Viewpoint... The relationship between general partners, executive partners and fund managers and the division of powers and responsibilities in the fund's dual GP model.

In practice, due to the diversification of the demands of all parties involved in private equity funds, the dual-GP model or even the multi-GP model is often used in the establishment of partnership private equity funds. This paper analyzes the relationship and division of authority and responsibility between the general partner, the executive partner and the fund manager in the dual GP model as follows: Definition of 1. General Partner (I) related regulations General Partner (GP) is a legal term under the Partnership Law, and according to Article 2 and other provisions of the Partnership Law, a general partner refers to a partner who bears unlimited joint and several liability for the debts of the partnership. (II) Concerns Laws and regulations or the self-discipline rules of the China Securities Investment Fund Association (hereinafter referred to as the China Foundation Association) have less provisions on the rights and obligations of GP, but GP often serves as the executive partner (hereinafter referred to as the executive partner) or the private equity fund manager (hereinafter referred to as the manager), and the relevant laws and regulations or the self-discipline rules of the China Foundation Association have more requirements for the executive partner or the manager. Definition of 2. executive partner (I) related regulations Executive partner (hereinafter referred to as executive partner) is also a legal term stipulated in the partnership enterprise law. According to the provisions of articles 2, 26 and 67 of the partnership enterprise law, the executive partner refers to the general partner who represents the partnership enterprise and executes the partnership affairs in accordance with the agreement of the partnership agreement or the entrustment of all the partners. (II) Concerns 1. The executive partner must be a general partner, but the general partner may not be an executive partner, so GP is divided into executive GP and non-executive GP; 2. The authority to execute the affairs of the executive partner is derived from the entrustment authorization of all partners, and a legal relationship of entrustment is established between the executive partner and other partners; 3. In the case of more than one GP, all partners can theoretically entrust one of them as the executive partner, or more than two or more GPs as the executive partner. Definition of 3. private equity fund manager (I) related regulations The Securities Investment Fund Law, the Interim Measures for the Supervision and Administration of Private Investment Funds and other existing laws and regulations have not clearly defined fund managers. However, according to the relevant self-discipline rules and practice of the China Foundation Association: private equity fund managers should be the fundraisers and managers of private equity fund products, and their main responsibility is to be responsible for the investment and operation of fund assets in accordance with the agreement of the fund contract. On the basis of risk control, strive for the maximum investment income for fund investors. The manager of a partnership private equity fund may be a GP or a related party of the GP as the manager. (II) Concerns In accordance with the above provisions and filing practices: 1. The general partner, the executive partner and the fund manager are inconsistent in some cases, and the "trinity" is the state of the three in certain circumstances. 2, according to the filing requirements of the China Foundation Association, with the unanimous consent of all partners, the fund management rights can be entrusted to GP or GP's related parties, so theoretically the fund manager may be the partner, non-partner GP, or GP's related parties. There is also a legal relationship of entrustment between the fund manager and the executive partner and other partners. 3, because the "Private Investment Fund Filing Notice" clearly stipulates that the manager of a private investment fund shall not be more than one, therefore, even if multiple GPs in the partnership have the qualification of a private fund manager, there can only be one manager. 4. Dual GP Mode The dual-GP mode is commonly used in the following ways: (I) single partner and manager non-partner GP 1, this model is the more common "double GP" model, by the private equity fund manager qualification GP1 as the executive partner, GP2 does not serve as the executive partner, may not have the private equity fund manager qualification. 2. In this model, GP1 has greater rights and the partnership is executed and managed by GP1. GP2, on the other hand, has neither the status of a partner nor the status of a manager, has a lower participation in the fund and can exert less influence on the operation of the fund. (II) double-partner single manager. 1, this model is also more common, GP1 as the manager and at the same time as the executive partner; GP2 as the executive partner but not the fund manager. 2. Under this model, both GP1 and GP2 have the authority to execute partnership affairs, but according to the requirements of the CFA, there can only be one fund manager, so matters involving fund management should be primarily exercised by GP1. The permissions of GP2 are subject to certain restrictions, as detailed in Part V of this article. (III) non-partner GP and manager single partner 1. In this model, one GP acts as the manager but not the partner, while the other GP acts as the partner. 2. As mentioned above, the executive partner and the administrator form a legal relationship with the other partners. Among them, the entrustment authority of the executive partner comes from the legal provisions such as the Partnership Law and the agreement of the partnership agreement, while the entrustment authority of the manager comes from the agreement of the partnership agreement and the agreement of the entrustment management agreement. Under this model, the administrator's authority is relatively weakened, and because he does not have the status of a partner, the administrator cannot directly enjoy the rights of the partner as stipulated in the partnership law and agreed in the partnership agreement. It can only carry out fund management work in accordance with the authorization of the partner and other partners in the partnership agreement and the entrustment management agreement. For some fund management work, it may require the cooperation of the executive partner to complete. To some extent, there is a certain restraint between the executive and the administrator. 