration mechanism. Compared to the previous law, which strictly limited such creditor claims—for instance, allowing them only in cases of corporate bankruptcy, liquidation, or a few narrowly defined scenarios—the new legislation broadens the scope of applicability, making it sufficient for general situations where a company fails to meet its due debt obligations. This enhancement provides stronger protection for creditors, effectively preventing companies from delaying action until they face insolvency before pursuing shareholders’ unpaid contributions.

In addition to the core provisions mentioned above, Articles 50 and 88 of the Company Law also address the liability for unpaid capital contributions. Article 50 specifically targets situations where shareholders fail to make their required contributions at the time of company establishment. It stipulates that if, upon formation of a limited liability company, shareholders have not actually paid up their contributions as outlined in the company’s articles of association, or if the value of non-monetary assets contributed falls significantly short of the agreed amount, the remaining founding shareholders, along with the defective contributor, shall jointly bear liability for the shortfall. This means that if any shareholder fails to fulfill their capital contribution obligations at the time of incorporation, the other founding shareholders will be collectively responsible for making up the unpaid amount—up to the extent of their own contributions—thereby safeguarding both the company’s interests and those of its creditors. Furthermore, Article 88 introduces new regulations governing the responsibilities of shareholders when transferring equity that includes unpaid capital contributions. Specifically, if a shareholder transfers equity before the expiration of the contribution deadline, the transferee assumes the obligation to pay up the outstanding capital. If the transferee subsequently defaults on fully meeting this obligation, the original shareholder remains jointly and severally liable for the unpaid portion. This provision effectively closes the loophole that allowed shareholders to evade their capital contribution duties by simply transferring their equity holdings. At the judicial interpretation level, Article 13 of the Supreme People’s Court’s "Provisions on the Application of the Company Law (III)" ("Company Law Interpretation III," for short) clearly states: When corporate creditors seek compensation from shareholders who have failed to fulfill or fully perform their capital contribution obligations, such shareholders shall bear liability within the scope of the unpaid principal and interest, covering only the portion of the company’s debts that cannot be repaid. Supplementary Compensation Liability Certainly! Here's the translation: "The court should uphold this; however, if the shareholder has already assumed the aforementioned liability, any subsequent requests for the same by other creditors will not be supported. This judicial interpretation establishes the supplementary liability of shareholders who have failed to make their contributions toward the company’s debts, as well as the "first-come, first-served" principle for priority repayment. After the new Company Law takes effect, this interpretative provision will not be immediately abolished but may still be applied by analogy under certain circumstances. Additionally, Article 6 of the previously issued "Nine Civil Guidelines" also addressed the issue of accelerated capital contributions: generally, shareholders whose contribution deadlines have not yet arrived should not be held liable for immediate repayment. However, in special cases—such as when the company is already insolvent but fails to file for bankruptcy, or when the shareholders' meeting arbitrarily extends the contribution deadline after debts have arisen—shareholders may, exceptionally, be required to bear supplementary compensation liability within the scope of their unpaid contributions."

Under the aforementioned conditions, what legal liabilities might shareholders who have failed to contribute capital or have withdrawn their contributions face? According to the new Company Law and its related interpretations, the main forms of shareholder liability include the following:

First, shareholders who have failed to fulfill their capital contribution obligations bear the responsibility to make up the shortfall for the company. This is an internal liability aimed at restoring the company’s registered capital to its full amount. The company has the right to directly sue such shareholders, demanding that they pay up the outstanding contributions they have committed but not yet made, as well as compensate the company for any losses incurred as a result. For instance, if a shareholder’s delayed contribution leads to insufficient funds for the company, the shareholder must indemnify the company for the corresponding losses. The obligation to make up the shortfall ultimately manifests as a creditor-debtor relationship between the shareholder and the company, forming the basis upon which creditors can exercise their rights by way of subrogation. In practice, the company’s board of directors is duty-bound to promptly identify instances where shareholders fail to meet their capital contribution commitments and initiate the necessary collection procedures. Under Article 51 of the new Company Law, the board is required to regularly review shareholders’ capital contribution status and formally issue written reminders to those who have yet to fulfill their obligations on time. If, after receiving such a reminder, a shareholder still fails to make the required payment within the prescribed grace period, the board may resolve to notify the shareholder that they have forfeited the equity corresponding to the unpaid contribution, leading to a proportional reduction in the company’s registered capital—or alternatively, enabling the company to bring in new shareholders to take over the vacated equity. Clearly, through these mechanisms of urging compliance and revoking rights, the company seeks to strengthen its internal capital accountability framework and ensure that shareholders honor their financial commitments.

