Perspective | An Analysis of the Path to Adding Shareholders as Enforced Parties
Published:
2026-01-04
When a shareholder is added as an enforced party in an enforcement procedure, since the shareholder’s liability is determined without prior trial, the principle of legality of grounds must be strictly adhered to. This article analyzes and discusses the common approaches for adding corporate shareholders as enforced parties.
When a shareholder is added as an enforced party in an enforcement procedure, since the shareholder’s liability is determined without prior trial, the principle of legality of grounds must be strictly adhered to. This article analyzes and discusses the common approaches for adding corporate shareholders as enforced parties.
I. Principle of Statutory Grounds for Additional Reasons
Provisions of the Supreme People's Court on Several Issues Concerning the Modification and Addition of Parties in Civil Enforcement (hereinafter referred to as "the Provisions") Amendment and Supplementary Provisions Article 1 stipulates that if an application meets the statutory requirements, the people’s court shall support it. This article clarifies that, in civil enforcement proceedings, an application to add a company’s shareholders as judgment debtors must comply with statutory principles.
The “Regulations on Amendments and Additions” contain five main articles (Articles 17 through 21) that stipulate the procedures for adding corporate shareholders as persons subject to enforcement. In principle, such additions are limited to the following circumstances: ① shareholders have failed to pay or have not fully paid their capital contributions; ② shareholders have withdrawn their capital contributions in a disguised manner; ③ shareholders have transferred equity without fulfilling their capital contribution obligations in accordance with the law; ④ Shareholder of a one-person company It cannot be proven that the company’s assets are separate from one’s own assets; ⑤ The company has completed deregistration without first undergoing liquidation—these constitute five specific scenarios—and clearly stipulate that objections must be raised beforehand. Action for Objection to Enforcement The relief procedure (Article 32).
The trial of a lawsuit challenging the addition of an enforced party differs from that of ordinary civil and commercial cases in which shareholders are held liable pursuant to the Company Law of the People’s Republic of China (hereinafter referred to as the “Company Law”) and relevant judicial interpretations. In an enforcement objection lawsuit seeking to add a company’s shareholders as enforced parties, the court’s ruling should first be based on the five circumstances specified in the Provisions on Amendments and Additions, and only secondarily on the corresponding provisions of the Company Law and related interpretations. For situations not listed in the Provisions on Amendments and Additions as grounds for adding parties—such as other shareholders, directors, senior management personnel, or actual controllers who assisted in the withdrawal of contributed capital—the applicant’s request to amend or add such parties solely on the basis of the Company Law and related judicial interpretations should not be supported.
2. Shareholders have failed to pay their contributions or have not paid them in full.
Article 17 of the “Provisions on Amendments and Additions” stipulates that one of the conditions for applying to add a company’s shareholders as judgment debtors is “failure to pay or failure to fully pay the subscribed capital contribution.” The phrase “failure to pay or failure to fully pay” encompasses both cases where the subscription period has expired without payment and cases where the subscription period has not yet expired but has been accelerated to become due ahead of schedule. The rationale is as follows: According to the “Reference for Reviewing Difficult Legal Issues in Enforcement (No. 3)—Special Issue on Amendment and Addition of Parties,” issued by the Enforcement Bureau of the Shandong High People’s Court, Opinion No. 10 states: In accordance with Article 6 of the “Minutes of the National Courts’ Civil and Commercial Trial Work Conference,” if the applicant for enforcement meets any of the following conditions, the enforcement court shall support the applicant’s request to add shareholders who have failed to fulfill their capital contribution obligations in accordance with the law and whose subscription periods have not yet expired as judgment debtors: First, in cases where the company itself is the judgment debtor, the court has exhausted all enforcement measures but found no assets available for enforcement, and the company already meets the statutory grounds for bankruptcy but has not filed for bankruptcy; second, after the company’s debts arose, the shareholders’ (general) meeting or other means have been used to extend the shareholders’ subscription periods. The above-mentioned opinion of the Shandong Provincial High People’s Court explicitly clarifies that “failure to pay or failure to fully pay” includes situations where the subscription period has not yet expired but has been accelerated to become due ahead of schedule.