3. In practice, the adoption of this method requires attention to how the manager performs the fund management work completely without acting as a partner, and ultimately protects the rights and interests of the fund and all partners. It is suggested that consideration may be given to agreeing in advance, for example, through an agreement, on the partner's obligation to cooperate and the administrator's exemption clause. In addition, in accordance with the regulatory requirements of the China Foundation Association, for the above-mentioned first (II) and (III) models, the parties should not use this to carry out channelization business, there is a channel behavior of the fund will not be filed. Therefore, it is important to avoid a broader agreement on the rights of non-administrators, especially if the partner is not registered as a fund manager, in order to avoid being identified as a channel-borrowing act. (IV) Single Executive Partner and Manager Financial/Investment Adviser As mentioned earlier, GPs who do not serve as managers and partners have a low degree of participation in the fund, and in order to appropriately address some of the demands of such GPs, this model has emerged in practice. Under this model, the GP does not act as an administrator or executive partner, but provides advisory services as a financial/investment adviser, thereby collecting the associated fees. In addition, GP2 may not even act as a general partner of the fund, but only as a financial/investment adviser entrusted by the fund, as an adviser to participate in the operation of the fund and obtain income, from the operational level is more flexible. Judging from the current regulatory regulations of the China Foundation Association, there is currently no prohibition on subjects that have not been registered as managers as financial advisors for equity private equity funds, but only qualification requirements for investment advisors for securities private equity funds. However, from the overall trend, the requirements for financial advisers of equity private equity funds may also be more stringent in the future. (V) GP and administrator separation 1. In the single GP mode or the dual GP mode, the manager can also be separated from the GP. 2, "Private Investment Fund Contract Guidelines No. 3 (Guidelines on the Essential Terms of Partnership Agreements)" stipulates that "the manager of a partnership fund may be an executive partner of the partnership, or it may be entrusted to other private equity fund management institutions". According to the above provisions, the fund manager may not be a partner or even a GP. However, the China Foundation Association requires that an association relationship must be formed between the GP and the fund manager, where the association relationship must be confirmed in accordance with accounting standards or formed through management appointments. 3. This model is similar to the problems faced by the (III) dual GP model. The manager does not have the status of a partner and only obtains the management authority through the agreement. The adoption of this model requires attention to two types of issues: (1) How does the manager perform the fund management work completely without serving as the executive partner, and ultimately protect the rights and interests of the fund and all partners. If the manager is related to the partner GP, the problem can be solved to a certain extent. However, if the manager is not related to the partner GP and only has a relationship with the non-partner GP, the partner's cooperation obligation shall be agreed through agreement and other means. (2) Since the manager is not a partner and does not sign a partnership agreement, the LP is not a counterparty to the contract, and the manager is isolated from the LP. In the event of a breach of contract or failure to exercise due diligence by the administrator, it is more difficult for LPs to defend their rights. For LP, it is suggested to reduce the above risks by LP participating in the signing of the entrustment management agreement and GP issuing unilateral commitment. 5. the division of rights and responsibilities in the dual GP model. (I) principle of division of powers and responsibilities 1. Key points of concern The dual GP mode has always been the focus of the China-based association when filing. The essence of the core issue is how to reasonably divide the responsibilities and authorities of the dual GP, whether there is a disguised occupation of the channel and disguised engagement in the dual manager structure. 2, the main business of different partnerships, its partnership affairs are also different. For a partnership fund, its partnership affairs are mainly the foreign investment and management of the fund and the day-to-day administrative affairs, and the foreign investment and management of the fund is the natural responsibility of the manager. Therefore, in theory, the execution of partnership affairs can include fund management affairs. 3, in the single GP model, the executive partner and the manager overlap, all external representative partnership, internal management and other rights and obligations should belong to the executive partner. However, in the double GP mode, especially when the executive partner does not act as the manager, due to the unanimous agreement of all partners to entrust some rights to the manager, the rights of the executive partner are bound to be limited. Even if they have the qualification of private equity fund manager, they can only participate in the operation of the fund and assist the manager in the management work in a compliant manner, but they cannot be agreed to be directly responsible for the fund management affairs. At the same time, for non-executive managers, or managers whose non-GP is only a GP affiliate, the exercise of some of their rights requires the cooperation of the executive partner. (II) specific division of powers and responsibilities 1. Powers and responsibilities of the fund manager According to the self-discipline rules of the China Foundation Association and the requirements of filing practice, and in combination with the above-mentioned principles of division of powers and responsibilities, regardless of whether the fund manager is an executive partner, a non-executive partner GP, or a non-partner associated with GP, matters related to fund raising, investment, post-investment management, and withdrawal shall be the responsibility of the fund manager, which may include: (1) Raising funds in accordance with the law and preserving information related to fund raising; (2) To co-organize the fund filing procedures in the China-based Fund; (3) Responsible for fund investment (including pre-investment due diligence, investment decision-making, post-investment management, investment exit, etc.); (4) Disclosure of information to investors; (5) After the liquidation of the fund, the liquidation procedures shall be handled by the Fund; (6) Other duties stipulated in laws and regulations, the self-discipline rules of the China Foundation Association and the fund contract. 2, non-manager of the duties of the partner. A partnership agreement may agree on the rights of a non-administrator to hold a partnership in addition to the duties of the administrator as expressly stipulated in the laws and regulations and the self-discipline rules of the China Foundation Association. It is not in line with the market-oriented law of fund operation to completely prohibit non-managers from participating in fund operation. However, non-managers should participate in fund operation under the requirements of supervision. They can assist managers to complete and appropriately participate in fund investment, management and withdrawal other than fund raising, and can be responsible for daily administrative affairs, including: (1) Take actions necessary to maintain the legal existence of the partnership, safeguard or obtain the legitimate rights and interests of the partnership and carry out business activities as a partnership, such as finding office space for the partnership, signing lease contracts, recruiting administrative and cleaning personnel, etc; (2) Appoint members of the voting board, but cannot actually control the fund's investment decision-making power through agreement arrangements, and cannot occupy a majority of seats; (3) Engage professional intermediaries and consultants to provide services to the partnership; (4) Assist in the search for, development of potential investment projects with investment value and provide them to the Fund and the Manager; (5) Providing advice to the partnership on matters such as investment structuring arrangements and assisting the manager in negotiating the terms of the investment and completing the investment; (6) Provide advice to the Fund and the Manager on the exit of investments and the disposal of assets. (7) Responsible for the approval and registration of the partnership in the administrative department and tax-related matters.