When a company’s assets are insufficient to settle its due debts, shareholders who have failed to contribute their capital in full and on time may be held liable for supplementary compensation. Specifically, this supplementary liability represents an external obligation aimed at safeguarding the interests of creditors, akin to the nature of a general guarantee: Shareholders are not the primary obligors for the company’s debts, but they are required to step in and cover any shortfall with their personal assets if the company itself cannot meet its financial obligations. According to Article 13 of the Interpretation (III) of the Company Law, creditors may request shareholders who have neglected their capital contribution obligations to assume supplementary compensation liability within the scope of the unpaid principal amount and accrued interest corresponding to their unfulfilled contributions. Such claims must be upheld by the court. Here, "within the scope" clearly defines the upper limit of the shareholder’s liability—as the unpaid capital plus any applicable interest—ensuring that shareholders are not held responsible for amounts exceeding their committed contributions, thus aligning with the fundamental principle of limited liability. Supplementary compensation liability is typically established through a court judgment as a conditional obligation. For instance, the court’s ruling might state explicitly: "A certain shareholder shall bear supplementary compensation liability within the scope of their unpaid capital contribution for any shortfall in the company’s debt that remains unpaid or uncollectible." This means that enforcement action against the shareholder can only proceed after it has been confirmed during the execution phase that the company possesses no assets available for satisfaction of the debt—preventing creditors from bypassing the company altogether to directly pursue recovery from the shareholder. It is important to note that supplementary compensation liability differs significantly from joint and several liability. While the latter imposes immediate and unlimited responsibility on shareholders, the former emphasizes a sequential approach, requiring creditors to first exhaust the company’s assets before turning to individual shareholders—and even then, only up to the limits of their unpaid contributions. This balanced approach effectively protects both the limited liability of shareholders and the rights of creditors.

Joint and several liability means that the relevant shareholders bear equal responsibility for repaying the company’s entire debt, allowing creditors to directly claim the full amount from the shareholders without being limited by the shareholders’ unpaid capital contributions. Under normal circumstances, shareholders are only required to assume such liability in specific statutory situations outlined by law. A typical example is the abuse of the company’s separate legal personality to evade debts, as stipulated in Article 23 of the Company Law. When shareholders engage in actions like withdrawing all their capital contributions or deliberately transferring assets through related-party transactions, resulting in the company becoming a shell corporation with insufficient assets to meet its external liabilities, people’s courts typically rule that these actions constitute a serious infringement upon creditors’ rights. Consequently, the court may order the shareholders to assume joint and several liability for the company’s debts. In such cases, the shareholders’ liability no longer remains capped at their subscribed capital contributions but could extend to covering the company’s total outstanding debt. However, it’s important to note that judicial determinations of "abuse of limited liability" carry a high threshold—they generally require evidence that the shareholder acted intentionally with the purpose of evading debts, and that there is a direct causal link between the shareholder’s wrongful conduct and the company’s inability to repay its obligations. In other words, joint and several liability applies only when illegal activities lead to an improper outflow of company assets, causing tangible harm to creditors’ interests—and this approach helps prevent overly harsh penalties for mere minor infractions.

In judicial practice, according to the latest adjudication rules, courts generally support creditors' claims in the following circumstances, while in other cases, they do not grant such claims.