3. Shareholders’ withdrawal of contributed capital
How to determine whether an act constitutes “withdrawal of capital contribution” as stipulated in Article 18 of the “Provisions on Amendments and Additions”? This should be understood in conjunction with Article 17 of the “Regulations of the Supreme People’s Court on Several Issues Concerning Property Investigation in Civil Enforcement,” which provides: “If a legal person or non-legal organization that is the party subject to enforcement fails to perform the obligations determined by the effective legal document, and the applicant for enforcement believes that the party has engaged in behaviors such as refusing to report or falsely reporting its property status, concealing or transferring property in order to evade debts, or if its shareholders or investors have made untrue capital contributions or withdrawn their capital contributions, the applicant may submit a written application to the people’s court requesting that an auditing agency be commissioned to conduct an audit of the party subject to enforcement. The people’s court shall, within ten days from the date of receipt of the written application, decide whether to grant such permission.” In other words, the burden of proof regarding “withdrawal of capital contribution” rests with the applicant for enforcement, and this must be established through... Judicial audit procedure Confirmed.
4. Shareholders transfer equity without fulfilling their capital contribution obligations as required by law.
The “failure of shareholders to fulfill their capital contribution obligations in accordance with the law before transferring equity,” as stipulated in Article 19 of the “Provisions on Amendments and Additions,” is one of the prerequisites for adding the original shareholder as an enforced party. In accordance with the statutory principle governing grounds for addition, whether the original shareholder can be added as an enforced party should be determined by examining this provision. The provision in Paragraph 1 of Article 88 of the “Company Law,” which states that “if a shareholder transfers equity for which the capital contribution has been subscribed but the contribution deadline has not yet arrived, the transferee shall assume the obligation to pay such capital contribution,” does not fall within the circumstances listed in Article 19 of the “Provisions on Amendments and Additions” as grounds for adding an enforced party. Therefore, in civil enforcement proceedings, it is generally inappropriate to directly add the original shareholder who transferred equity before the contribution deadline as an enforced party to bear corresponding liability.
The second paragraph of Article 88 of the Company Law stipulates: “If a shareholder fails to contribute capital by the date specified in the company’s articles of association, or if the actual value of non-monetary property contributed as capital is significantly lower than the subscribed capital amount, both the transferor and the transferee shall jointly and severally bear liability within the scope of the undercapitalized amount. If the transferee was unaware and could not have been expected to be aware of the aforementioned circumstances, the transferor shall bear the liability.” This scenario conforms to the provision in the “Regulations on Amendments and Additions” that states: “A shareholder transfers equity without fulfilling the capital contribution obligation as required by law.” Therefore, if the applicant for enforcement requests that the original shareholder be added as an enforced party and held subsidiarily liable for the portion of the company’s debts that cannot be repaid within the scope of the unpaid capital contribution, such request may be supported in accordance with the law.
V. A shareholder of a one-person company cannot prove that the company’s assets are separate from their own assets.
Article 20 of the “Regulations on Amendments and Additions” stipulates amendments and additions. Shareholder of a single-member limited liability company One of the requirements for the judgment debtor is that “the shareholder cannot prove that the company’s assets are separate from their own assets.” Therefore, the burden of proof regarding the separation of the company’s assets from the shareholder’s own assets should rest with the shareholder.
6. The company carried out cancellation registration without first undergoing liquidation.
Article 21 of the “Regulations on Amendments and Additions” stipulates that one of the conditions for applying to add a company’s shareholder as an enforced party is “carrying out deregistration without first undergoing liquidation.” Lawyers can directly obtain the business registration files of the enforced party to provide proof of this.
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