2022-12-01

J. T. Capital Watch. Can creditors who pay for their debts exclude court enforcement?

1. Introduction In the case of A v. Company B's loan contract dispute, according to A's application, the People's Court made a civil ruling in October 2017 and seized Company B's house. After the effective judgment supports A's claim, A applies to the people's court for compulsory execution. C is based on the non-fault buyer stipulated in Article 28 of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objection and Reconsideration Cases by People's Courts (hereinafter referred to as the "Provisions on Enforcement Objection and Reconsideration"). The main basis is: Company B owes C 2 million yuan and uses the house involved in the case to offset the debt, the two parties signed a house-to-house debt settlement agreement dated August 2017; the property company issued a detailed list of entry charges on the same day. So, can C, as a creditor of a house-to-house debt, exclude court enforcement based on the provisions of Article 28 of the "Enforcement Objection and Reconsideration Provisions")? Regarding the issue of whether creditors outside the case can exclude the enforcement of general monetary claims, the current legal norms are not clearly stipulated, and there are large differences in the practice of this issue, this paper attempts to sort out the judicial point of view, with a view to providing a reference perspective. 2. Supreme Court View After searching the judicial views and cases of the Supreme Court, the Supreme Court has different views on the issue of "whether the creditor of the debt with the house can exclude the enforcement of the court", and one group holds that the creditor of the debt with the house is sufficient to exclude the enforcement of the general (I. e. unsecured) monetary claim (hereinafter referred to as "definitely excluding the enforcement"); the second category holds that creditors who set off their debts cannot exclude the enforcement of general (I. e. unsecured) monetary claims (hereinafter referred to as "negative exclusion of enforcement"). (I) positive exclusion of execution 1. Representative judicial perspective In the minutes of the 12th meeting of judges of the Supreme Court in 2019, the Second Circuit Court of the Supreme Court pointed out that if the debt-for-property agreement is actually performed, the ownership of the debt has changed, and the recipient's claim to exclude the enforcement of the debt should be supported. 2. Typical cases of the Supreme Court (1)(2020) Supreme Law Min Shen No. 4743, the opinion of the judge: when the Provisions on Objection and Reconsideration of Execution were formulated, "debt in rem" was originally intended to be included in the scope of protection of the right of expectation of real right. In view of the fact that the outsider and the person subject to execution may collude with each other in bad faith to reverse the signing time to exclude the execution power of other creditors, in the absence of the technical means to identify the exact time of the signing of the contract, it is not sufficient to exclude the possible moral hazard, so the "debt in rem" is not included in the scope of the right of expectation. However, the Court believes that if there is evidence to prove that the "debt in kind" agreement was signed at a specific time and conforms to the provisions of Article 28, its right to exclude enforcement should still be protected. "Debt to debt" is actually a kind of value exchange, that is, the value of the creditor's rights in exchange for "things" of goods, "debt to debt" in line with the external characteristics of the general real estate sale, on the basis of the right to expect, enjoy the civil rights and interests of excluding enforcement. (2)(2019) Supreme Law Civil Final No. 1894, the referee's view: the creditor of the house to pay the debt does have evidence to prove that the parties have formed a separate real estate sale relationship, and the payment of the purchase price is to the seller's debt to offset the top, can exclude the debtor's other creditors of the enforcement. (3)(2017) Supreme Law Minshen No. 785, the referee's point of view: before the property involved was preserved and sealed up, the person subject to execution signed an agreement with an outsider to repay debts in kind. The outsider actually invested in the construction and occupied the house involved in the case, and has fulfilled the obligations stipulated in the legal and valid contract. Although he has not gone through the transfer procedures, the reason why he has not handled the transfer is that the project has not been completed as a whole and cannot be handled objectively. With reference to the provisions of Article 28 of the Provisions on Objection and Reconsideration of Execution, it shall be determined that a company's request for exclusion of execution of the property involved in the case is justified. Summary: To sum up, the affirmative point of view is that it is generally believed that the creditor who pays the debt with the house does have the true intention to purchase the debt-paying house, there is no situation of evading execution or evading the debt, and has actually occupied the house before the people's court takes enforcement measures., There is no fault for not transferring the ownership of the house, that is, the creditor who pays the debt with the house conforms to Article 28 of the "Implementation Objection and Reconsideration Regulations. (II) negative exclusion execution 1. Representative judicial perspective (1) The second paragraph on page 304 of the "Understanding and Application of the Minutes of the National Court's Civil and Commercial Trial Work Conference" (edited by the Second Civil Trial Division of the Supreme People's Court, published by the People's Court Publishing House, 2019 Edition) holds that non-case creditors cannot fight against the execution of money debts based on debt-in-kind agreements, mainly based on two considerations: one is to prevent outsiders from colluding maliciously with the executed to reverse the time to damage the rights of the debt-case, under the circumstances that it is difficult to accurately determine the time when the contract was signed and it is difficult to determine the malicious collusion of the parties, only a more cautious attitude can be taken towards debt repayment with property. The second is to violate the equality of debts, that is, the purpose of setting up debt repayment with property is to eliminate the old money debt, and the debt repayment with property is still the debt of money in essence, which should not take precedence over another money debt. (2) The minutes of the 15th judges' meeting of the Second Circuit Court of the Supreme People's Court in 2021 held that Article 28 of the Provisions on Objection and Reconsideration of Execution stipulates four conditions under which buyers of non-fault real estate can exclude the enforcement of monetary creditors. As long as one element is not met, the enforcement of monetary claims cannot be excluded. A debt-for-property agreement is different from a contract of sale and purchase in that it is either a new debt settlement or a debt renewal. In the case of new debt settlement, there are both old and new debt, which is quite different from the contract of sale of a single debt nature, and in the case of debt renewal, the creditor only has the right without the obligation to pay, and is not the same as the contract of sale that requires the payment of consideration. Thus, relying solely on a debt-for-rem agreement is not sufficient to preclude the enforcement of another monetary claim. 2. Typical cases of the Supreme Court (1)(2022) Supreme Law Minshen No. 104, Referee's View: The right to expect housing obtained through "debt in kind" generally cannot prevent execution. The key substantive problem of the execution objection is to compare the effectiveness of the different types of rights existing in the subject matter of the execution. Although the right of expectation of the ordinary buyer is given the name of "real right", it is not a vested right after all, and is still essentially a claim for creditor's rights. For the housing sales contract signed by "debt in kind", we should not only consider whether the debt has the priority attribute, but also consider the true meaning of the civil legal act. Generally speaking, the real intention of both parties lies in the transfer of the subject matter of the house as the way of paying off the old debt, which is different from the real sense of the house sale. Before the transfer of the house, the new debt arising from the contract of sale has not been eliminated, resulting in the coexistence of new debts and old debts, so the buyer's right to oppose the executor outside the contract of sale should not exceed the validity of the old debt. (2)(2021) Supreme Law Civil Final No. 1245, the judgment view: the buyer obtains the right of expectation of the property right by way of debt relief, but its inferior position is inferior to the security right, can not exclude the mortgagee's enforcement of the house. (3)(2020) Supreme Law Minshen No. 6858, the judgment point of view: if the debt relief creditor can exclude the other money creditors of the seller from the enforcement of the debt relief, it is tantamount to the "buyer" obtaining the legal status of taking precedence over other ordinary money creditors through the new debt settlement or the property settlement agreement of the nature of the property settlement appointment, the ordinary claims, which should have been in an equal position of payment, will thus have a difference between priority and inferiority, violating the principle of equality of debt and harming the legitimate rights and interests of other ordinary monetary creditors. (4)(2017) Supreme Law Civil Final No. 354, judgment view: the debt-for-property agreement between the parties in this case, can not reflect the true intention of the two sides to buy and sell houses, but the debtor's alternative way of performing the debt, does not necessarily cause the change of housing ownership. And the house in dispute has not completed the change of ownership registration procedures, creditors only have the right to claim, not the property right. In this case, the delivery of the property agreed upon in the property settlement agreement is the performance of the debt for the purpose of eliminating the pecuniary debt, and before the registration of the change of the house is completed, the property settlement agreement does not form an interest superior to other claims, and undermines the principle of equal payment of the claims. Summary: To sum up, it is generally believed that the debt repayment with house is based on the behavior of borrowing to offset the account, and its purpose is to eliminate the creditor's rights, rather than the simple behavior of buying and selling houses, which cannot reflect the true intention of transforming the relationship between creditor's rights and debts into the relationship between buying and selling houses. Therefore, before the registration of ownership of houses is completed, the obligee only enjoys the right to claim as a creditor, based on the principle of equality of debt, the general claims they enjoy do not have a priority value benefit over the enforcement claims. 3. local judicial documents The author's search found that, although the current norms at the national level do not clearly on the housing debt can exclude enforcement, but some local higher people's courts combined with local trial practice, issued the corresponding judgment guidelines, see the table below: Summary: From the above-mentioned judicial documents of the local higher people's court, it can be seen that whether the obligee of the house-to-house debt can be excluded from the court's enforcement, generally from the authenticity of the house-to-house debt agreement, the absence of circumstances such as evasion of execution or evasion of debt, the signing time of the house-to-house debt agreement, the fact that the assignee of the debt occupies the property, the value of the property, the debt amount and the property, the value of the property, the equivalent, and the fault of, it is believed that court enforcement can be excluded if the conditions are met. 4. summary and suggestions (I) Summary After searching the cases, the author believes that in recent years, in the practice of adjudication, it is often believed that the parties' opinions on the disposal of the house should be respected. Under the circumstances that there is no evasion of execution or evasion of debts or malicious collusion to damage the legitimate rights and interests of third parties, at the same time, it meets the provisions of Article 28 of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objection and Reconsideration Cases by the People's Court (I. e., the court has signed a house-to-debt agreement, has legally occupied the house, the debt-to-debt exists objectively and meets the requirements of debt-to-debt, and the failure to register the transfer is not caused by the outsider's own reasons), and can exclude the court from the enforcement. (II) recommendations 1. From the buyer's point of view, it is suggested that when obtaining a house by means of debt repayment, the true intention of purchasing the house should be clearly expressed, and the signed housing agreement should state the housing ownership registration certificate, the location, area, price and other matters, and it is suggested that the housing transfer registration procedures should be handled in a timely manner. 2. From the creditor's point of view, it is suggested that if the buyer excludes the creditor's enforcement by claiming in rem, the creditor should clarify the nature of its own claim, that is, whether it belongs to the general claim or the security right. If it is a creditor of a general claim, it is recommended to examine in strict accordance with the law whether the buyer has a civil interest and whether it can meet the conditions for excluding enforcement. If it belongs to the creditor of the security right, it is suggested that the right to live in accordance with the right of the purchase consumer takes precedence over the security right to the right of expectation, and then formulate a litigation strategy to fully safeguard their legitimate rights and interests.