This is the prerequisite for supporting the creditor’s claim. For a creditor to directly hold shareholders liable when the company has failed to repay its debts, the creditor must first prove that the company is insolvent—that is, "unable to pay its due debts." This is the core requirement for judicial review. In the litigation, the plaintiff-creditor must provide evidence demonstrating: 1) That the creditor holds a legitimate, valid, and matured claim against the company; 2) That the company does not possess sufficient assets to settle this debt. If the creditor’s claim against the company has not yet been confirmed by a final court judgment, the court typically requires the company to join the lawsuit as either a co-defendant or an interested third party, in order to verify the authenticity of the creditor-debtor relationship. The court will also proactively clarify and potentially add the company to the case, ensuring that there is no collusion between the creditor and the company aimed at fabricating false debts. Conversely, if the creditor’s claim against the company has already been established by a binding legal document and has entered the enforcement phase—yet the company is subsequently found to have no assets available for execution (e.g., when the court’s enforcement authority issues a ruling concluding the current enforcement proceedings)—this fact alone can serve as conclusive proof that the company is indeed unable to meet its debt obligations. Under such circumstances, the creditor may choose to sue only the relevant shareholders without needing to name the company as a defendant. In these cases, the court will generally accept the outcome of the enforcement proceedings as sufficient evidence of the company’s insolvency. For instance, in cases such as (2024) Yu01 Minzhong9701 and (2024) Hu0117 Minchu9408, the company’s outstanding debts had been subject to enforceable judgments, but enforcement efforts ultimately proved futile. As a result, the executing court issued rulings concluding the enforcement process. Relying on these conclusive enforcement rulings, the creditors directly sued the shareholders who had failed to fully contribute their capital, arguing that the termination of enforcement proceedings clearly demonstrated the company’s inability to pay its due debts. Consequently, the courts ruled that the shareholders should bear supplementary liability for the company’s debts within the scope of their unpaid capital contributions. Thus, it becomes evident that the court will only uphold the creditor’s request to hold shareholders accountable if the creditor successfully establishes that the company is genuinely insolvent. On the other hand, if the company still retains the ability to repay its debts—or if the creditor has not yet exhausted all available legal remedies against the company—the court will generally be cautious about invoking shareholder liability as an extraordinary remedy.

Another key factor supporting creditors' requests lies in the fact that shareholders' capital contribution obligations have either become due without being fulfilled, or, though not yet due, have been "accelerated" under statutory circumstances. Specifically, for contributions that have already exceeded the agreed-upon payment deadline, shareholders are clearly in breach of their contractual duties and are legally required to make up the shortfall while also bearing liability to creditors. In such cases, creditors can either directly invoke Article 13 of the Interpretation (III) of the Company Law to demand that shareholders assume supplementary compensation responsibilities, or, alternatively, under Article 535 of the Civil Code, step into the company’s position to exercise its right of claim against the shareholders for the unpaid capital contributions. As for contributions whose subscription periods have not yet expired, creditors may only seek acceleration if the aforementioned conditions for accelerated maturity—namely, the company’s inability to pay its debts—are met. Following the implementation of the new Company Law, courts across various regions have begun to support creditors’ requests for accelerating the maturity of unfulfilled capital contributions. For instance, in the first case handled by the Xicheng District Court in Beijing under the newly enacted Article 54 of the Company Law, a creditor (Li, a former employee of the company) filed an application during enforcement proceedings to add shareholder Zhang as an additional judgment debtor. After confirming that the company had no assets available for enforcement, the Xicheng Court applied the accelerated maturity rule stipulated in Article 54, ordering the shareholder to fulfill his capital contribution obligation ahead of schedule and holding him liable for supplementary compensation within the scope of his unpaid contribution. It is important to note, however, that if the capital contribution period has not yet expired and the company still maintains sufficient financial capacity to meet its obligations, creditors cannot compel shareholders to make early payments to settle the company’s debts. For example, in Case No. (2019) Supreme People’s Court Min Zhong No. 230, a creditor named Zeng attempted to hold two original shareholders—whose contribution deadlines were still pending—jointly liable for supplementary compensation regarding the company’s outstanding debts. However, the Supreme Court explicitly ruled that this request essentially amounted to seeking an acceleration of the shareholders’ capital contribution obligations, which lacked legal basis under the then-current legal framework, and thus dismissed the creditor’s claim. That said, with the entry into force of the new Company Law, this case now benefits from a clear legal foundation. Nonetheless, creditors must still provide evidence demonstrating that the company is indeed unable to repay its debts before they can successfully invoke the accelerated maturity provision.