2022-11-30

Viewpoints... Legal analysis of issues related to the shareholder roster system.

Foreword The Company Law clearly stipulates the shareholder register system of limited liability companies, and the shareholder register is an important basis for the company's statutory preparation documents and shareholder certificates. However, in practice, the importance of the register of shareholders is often ignored, many enterprises only know the industrial and commercial (registration authority) registration, but not the register of shareholders, once the two registration is inconsistent or can not be both, or the registration and relevant legal documents (such as equity transfer contract, capital increase contract, internal resolution, etc.) agreement is inconsistent, it often leads to a series of equity disputes or legal risks, such as disputes over the qualification of shareholders, disputes over the record of shareholders, and disputes over the registration of shareholders. This paper explores the legal analysis, common problems and cases of the shareholder register system. 1. relevant legal provisions Relevant provisions of the the People's Republic of China Companies Act of (I) (the "Company Act") [Chapter II Establishment and Organizational Structure of a Limited Liability Company] [Article 26 Paragraph 1]: The registered capital of a limited liability company shall be the amount of capital contribution subscribed by all shareholders registered with the company registration authority. [Chapter II Establishment and Organization of a Limited Liability Company] [Article 32]: A limited liability company shall keep a register of shareholders, which shall record the following matters: (1) the names and domiciles of the shareholders; the amount of capital contribution of the (II) shareholders; (III) the number of the certificate of capital contribution. 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. [Chapter V Special Provisions on the Organization of Listed Companies] [Article 130]: Where a company issues registered shares, it shall keep a register of shareholders, which shall record the following items: (1) the name and domicile of the shareholders; the number of shares held by each shareholder of the (II); the number of shares held by each shareholder of the (III); the date on which each shareholder of the (IV) acquired the shares. Where bearer shares are issued, the company shall record the number, serial number and date of issue of the shares. [Chapter IX Company Merger, Division, Capital Increase, and Capital Reduction] [Article 179, Paragraph 2]: When a company increases or decreases its registered capital, it shall register the change with the company registration authority in accordance with the law. [Chapter 12 Legal Liability] [Article 211 Paragraph 2]: When a company's registered items are changed, if the relevant change registration is not handled in accordance with the provisions of this Law, the company registration authority shall order it to register within a time limit; If it fails to register within the time limit, a fine of not less than 10,000 yuan but not more than 100,000 yuan shall be imposed. (II) the Supreme People's Court on the application of<中华人民共和国公司>(III) of Provisions on Certain Issues (hereinafter referred to as "the (III) for Judicial Interpretation of the Company Law") Article 23: After the parties have fulfilled their capital contribution obligations or acquired equity in accordance with the law, the company has not issued a capital contribution certificate in accordance with the provisions of Articles 31 and 32 of the Company Law, recorded in the register of shareholders and registered with the company registration authority. If the parties request the company to perform the above obligations, the people's court shall support it. (III) Regulations on the Administration of the People's Republic of China Company Registration (as amended in 2016) (hereinafter referred to as the "Regulations on the Administration of Company Registration" Article 2: The establishment, alteration and termination of a limited liability company and a joint stock limited company (hereinafter referred to as the company) shall be registered in accordance with these Regulations. Article 31 Where a company increases its registered capital, it shall apply for registration of change within 30 days from the date of making the resolution or decision on change. Where a company reduces its registered capital, it shall apply for registration of change after 45 days from the date of the announcement, and shall submit the relevant certificate of the company's announcement of the reduction of registered capital published in the newspaper and the explanation of the company's debt settlement or debt guarantee. Paragraph 1 of Article 34: Where a limited liability company changes shareholders, it shall apply for registration of change within 30 days from the date of change, and shall submit the main qualification certificate of the new shareholders or the identity certificate of natural persons. (IV) Company Law (Revised Draft) (draft for comments, not yet in force) Article 50 A limited liability company shall keep a register of shareholders, which shall record the following matters: (1) the name or names and domicile of the shareholders; the amount and time of capital contribution of the (II) shareholders; the number of the certificate of capital contribution of the (III); and the time when the (IV) acquired and lost the qualifications of shareholders. Shareholders recorded in the register of shareholders may claim to exercise their rights in accordance with the register of shareholders. Article 87 Where a shareholder transfers his equity, he shall notify the company in writing, request to change the register of shareholders and register the change with the company registration authority, and the company shall not refuse without justifiable reasons. If the company refuses or fails to reply within a reasonable period of time, the transferor or transferee may bring a lawsuit to the people's court in accordance with the law. Article 88 After the transfer of equity in accordance with this Law, the company shall promptly cancel the certificate of capital contribution of the original shareholders, issue a certificate of capital contribution to the new shareholders, and amend the records of the relevant shareholders and their capital contributions in the articles of association and the register of shareholders accordingly. The amendment to the articles of association does not need to be voted on by the shareholders' meeting. Article 104 A company limited by shares shall prepare a register of shareholders and keep it in the company, except for the registration of shares in a securities registration and settlement institution established in accordance with the law. The register of shareholders shall record the following matters: (1) the name or name and domicile of the shareholders; the type and number of shares subscribed for by each shareholder of the (II); the number of the shares issued by the (III) in paper form; (IV) the date on which each shareholder acquired the shares. Article 111 A company limited by shares shall keep its articles of association, register of shareholders, corporate bond stubs, minutes of shareholders' meetings, minutes of meetings of the board of directors, minutes of meetings of the board of supervisors and financial and accounting reports on file with the Company. Article 170 The transfer of shares shall be carried out by the shareholders by endorsement or by other means prescribed by laws or administrative regulations; after the transfer, the company shall record the name or names and domicile of the transferee in the register of shareholders. The register of shareholders shall not be changed within 20 days prior to the convening of the shareholders' meeting or within 5 days prior to the base date on which the company decides to distribute dividends. Where the law provides otherwise for the registration of changes in the register of shareholders of listed companies, such provisions shall prevail. Summary of relevant (V) laws 1. The record of the register of shareholders and the registration of the registration authority are the two main forms of registration of the rights of shareholders of a company. The former belongs to the internal registration of the company, which is the basic basis for determining the identity of the shareholders of the company, while the latter can protect the rights of shareholders through the confrontation of external publicity. In judicial practice, according to the different functions of registration, commercial registration is divided into right registration and declaration registration. Right registration has the effect of creating right subjects or legal relations. If it is not registered, it cannot produce corresponding rights or legal relations. Declaration registration means that registration does not serve as the basis for changing the gain or loss of rights, but only has the effect of declaring rights. The consequence of non-registration is that it cannot fight against bona fide third party. Under the premise that the basic legal documents (equity transfer contract, capital increase contract, internal resolution, etc.) are available in accordance with the law, the record of the register of shareholders is closer to the registration of rights, while the registration of the registration authority is clearly a declaration registration. Therefore, the author believes that when investors obtain the status of shareholders of the company through new establishment, capital increase, transfer, etc., they should pay attention to the relevant agreements and internal resolutions to clarify the company's obligation to amend the register of shareholders and issue a certificate of capital contribution, and confirm that the company has fulfilled the above obligations in a timely manner after the basic legal documents take effect. 2. The "Company Law" has relevant provisions on equity changes caused by equity transfer (the company's registered capital remains unchanged), [Article 32] of the "Company Law" [Chapter II Establishment and Organizational Structure of Limited Liability Companies] and [Chapter V Special Provisions on the Organizational Structure of Listed Companies] [Article 130], but there are no clear provisions for unlisted company limited by shares. It is worth noting that the "Company Law (Revised Draft)" has paid attention to this point and has made useful supplements in Article 104. 3. According to [Article 2] of [Chapter 1 General Provisions] of the "Company Law", "The company referred to in this Law refers to a limited liability company and a joint stock limited company established within the territory of China in accordance with this Law", it can be seen that [Chapter 9 Company Merger, Division, Capital Increase, Capital Reduction] [Article 179 Paragraph 2] "A company increases or decreases its registered capital, the scope of the restriction includes limited liability companies and joint stock limited companies. It can be seen that according to the current law, for non-listed joint stock limited companies, although the change of equity caused by share transfer is not explicitly required to go through industrial and commercial registration (the author thinks that the regulation is based on the comprehensive consideration of the large number of shareholders of joint stock limited companies and the default need not to obtain the consent of other shareholders), however, when the registered capital changes (capital increase, capital reduction), it is still required to register with the registration authority. 2. common legal issues related to the register of shareholders Whether the statute of limitations applies to the right to request records in the register of (I) shareholders. According to Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Limitation of Action System in the Trial of Civil Cases (2020 Amendment), the parties may raise a limitation of action defense against claims. It can be seen that the object of the statute of limitations is the right of claim, and the question of whether the right of claim recorded in the register of shareholders applies to the statute of limitations depends on whether the right of claim recorded in the register of shareholders belongs to the right of claim. The mainstream view of the judiciary is that the premise of the right of claim recorded in the register of shareholders is the confirmation of the qualification of shareholders, which belongs to the confirmation of the claim, belongs to the right of procedural claim, not the right of claim (entity claim), and does not apply the statute of limitations. Relevant jurisprudence: 1.(2022) Yue 01 Min Zhong No. 12426: Civil Judgment of Second Instance on Dispute over Shareholder Qualification Confirmation by Huang Xiuhua and Guangzhou Wofu Mould Co., Ltd. The court held that: equity includes property rights, creditor's rights, personal rights and other content, and property rights and personal rights have the world and exclusive, do not apply the statute of limitations. This case is a dispute over the confirmation of shareholder qualification, and Huang Xiuhua only requests confirmation that he has the shareholder qualification of Wofford, which does not involve the content of the claim and is not subject to the limitation of the statute of limitations. 2.(2022) Liao 01 Min Zhong No. 11271: Second Instance Judgment on Dispute over Shareholder Qualification Confirmation between Danan Non-staple Food Joint Store and Li Xueni, Shenhe District, Shenyang City The court held that, according to the provisions of Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Limitation of Action System in the Trial of Civil Cases, "The parties raise the defense of the limitation of action against the right of claim", the object of the limitation of action is the right of claim, which is mainly applicable to the claim for payment. This case is the confirmation of the action, and the confirmation of the action belongs to the procedural claim right is not the entity claim right, more non-claims claim, since there is no room for the application of the statute of limitations. The qualification of shareholders when the record of the register of shareholders of the (II) is inconsistent with the registration of the registration authority. As mentioned earlier, both the record of the register of shareholders and the registration of the registration authority are the two main forms of registration of the rights of shareholders of a company. The former belongs to the internal registration of the company, which is the basic basis for determining the identity of the shareholders of the company, and the legal nature is closer to the registration of rights, while the latter can protect the rights of shareholders through the confrontation of external publicity, and the legal nature belongs to the declaration registration. The inconsistency between the record in the register of shareholders and the registration authority is mostly found in the failure to register the industrial and commercial change or update the register of shareholders in time after the company's equity change (equity transfer, capital increase, etc.). At this time, the real reason for the inconsistency between the record in the register of shareholders and the registration authority shall be judged according to the basic legal facts, and whether the "new shareholder" has been approved by the company or actually exercised the shareholder rights shall be judged. However, it should be noted that the register of shareholders is not an authorized registration in the full sense, that is, the qualification of shareholders cannot be determined solely by the register of shareholders, and investors who are not recorded in the register of shareholders may also claim their qualification and rights of shareholders by proving that they have been recognized by the company or have actually exercised their rights as shareholders. Relevant jurisprudence: 1.(2021) Yun 0102 Min Chu No. 15859: Zeng Delong and Gao Yunquan's Civil Judgment of First Instance on Disputes over Donation Contracts The court held that the plaintiff and the defendant, as persons with full civil capacity, signed the three resolutions of the shareholders' meeting to confirm that the resolutions of the shareholders' meeting were the true intentions of the original and the defendant, which did not violate the mandatory provisions of laws and administrative regulations and were legal and effective. Therefore, the court confirmed the free transfer of the contractual relationship between the plaintiff and the defendant... And it can be seen from the amendments to the articles of association of Kunzhou Company and the two minutes of shareholders submitted by the defendant, all shareholders of Kunzhou Company recognize that the shares held by the plaintiff in Kunzhou Company have been transferred to the defendant free of charge, and the three resolutions of the shareholders' meeting are binding on the rights and obligations of the shareholders. The register of shareholders recorded in the articles of association of the company is the basis for shareholders to obtain their identity as shareholders and exercise their rights as shareholders, while the plaintiff is no longer a shareholder in the register of shareholders of Kunzhou Company. According to Article 32 of the the People's Republic of China Company Law, failure to register the change of shares does not lead to the legal consequences of invalidity of the change of shares, and failure to register the change of shares can only have the effect of not opposing a third party. According to the provisions of Article 176 and Article 509 of the the People's Republic of China Civil Code, both the plaintiff and the defendant shall perform their obligations in accordance with the agreement, and the plaintiff's failure to cooperate with the registration procedures for equity change as agreed constitutes a breach of contract. 2.(2018) Yun 23 Min Zhong No. 615: xiao Yingguang and Yuanmou County Department Store Trade Wholesale Co., Ltd., Gong Cuihua, Luo Shaohua, Wen Zhimei, Zhou Junhong, Chen Yongxiang, Liao Shuangquan, Yang Haiguang, Chen Yuli, Zhang Guangyan, Wang Ruyuan, Liu Hongmei, Chen Xiuhong, Jiang Rongju, Duan Yan, Pan Yinghong, Yang Zie Hongliang, Yang Lijia, Yang Jinyan, and Examine Civil Dispute on Shareholder Qualification Confirmation The court held that Xiao Yingguang submitted his resignation to Yuanmou County Department Store Trade Wholesale Co., Ltd., voluntarily transferred his shares and received the share payment paid by the company. Although Yuanmou County Department Store Trade Wholesale Co., Ltd. did not change its industrial and commercial registration for some reason, the company amended its articles of association through a resolution of the shareholders' meeting and issued a certificate of capital contribution to the shareholders of the company, xiao Yingguang is no longer a shareholder of the company. In the event that the list of shareholders in the industrial and commercial registration is inconsistent with the register of shareholders retained by the company, the internal confirmation of the identity and share of the shareholders shall be based on the register of shareholders retained by the company. Therefore, Xiao Yingguang has actually lost the shareholder qualification of yuanmou county Department Store Trade Wholesale Co., Ltd. and his request to confirm himself as a shareholder of yuanmou county Department Store Trade Wholesale Co., Ltd., to enjoy 4% equity (50000 yuan) of the company, to issue equity certificates or capital contribution certificates, and to reissue dividends of 300000 yuan from 2007 to 2016 is inconsistent with the facts and legal provisions, and the court will not support it. 3.(2016) Supreme Farmin Shen No. 238: Yin Jiqing, Rizhao Juntai Real Estate (Group) Co., Ltd., Wang Xiaoyi and other shareholders' registers record dispute complaints and apply for civil rulings The court held that: to determine the establishment of the status of shareholders of a limited liability company, should be in accordance with the provisions of the Company Law and the relevant judicial interpretation, from the capital contribution, public.</中华人民共和国公司>