In terms of judicial outcomes, courts typically adhere to the principle of "limited recourse," thereby restricting the liability of shareholders. Generally speaking, shareholders who have failed to contribute their capital are only held liable for supplementary compensation, with the maximum amount of liability capped at the unpaid portion of their initial capital contributions plus any interest accrued due to the delay in making those payments. Court rulings usually specify that shareholders bear supplementary liability only for the portion of the company's debts that remain unpaid after exhausting its assets—and such liability arises solely when the company itself is unable to meet its obligations. This effectively grants shareholders a role akin to that of a general guarantor. Right of prior suit and defense Only when the company genuinely has no assets available for enforcement can creditors proceed to enforce the shareholders' personal assets. For instance, Article 6 of the "Nine Civil Guidelines" emphasizes that, in cases where shareholder liability is added during non-bankruptcy proceedings, shareholders should be entitled to the benefit of time and the right of prior defense—unless the company is already insolvent but fails to file for bankruptcy, or unless there are other malicious circumstances. Under such conditions, creditors cannot directly demand that shareholders whose capital contributions are not yet due immediately settle the outstanding debts. While the new Article 54 of the Company Law has slightly lowered the threshold for triggering shareholder liability, it does not negate the supplementary nature of this responsibility. In practice, some courts, erring on the side of caution, require creditors to sue the company jointly in litigation—or even include the company as a third party—to thoroughly investigate the company’s financial status. Moreover, courts typically clarify in their judgments the conditional nature of shareholder liability. Conversely, if, during the course of litigation or before the judgment is enforced, the company has already repaid its debts, or if its asset situation improves sufficiently to allow repayment, the supplementary liability of the shareholders will effectively become unenforceable. On the other hand, in cases involving acts such as misappropriation of capital contributions—where these actions clearly infringe upon creditors’ rights—the scope of shareholder liability usually aligns closely with the amount of funds illegally withdrawn. In other words, even when applying the general principle of joint and several liability under Article 23 of the Company Law, judicial practice often limits shareholders’ liability to the extent of the benefits they personally gained from the misappropriation or capital reduction, rather than requiring them to cover the entire debt obligation without limit. This approach strikes a careful balance, ensuring adequate protection for creditors while also setting reasonable boundaries for shareholder liability. As a result, creditors should reasonably anticipate that shareholder liability will generally extend only to the unpaid or misappropriated portions of their claims—and will not grant creditors the right to arbitrarily seize the shareholders’ personal assets in full.

According to Article 13 of the Third Interpretation of the Company Law, if a shareholder who has failed to contribute capital has already assumed liability for compensating the unpaid portion due to a creditor’s claim, other creditors’ identical requests against that same shareholder will not be supported by the court. This rule is designed to prevent multiple creditors from seeking duplicate compensation from the shareholder for the same unpaid capital contribution, thereby avoiding an unfair situation of "double recovery." Therefore, if a shareholder’s outstanding capital contribution is limited, and the first creditor has already fully enforced claims against that portion of the shareholder’s assets, subsequent creditors can no longer demand the same amount from the shareholder. However, it’s important to note that individual creditors may still pursue their own claims against the shareholder for the remaining shortfall in their respective unpaid debts. At the same time, this does not preclude later creditors from holding other shareholders accountable for any remaining unpaid liabilities—or even compelling shareholders who still have unfunded contributions to continue making up the difference. Moreover, when a company enters bankruptcy proceedings, the principle of "fair liquidation" enshrined in bankruptcy law mandates that shareholders’ unpaid contributions must be pooled into the bankruptcy estate for unified distribution among all creditors. As a result, individual creditors’ priority claims against shareholders will no longer be upheld. This understanding is already widely accepted in judicial practice: once a company goes bankrupt, individual creditors’ attempts to recover directly from shareholders take a backseat to ensuring equitable treatment for all creditors as a whole. In terms of implementation, the new Article 54 of the Company Law explicitly extends the right to make such claims—not only to individual creditors but also to the company itself. Specifically, when a company enters bankruptcy or liquidation, its administrator is empowered to compel shareholders to fulfill their outstanding capital contributions promptly, channeling these funds directly into the pool earmarked for debt repayment. Thus, creditors are advised to act decisively before initiating bankruptcy proceedings; otherwise, once the process begins, their previously prioritized claims against individual shareholders will inevitably transform into rights to receive proportional compensation—albeit on a pro-rata basis—from the overall bankruptcy estate.