2022-11-30

Viewpoint | Don't Know the "Capital Provident Fund"

Introduction Capital provident fund refers to the portion of shareholders' capital contribution in excess of registered capital (capital premium or equity premium), as well as gains and losses directly included in the owner's equity. The capital provident fund is not converted from the company's profits, it is essentially input capital. ① As China adopts the statutory registered capital system, the capital provident fund cannot be directly reflected as registered capital or as a separate industrial and commercial registration item, and there are few laws and regulations. The relevant provisions on the use of capital provident fund are mainly reflected in the accounting system standards, but in practice, the use of capital provident fund is special. This paper intends to sort out and analyze the relevant provisions of the capital provident fund, aiming to provide reference for relevant practical issues. Sources of formation of 1. capital provident fund Because the capital reserve fund is an integral part of the owner's equity, and it usually directly leads to the increase of the net assets of the enterprise, therefore, the capital reserve information is very important for the decision-making of investors, creditors and other accounting information users. In order to avoid inflating net assets and misleading decisions, it is necessary to identify the main sources of capital surplus formation. According to the Enterprise Accounting System, the sources of capital provident fund formation mainly include two types according to their purposes: One category is the capital provident fund that cannot be directly used to increase capital, which includes the preparation of donations to accept non-cash assets, the re-evaluation and appreciation of statutory property, and the preparation of equity investment. Among them, the preparation for accepting non-cash assets donation refers to the capital accumulation fund increased by the enterprise due to accepting the donation of non-cash assets; the legal property re-evaluation and appreciation refers to the difference between the confirmed value of the asset evaluation or the value agreed by both parties and the original net book value when the enterprise transfers out various assets due to foreign investment or when the enterprise needs to revalue the property due to merger and reorganization; the preparation for equity investment, when an enterprise adopts the equity method of accounting for its long-term equity investment in an investee, it increases its capital provident fund due to the acceptance of donations by the investee, resulting in an increase in the capital provident fund calculated by the investing enterprise in proportion to its shareholding or investment. One category is capital reserves that can be used directly to increase capital, which includes capital (or equity) premiums, cash donations received, transfer of appropriations, foreign currency capital translation differences and other capital reserves. Among them, the capital (or equity) premium refers to the part of the capital invested by corporate investors that exceeds their share of the registered capital, which is called equity premium in joint stock limited companies; accepting cash donations refers to the company's acceptance of cash donations The increased capital reserve; appropriation transfer refers to the completion of the appropriation projects allocated by the state for technological transformation and technological research, the part transferred to the capital provident fund according to regulations shall be recorded according to the transferred amount; the foreign currency capital conversion difference refers to the capital conversion difference caused by the different exchange rates adopted by the enterprise for foreign currency investment; other capital provident fund refers to the capital provident fund formed in addition to the above-mentioned capital provident fund and the amount transferred from various reserve items of the capital provident fund, including the debts exempted by creditors. Use of 2. Capital Provident Fund According to the provisions of Article 168 of the Company Law that "the company's provident fund shall be used to make up for the company's losses, expand the company's production and operation or to increase the company's capital. However, the capital provident fund shall not be used to make up for the company's losses", the capital provident fund has the following purposes: (I) to expand the company's production and operation The capital provident fund increases the asset base required for the company's operations, so the company can use the capital provident fund to expand the company's production and operation scale according to its own business needs without increasing capital, in order to enhance the company's operating strength. (II) to increase company capital Under normal circumstances, part of the company's capital reserve can be converted to increase the company's registered capital, but the conversion of the company's share capital needs to pay attention to the following important matters: 1. According to the provisions of the Enterprise Accounting System, the preparation items under the capital provident fund cannot, in principle, be transferred to capital (or equity). The preparation items include three items: preparation for accepting non-cash asset donations, revaluation and appreciation of statutory property, and preparation for equity investments. However, for companies that implement the Enterprise Accounting Standards, the capitalization of capital surplus includes the capital (equity) premium and the capital surplus of the realized portion of the capital surplus in addition to the capital surplus. 2. The transfer of the registered capital (or share capital) of the company from the capital accumulation fund shall be decided by the shareholders' meeting (general meeting of shareholders) or other similar authority. 3. If the capital accumulation fund is converted into share capital, income tax shall be paid in accordance with the provisions of the law and the relevant provisions of the Ministry of Finance and the State Administration of Taxation. Matters of concern in 3. practice (I) procedures for increasing registered capital Although article 168 of the Companies Act provides that the capital provident fund may be used to increase the capital of the company, the conditions that must be met for the conversion of capital from the provident fund and whether the capital must be increased to all shareholders in accordance with the original shareholding ratio are not stipulated by law. ② Article 43 of the "Company Law" stipulates that the method of discussion and voting procedures of the shareholders meeting shall be prescribed by the articles of association of the company, except as provided for in this law. Resolutions made at the shareholders' meeting to amend the articles of association of the company, increase or decrease the registered capital, as well as resolutions on the merger, division, dissolution or change of corporate form of the company must be passed by shareholders representing 2/3 or more voting rights. According to the above provisions, the shareholders of the company may, when convening a shareholders' meeting, determine whether the conditions for capital increase from provident fund have been met and whether to increase capital to all shareholders in accordance with the original shareholding ratio. If the articles of association do not provide for this, it shall be discussed and determined by the shareholders' meeting and implemented after being adopted by shareholders representing more than 2/3 voting rights. It is important to note that when only some shareholders are targeted to increase capital from the capital reserve, the resolution must be unanimously approved by all shareholders. The current company law does not prohibit the company from making targeted increases to some shareholders. However, since all shareholders enjoy the final rights and interests of the capital accumulation fund according to the proportion of equity, after the targeted increase, all the capital accumulation fund will be converted to the capital contribution of some shareholders, which may lead to the reduction of the interests of other shareholders. Therefore, the shareholders' meeting resolution of the company's targeted increase of registered capital can only be made with the unanimous consent of all shareholders. The (II) shall pay income tax on the acquisition of equity (shares) due to the transfer of capital reserves to increase capital (share capital). When capital surplus is transferred to capital (share capital), a corresponding change in legal form occurs, and the equity that originally belonged to the company is transformed into the share capital of the shareholders, and from the point of view of the change in legal form and control, it can be considered that the company has paid to the shareholders. Specifically, prior to the conversion, the capital provident fund represents the assets and interests of the company, while after the conversion, it is formally expressed as each shareholder's respective rights to the company, thus giving rise to the basis for taxation. However, it should be noted that, unlike other capital reserves, the capital reserves generated by the capital (equity) premium are not the income generated in the process of production and operation of the enterprise, in which the capital (equity) premium comes from the input of shareholders and should not be regarded as the income of the nature of "dividends and bonuses" obtained by shareholders, there is no need to pay corporate income tax (the standard rate is 25%) or personal income tax (the rate is 20%). At present, the income tax treatment of shareholders when an enterprise transfers capital from capital reserve is as follows: 1. Corporate shareholders The second paragraph of Article 4 of the notice of the State Administration of Taxation on the implementation of the enterprise income tax law (Guo Shui Han [2010] No. 79) stipulates that if the invested enterprise converts the capital reserve formed by the equity (ticket) premium into equity, it shall not be regarded as the dividend and dividend income of the investor enterprise, and the investor enterprise shall not increase the tax basis of the long-term investment. Therefore, for the shareholders of the enterprise, the capital accumulation formed by the equity premium or the stock premium of the invested enterprise will not lead to the tax liability of the shareholders. And at this time, do not distinguish between the nature of the invested enterprise, the invested enterprise with equity or stock premium formed by the capital accumulation to increase capital, are not subject to corporate income tax on its shareholders. 