Not all cases result in creditors' claims against shareholders being upheld; courts will dismiss claims that fail to meet statutory requirements or where valid defenses exist. For instance: ① If the company still has the financial capacity to repay its debts, or if the debt obligations have not yet come due, creditors are not permitted to directly sue shareholders for repayment. As previously mentioned, if the company remains capable of fulfilling its liabilities even after enforcement measures have been taken, creditors should first seek recovery from the company itself—directly adding shareholders as defendants is inappropriate. ② If the creditor has already consented to—or was aware of—the benefit associated with the shareholder contribution deadline, their claim may be restricted. In Case No. (2019) Supreme People’s Court Min Zhong 230, the Supreme Court clarified that when entering into transactions with a company, creditors had ample opportunity to review critical details such as the registered capital subscription deadlines. Therefore, by choosing to engage in the transaction, they implicitly agreed to abide by the shareholders’ commitment to contribute capital within the stipulated timeframe. Consequently, if a creditor knowingly entered into a deal despite knowing that the shareholder still had several years left to fulfill their obligation, and later sought to accelerate the payment, the court might determine that the creditor had effectively waived their right to the deadline benefit. As a result, the court would likely reject the creditor’s request for accelerated repayment. ③ If a shareholder has already lost their legal status as a shareholder, direct claims for accelerated contributions will not be supported. For example, in Case No. (2021) Jing 02 Min Zhong 4102, the company became insolvent after incurring the debt. However, some original shareholders had previously transferred their equity interests and exited the company, while a new shareholder, Mr. Zhou, stepped in and extended the original contribution deadline. The court ruled that the current shareholder, Mr. Zhou, had forfeited any remaining benefit from the extended deadline and thus bore supplementary liability within the scope of his unpaid contributions. In contrast, the court did not hold the former shareholders—who had already withdrawn—as directly liable, reasoning that they no longer held shareholder status at the time the debt arose. This ruling underscores that, under Article 54, creditors’ claims for accelerated maturity generally target shareholders who were still legally part of the company at the time the debt was incurred and who had yet to fulfill their capital contribution obligations. For shareholders who had legally exited the company before the debt was incurred, their actions must be separately assessed to determine whether they violated the creditor’s rights—such shareholders cannot automatically be subject to the accelerated maturity rule. ④ Other legitimate defenses include situations where the defendant shareholder can prove that the creditor’s claim either does not exist, has already been settled, or has exceeded the statute of limitations. Additionally, as previously noted, the defendant shareholder may exercise their rights within the company by compelling the board of directors to issue a formal notice urging all other shareholders who have yet to contribute their capital to do so promptly. By bolstering the company’s overall financial strength, this action could potentially restore the company’s ability to meet its obligations, thereby removing the basis for accelerating the debt repayment. Once the company regains its solvency, the prerequisite for claiming accelerated maturity no longer exists, and the creditor’s lawsuit would consequently lose its validity. In essence, creditors seeking to enforce their rights against undercapitalized shareholders must strictly adhere to the statutory conditions governing such claims. Should circumstances change in a way that renders these conditions unmet, courts will naturally refrain from holding shareholders accountable further.

This case marks the first instance under Beijing's Xicheng District Court to apply Article 54 of the newly implemented Company Law, occurring on the very first day of the law's enforcement. A company employee, Li, had reached a labor dispute mediation agreement with his employer, securing a payment of 70,000 yuan from the company. However, the company failed to make the payment as scheduled. Li subsequently applied for compulsory enforcement, but the court found no assets available for execution, leading to the dismissal of the case. Undeterred, Li then invoked Article 54 of the new law to request that the company’s major shareholder, Zhang, be added as an additional defendant in the ongoing enforcement proceedings. Zhang holds a 60% stake in the company and was contractually obligated to contribute capital totaling 1.8 million yuan by a deadline far beyond the present—specifically, in 2052. After careful review, the Xicheng Court determined that the company had indeed become insolvent and unable to meet its due debts. Consequently, the court ruled to include Zhang as an additional defendant and applied the "accelerated maturity" rule for capital contributions: ordering Zhang to fulfill his capital contribution obligation ahead of schedule, thereby making him jointly and severally liable for up to 1.8 million yuan—the amount he had yet to contribute—to cover the outstanding wage debt owed to Li by the company. Ultimately, Zhang was compelled to pay Li more than 70,000 yuan in unpaid wages. This landmark case vividly illustrates the transformed approach creditors can take under the new law to protect their rights: when a company defaults on its obligations and its capital remains perpetually underfunded, creditors are now empowered to directly petition the courts to compel relevant shareholders to immediately inject sufficient capital to settle the company’s debts. At the same time, the court’s ruling clearly stipulates that shareholders bear supplementary liability only within the scope of their unfulfilled capital commitments, ensuring both the effective realization of Li’s claim and adherence to the limits of Zhang’s original contractual obligations.