2. Individual shareholders Article 1 of the notice of the State Administration of Taxation on the exemption of individual income tax on the conversion of capital stock and the distribution of bonus shares by joint-stock enterprises (Guo Shui Fa [1997] No. 198) stipulates that the conversion of capital stock by joint-stock enterprises with capital accumulation fund does not belong to the distribution of dividends and dividends, and the amount of capital increase obtained by individuals is not regarded as personal income and individual income tax is not levied. The "Approval of the Original Urban Credit Cooperatives in the Process of Transforming into Urban Cooperative Banks to Pay Individual Income Tax on Income from Individual Share Appreciation" (Guo Shui Han [1998] No. 289) states that the "capital provident fund" described in Document No. 198 refers to the capital provident fund formed by the income from the premium issuance of shares of joint-stock enterprises. The second paragraph of Article 2 of the Circular of the State Administration of Taxation on Further Strengthening the Collection and Administration of individual income tax for High-income earners (Guo Shui Fa [2010] No. 54) stipulates that if capital reserves other than stock premium are transferred to increase registered capital and share capital, individual income tax shall be levied in accordance with the items of "income from interest, dividends and dividends" and in accordance with the current policies. That is to say, only the capital reserve formed by the stock premium issuance of joint-stock enterprises is not regarded as the personal income of shareholders when it is converted into share capital, and no personal income tax is levied; for the capital reserve formed by joint-stock enterprises that are not part of the stock issuance premium, and non-joint-stock enterprises that convert capital reserve into share capital (capital), there is no clear stipulation that individual shareholders' personal income tax is not levied. In practice, some local tax authorities will levy a 20% personal income tax on "interest, dividends and dividend income" on individual shareholders when limited liability companies and non-listed joint-stock enterprises increase their capital (share capital) at a capital (share capital) premium. Of course, there is still much controversy over the appropriateness of this provision, with opponents arguing that the nature of the enterprise should not affect the determination of the nature of capital, and that Document No. 79, which applies to the enterprise, likewise does not distinguish whether the shareholders of the enterprise are subject to corporate income tax by the nature of the enterprise. The (III) shall not arbitrarily withdraw the capital provident fund without legal procedures. Although the legal provisions are not clear, the relevant judicial cases are negative about the arbitrary direct or disguised withdrawal of capital reserves by shareholders. For example, in (2017) Shan 01 Minchu No. 1079 case, the court held that the withdrawal of capital contribution is not limited to the withdrawal of capital contribution that has been paid in the registered capital. In the case of capital increase of the company, the withdrawal of capital contribution (I .e. capital reserve) by shareholders that has not been registered by the industrial and commercial department but has become the legal person property of the company also belongs to the category of withdrawal of capital contribution and is prohibited by the company law. ③After the case was retried by the Shaanxi Provincial High Court and the Supreme People's Court, both supported the judgment of the court of first instance. In addition, the same view is held in (2013) Minti Zi No. 226 and (2013) Minshen Zi No. 326 cases. Moreover, the agreements between shareholders and between shareholders and the company on the retrieval of capital reserves are invalid. In the case of (2019) Su Minzong No. 1446, the court held that the content of the undertaking involved in the case was that Banghao Company returned the part of investment funds larger than the registered capital to Zhongnan Company, which violated the capital maintenance principle of the Company Law and damaged the legitimate rights and interests of Banghao Company and its creditors, and should be invalid, therefore, Zhongnan Company shall not be supported in requesting Banghao Company and other shareholders to return funds to it in accordance with the undertaking. ④ Not only that, the shareholders who withdraw their capital contributions usually make false financial accounting statements to increase profits for distribution, transfer the capital contribution through fictitious creditor's rights and debts, and transfer the capital contribution out by using related transactions. ⑤ Such acts are prohibited by the relevant jurisprudence. For example, in the Supreme Court (2013) Minti No. 226 case, the court found that the actual capital contribution of the shareholders is greater than the capital premium formed by the capital contribution payable, which belongs to the company's capital provident fund in nature and does not constitute a shareholder's loan to the company, and the shareholders use this as a loan claim and the company to repay the debt, constitute a disguised withdrawal of capital contribution. The court held that the board of directors of Jinhua Investment Company decided to use the real estate in this case to offset the principal and interest of Lin Jinpei's capital contribution, which was essentially to convert Lin Jinpei's capital contribution belonging to the capital accumulation fund into the company's loan to Lin Jinpei, and to return it in the form of debt repayment, resulting in Lin Jinpei's disguised withdrawal of capital contribution, violating the principle of capital enrichment of the company and the provisions of the above notice of the Company Law and the State Council, therefore, the resolution of the Board of Directors on the confirmation of Lin Jinpei's loan claims and the decision to offset the debt in kind should be deemed invalid. ⑥ Although the Company Law does not explicitly include capital surplus as a statutory contribution. However, allowing shareholders to withdraw their capital surplus at will would also materially undermine the principle of corporate capital maintenance. The path to the recovery of (IV) capital reserves-after the liquidation of the company. The company's capital provident fund belongs to the category of the company's capital, and the shareholders enjoy the shareholders' equity, not the ownership. According to Article 26 of the Accounting Standards for Enterprises, the owner's equity of an enterprise, also known as shareholders' equity, refers to the residual equity enjoyed by the owner after deducting liabilities from the assets of the enterprise. It is the economic interest of the company's shareholders in the remainder of the company's total assets after deducting liabilities (I. e., the company's net assets), as opposed to ownership. Therefore, for investments that have been included in the company's capital reserve, shareholders can claim owner's equity from the company in proportion to their capital contributions after the liquidation of the company. The reasons for the liquidation of a company generally include the dissolution of a shareholder resolution, the dissolution of an administrative order and the liquidation of bankruptcy. Among them, the reason for bankruptcy liquidation is that the company's assets are not enough to pay off all the debts or the obvious lack of solvency, at this time, the liabilities are greater than the assets, the owner's equity is negative, does not involve the distribution of capital reserves. Thus, the treatment of capital reserves may only be involved in the dissolution of a shareholder resolution or an executive order. According to the second paragraph of Article 186 of the Company Law, the remaining property after the company's property is paid for liquidation expenses, employees' wages, social insurance premiums and statutory compensation, the taxes owed, and the company's debts are paid off. The company is distributed in proportion to the capital contribution of shareholders, and the company limited by shares is distributed in proportion to the shares held by shareholders. The capital surplus on the company's books is distributed together with surplus and paid-in capital in proportion to the shareholders' capital contribution or shareholding. Also, income tax is still payable on the proceeds of liquidation. Conclusion As an important asset of the company, the fund provident fund can bring real benefits to the company and shareholders by recognizing it and making good use of it.