In this case, Zeng transferred his equity stake in a company to Gansu X Company, but the latter failed to fully pay the equity consideration, resulting in outstanding debt. After winning the lawsuit, Zeng applied for enforcement, yet Gansu X Company had no assets available for execution. Consequently, Zeng appealed, seeking that the two former shareholders of Gansu X Company—who had already stepped down from the company (Feng and his son)—should bear supplementary liability for the portion of the debt that remained unpaid, within the scope of their unpaid capital contributions. Notably, prior to transferring their equity in Gansu X Company, Feng and his son still had unfulfilled capital contribution obligations whose deadlines had not yet arrived. The Supreme People’s Court, in its second-instance ruling, dismissed Zeng’s claim, holding that since the deadline for Feng and his son to fulfill their capital contribution obligations was set for the end of 2025, they could not be deemed to have "failed to perform their capital contribution obligations" before the deadline expired. The court reasoned that as a creditor, Zeng should have been aware of this publicly disclosed information about the contribution schedule at the time of the transaction—and once engaging in the deal with the company, he should have accepted the constraints imposed by that timeline. Therefore, Zeng’s request for accelerating the payment of Feng’s capital contributions lacked legal grounds, and the court accordingly denied his claim. This judicial decision essentially reflects the traditional legal framework’s emphasis on respecting and protecting shareholders’ rights regarding their committed capital contribution schedules—unless statutory exceptions apply, creditors are generally barred from compelling shareholders to make early payments before the due date. However, the introduction of Article 54 of the newly revised Company Law has clearly altered this balance, elevating the principle that creditors may now seek accelerated payment as a general rule. Thus, if this case were reconsidered under the new law, Zeng would undoubtedly be able to invoke Article 54 to demand that Feng and his son make their capital contributions ahead of schedule—provided he can convincingly demonstrate that Gansu X Company is already facing an inability to meet its maturing debts. If sufficient evidence supports such a claim, the new law would offer Zeng a remedy that was previously unavailable under the old legal regime. Of course, in this specific case, Feng and his son had already transferred their equity interests and exited the company; this change in their corporate status might, under the new legal context, serve as a valid defense against Zeng’s claims.

In this case, after Donghua X Company was established, none of the shareholders had made their full capital contributions. In June 2019, Zhou acquired all the company’s equity and subsequently extended the deadline for fulfilling the registered capital contribution—from 2027 to 2034—while the original shareholders exited the company. Later that August, Beijing X Company entered into a contract with Donghua X Company but later terminated it, agreeing that Donghua X would refund the payment for goods delivered. However, Donghua X failed to make the repayment. Although Beijing X secured a favorable court ruling, enforcement efforts proved futile. Consequently, Beijing X filed a lawsuit seeking that the current shareholder, Zhou, along with the former shareholders such as Chen, bear supplementary compensation liability within the scope of their unpaid contributions. The Beijing No. 2 Intermediate Court, in its second-instance review, ruled that Donghua X Company had become insolvent and clearly lacked the financial capacity to settle its debts. The court determined that while the company met the legal criteria for bankruptcy, it had not yet initiated bankruptcy proceedings. Therefore, Zhou, as the current shareholder, should no longer enjoy the benefit of the extended contribution deadline. The court thus upheld Beijing X’s claim that Zhou must assume supplementary compensation liability up to the amount of his unpaid contribution, aligning with the spirit of Article 6 of the "Nine Civil Interpretations" and Article 54 of the new Company Law. Regarding the liability of the former shareholders, the court clarified that股权转让 (equity transfer) is a legitimate right of shareholders. Since Chen and other former shareholders were no longer shareholders at the time the debt arose, they cannot be held liable under the same grounds as Zhou. Instead, the court emphasized the need for a more detailed analysis of whether the actions of the former shareholders—such as extending the contribution deadline or transferring equity—were aimed at evading their capital contribution obligations and thereby harming creditors. If evidence emerges confirming such behavior, the court may consider holding these former shareholders separately accountable. However, based on the evidence presented in this case, the court did not find sufficient grounds to impose supplementary liability on the former shareholders. Ultimately, the court ruled that Zhou shall bear supplementary compensation for the company’s debts within the limits of his unpaid contribution, while the former shareholders are exempt from liability. This case underscores two key points: First, when a company falls into insolvency, its current shareholders can no longer rely on the benefit of the extended contribution deadline and must take responsibility for the company’s outstanding debts. Second, shareholders who have legally exited the company generally remain shielded from the accelerated contribution obligation, unless their exit itself violates the law or infringes upon the interests of creditors. Moreover, following the implementation of the new Company Law, if a former shareholder transfers equity without fully paying up their capital contribution, both the original shareholder and the transferee will typically bear joint and several liability for fulfilling the capital contribution obligation. This means that even though shareholders like Chen have already stepped down, if the transferee, Zhou, ultimately fails to meet his payment commitments, the former shareholders could still face potential liability. This ruling advises creditors in similar cases to carefully weigh their options: they may choose to either demand immediate fulfillment of the accelerated contribution obligation from the current shareholder or pursue joint and several liability against the former shareholders, depending on the specific circumstances. Such strategic decisions can help maximize the chances of recovering the owed funds and safeguarding creditors’ interests effectively.

In certain cases, a company’s inability to repay its debts directly stems from shareholders’ malicious withdrawal of capital. In such instances, courts often hold shareholders accountable by applying Article 23 of the Company Law or general principles of tort liability. For example, in the capital reduction dispute involving Heilongjiang “Cold Land Black Soil Group,” the provincial agricultural materials company, as the majority shareholder, took the lead in drastically reducing the registered capital from 110 million yuan to 30 million yuan when the company was already insolvent—ostensibly to offset accumulated losses. Capital Surplus In fact, this move released 20 million yuan of funds previously invested by two new shareholders. During the enforcement proceedings, creditor Fenghui Company claimed that the capital reduction constituted an illegal withdrawal of capital contributions and thus requested that Provincial Agricultural Materials Company be added as a judgment debtor to assume liability. The court of first instance sided with the creditor, ruling that the action was "formally a capital reduction but实质 a capital withdrawal," and ordered Provincial Agricultural Materials Company to bear responsibility for the debt within the scope of the 20 million yuan withdrawn. However, both the High Court in the second trial and the Supreme People’s Court in the retrial reversed the decision, holding instead that the capital reduction by Provincial Agricultural Materials Company did not lead to a decrease in the company’s assets (since the reduced amount was used to offset losses, leaving the total asset value unchanged). Consequently, the company’s ability to repay its debts remained unaffected, and the act therefore did not qualify as an illegal withdrawal of capital contributions. As a result, the shareholders should not be held liable as additional judgment debtors. The Supreme Court emphasized that the key issue in determining whether capital has been illegally withdrawn lies in whether there has been an improper reduction in the company’s actual assets. If the reduction is merely reflected on the books without any actual outflow of funds, it differs fundamentally from an outright withdrawal of capital. This case highlights, on one hand, the courts’ stringent standards for proving capital withdrawal—specifically, the need to demonstrate that funds have indeed left the company and that shareholders have gained undue benefits. On the other hand, it also serves as a reminder to creditors: when alleging that shareholders have withdrawn capital illegally, they must focus on providing concrete evidence that such actions directly undermine the company’s ability to meet its obligations. Only then can creditors convincingly persuade the court to rule that the shareholders have indeed harmed their creditors’ interests. Once the evidence of capital withdrawal is solid—such as when shareholders illegally transfer their contributions back to their own accounts or those of affiliated entities, ultimately leaving the company insolvent and unable to settle its debts—the court will likely conclude that the shareholders have abused the company’s separate legal personality to evade liabilities, thereby ordering them to assume joint and several liability for the relevant debts.

Based on the aforementioned legal rules and case precedents, when dealing with shareholder failure to contribute capital or withdrawal of contributed capital in debt disputes involving limited liability companies, creditors, as well as the company and shareholders themselves, should pay attention to the following matters to balance the interests of all parties and effectively manage legal risks:

For creditors facing the potential issue of an undercapitalized debtor company, it is crucial to take timely measures to safeguard their rights and interests. First, it is advisable to thoroughly investigate the company’s registered capital and shareholder contributions during both transaction and litigation stages. This can be done by reviewing industrial and commercial registration documents, publicly available verification reports, financial statements, and other relevant materials, enabling creditors to determine whether shareholders have actually made their contributions, how long the contribution period lasts, and whether there are any records of capital reduction. If any defects in the company’s capital structure are identified, creditors should insist on incorporating additional safeguards into contracts—such as requiring major shareholders to provide personal joint and several guarantees or establishing funds supervision mechanisms—to prevent future losses of creditor claims. Second, during litigation, if signs emerge that the company’s assets are insufficient to settle its debts, creditors should promptly initiate procedures to hold shareholders accountable. Specific actions may include: filing lawsuits against both the company and relevant shareholders simultaneously as defendants or third parties, allowing the court to consolidate the review of corporate debt and shareholder liability issues; or, after securing a favorable judgment against the company, submitting requests during the enforcement phase to add shareholders as judgment debtors, accompanied by evidence demonstrating the company’s inability to fulfill its obligations (e.g., a final termination order). Third, when drafting legal claims, creditors must clearly define the basis of their entitlements and the applicable liability mechanisms. Depending on the specifics of the case, they may pursue alternative legal avenues, such as invoking subrogation rights under contractual obligations (Article 535 of the Civil Code), asserting supplementary compensation claims under corporate law (Article 13 of the Interpretation of the Company Law III), or even initiating tort-based lawsuits (e.g., disputes over shareholders’ withdrawal of capital that harms creditors’ interests). Finally, creditors should carefully consider the timing and procedural strategies for litigation. If the company has already entered bankruptcy or liquidation proceedings, creditors should promptly file their claims with the administrator while providing clues about shareholders who have failed to contribute capital, thereby encouraging the administrator to exercise their statutory rights. Outside of bankruptcy proceedings, if the enforcement court refuses to directly add shareholders as judgment debtors, creditors can explore an alternative approach by filing a separate "dispute over shareholders’ liability for harming the company’s creditors," which is essentially an independent tort claim. Under this framework, creditors can directly sue shareholders suspected of abusing the corporate entity, holding them personally liable for compensating the company’s debts. In cases where enforcement courts hesitate to add shareholders during the execution phase, pursuing this standalone lawsuit while simultaneously seeking repayment of the company’s debts through consolidation remains a viable strategy.

For companies and shareholders alike, it is essential to proactively manage and mitigate associated risks. First, companies should establish robust mechanisms for capital maintenance and oversight of shareholder contributions. Under the new legislation, the board of directors is duty-bound to diligently verify and promptly request overdue payments from shareholders. If a shareholder fails to meet the payment deadline, the company must immediately issue a written demand for payment and, once the grace period expires, initiate the statutory procedure for forfeiting the shareholder’s rights. Company management cannot afford to neglect this responsibility, as failure to act not only jeopardizes the company’s interests but may also expose executives to personal liability (e.g., if directors fail to enforce timely payments, resulting in losses, both the company and creditors may hold them accountable for compensation). Second, shareholders must faithfully honor their commitment to contribute capital. When committing to pay up-front amounts during the subscription of registered capital, avoid blindly agreeing to excessively large contributions or unrealistic long-term deadlines. Instead, shareholders should prudently assess their financial capacity, set reasonable contribution amounts, and ensure timely payments to prevent becoming "defective contributors." Additionally, shareholders are strictly prohibited from withdrawing capital or engaging in unauthorized capital reductions. Should a shareholder decide to exit an investment or recover funds, they must strictly adhere to the legally mandated procedures for reducing capital. Importantly, when returning capital to shareholders as part of a lawful reduction, companies must first fulfill their obligation to notify all known creditors, obtain their consent, or provide adequate guarantees. Failure to do so could render the capital reduction invalid—or even lead to the transaction being treated as a disguised withdrawal of capital. Finally, shareholders should remain vigilant about the obligations tied to equity transfers. If a shareholder transfers equity before fully paying up their capital contribution, they must explicitly stipulate in the transfer agreement that the transferee assumes responsibility for fulfilling the outstanding contribution obligation. Moreover, the original shareholder must actively oversee the transferee’s timely payment. Under the new law, even after the transfer of capital obligations, the original shareholder does not automatically become entirely free from liability. If the transferee defaults on the payment, the original shareholder remains jointly and severally liable for settling the debt. In summary, fully complying with capital contribution obligations and conducting corporate capital operations in a transparent and compliant manner are the fundamental strategies for shareholders to effectively safeguard themselves against potential risks.