2022-11-30

The Power of Public Welfare | Deputy Director Zhou Jiakui of Zhongcheng Qingtai Jinan Institute was invited to give a special lecture on "Risk Prevention and Control of Internet Short Video" for the 2022 Shandong "Skills Prospering Lu" Vocational Skills Competition

In order to thoroughly implement the spirit of General Secretary Jinping's series of important instructions on the work of skilled talents, vigorously promote the spirit of model workers, labor spirit, and craftsmanship, and actively create a social fashion of "glorious labor, precious skills, and great creation. On November 29, lawyer Zhou Jiakui, deputy director of the Civil Committee of Shandong Law Association and deputy director of Zhongcheng Qingtai (Jinan) Law firm, was invited to give a special lecture on "risk Prevention and Control of Internet short Video" for the 2022 Shandong "skills Xinglu" Vocational skills Competition. In this lecture, lawyer Zhou Jiakui took the "Standard Rules for Auditing Online Short Video Content" as the topic, from the "network short video content audit standard rules", "short video infringement related issues analysis" and "from the advertising law", "anti unfair competition law", "copyright law" and "food safety law" and other aspects of the network short video possible risks "and other aspects of the competition requirements and the characteristics of the entries made a comprehensive and detailed explanation. Based on the food safety, advertising and similar competition issues involved in the entries, with legal explanations, and combined with typical cases, this paper explains the legal risks that may arise in the process of online short video shooting and how to prevent such problems. This lecture provides strong scientific and legal guidance for practicing the spirit of General Secretary Xi Jinping's series of important instructions on the work of skilled talents, and vigorously promoting the spirit of model workers, labor spirit, and craftsmanship. After the meeting, the host of the provincial TV station, other guests and contestants spoke highly of the lecture and hoped that lawyer Zhou would continue to provide legal support for the event.

2022-11-30

Viewpoints.........................................................................................................

On November 23, 2022, the UK Supreme Court ruled that Scotland could not hold a referendum on independence without the approval of the UK government. What exactly happened to make the UK Supreme Court issue such a ruling? Our lawyers found the ruling on the website of the UK Supreme Court, and here's a look at the whole story of the incident. (This article is about 2300 words and the reading time is about 7 minutes) The ruling is 35 pages long. None of the incidents occurred in isolation, and therefore paragraphs 4-11 of the ruling set out the background to the matter. In 2014, Scotland held an independence referendum under the authority of the Order in Council, which resulted in more votes against independence than in favor. Now the Scottish government wants another referendum on independence, but the British Privy Council has refused to issue an Order in Council. So the Scottish government wants another referendum without an Order in Council. What needs to be explained is that the Privy Council is the advisory body of the British monarch, and the head of the Privy Council is the Speaker of the Privy Council. In addition to being a member of the cabinet, the person holding this position is also the fourth highest Minister of State. By convention, the Speaker of the Privy Council also serves as the leader of the House of Lords or the House of Commons. The current Speaker of the Privy Council is Penny Mordaunt, the current Leader of the House of Commons and the first female Defense Secretary. In 1998, the Parliament of the United Kingdom passed the Scotland Act 1998 (Scotland Act 1998), which authorized the establishment of the Scottish Parliament and established the autonomy of Scotland. In 2007, the Scottish National Party came to power to form the current Scottish government, and the Scottish National Party has been committed to promoting Scottish independence. Section 29 of the Scotland Act 1998 provides that laws made by the Scottish Parliament that are beyond the legislative competence are null and void, and it is expressly agreed that provisions relating to "reserved matters" of the Scotland Act 1998 are beyond the legislative competence. Annex 5 of the Scotland Act 1998 provides for "reserved matters", which includes Scotland, the United Kingdom and the United Kingdom Parliament. Therefore, as long as the Scottish Parliament's legislative documents refer to Scotland, the United Kingdom and the United Kingdom Parliament, then the clause is invalid. However, paragraph 34 of Annex 6 of the Scotland Act 1998 provides that the Senior Legal Officer of the Scottish Government, the Chief Counsel of the Crown, the Scottish Legal Officer of the British Government and the Northern Ireland Legal Officer of the British Government are empowered to refer issues (devolution issues) that are not part of the proceedings to the United Kingdom Supreme Court. Returning to this case, the holding of an independence referendum requires special legislation by the Scottish Parliament, otherwise the legitimacy of the outcome of the Scottish independence referendum cannot be guaranteed, and the legislative authority of the Scottish Parliament is restricted by the Scotland Act 1998. The Scottish Government has therefore decided to apply paragraph 34 of Annex 6 of the Scotland Act 1998 and, since direct legislation is not valid, to refer it to the United Kingdom Supreme Court, which will rule on the relevant competence. As a result, the Scottish government drafted the Scottish independence referendum bill, and senior legal officials of the Scottish government asked the English court whether the Scottish Parliament had the power to legislate for the holding of a referendum on Scottish independence under paragraph 34 of Annex 6 of the Scotland Act 1998? The British government's Scottish law officer then asked two other questions in response to the question raised by the Scottish government: Is the issue raised by the Senior Legal Officer of the Scottish Government a "devolution issue" and, if not, would not apply to paragraph 34 of Annex 6 of the Scotland Act 1998. 2. Even if the issue is a "decentralization issue", can the court refuse to accept the application at its discretion? In fact, the answer to the latter two questions is obvious. The Supreme Court of the United Kingdom has also made it clear in this ruling that this is a matter of decentralization and the Supreme Court has the power to decide. After the reasoning in paragraphs 48-54 is clear, the Supreme Court of the United Kingdom should accept the application. From paragraph 55, the UK Supreme Court answers the question posed by the Scottish Government whether the Scottish Parliament has the power to legislate for the holding of a referendum on Scottish independence? Similar to the domestic judgment, the British Supreme Court judges also listed the views and arguments of the Scottish side and the British government respectively in this part, and made it clear in the "court assessment (The court's assessment)" part of the similar domestic judgment, "whether the Scottish Parliament has the right to legislate on the holding of a referendum on Scottish independence?" it is relevant to the "reserved matter" of the Scotland Act 1998, as this issue clearly includes the question of whether the union between Scotland and England should be terminated and whether Scotland should cease to be subject to the sovereignty of the Parliament of the United Kingdom. The Scottish National Party representative also put arguments on the "principle of self-determination and legality" to the UK Supreme Court in an attempt to shake up the "reserved matters" provisions of the Scotland Act 1998. The UK Supreme Court has also elaborated on the principles of self-determination and legality. Interestingly, the United Kingdom Supreme Court used the Supreme Court of Canada's decision on the secession of Quebec as its case. In the Canadian jurisprudence on the province of Quebec, the Supreme Court of Canada held that the law in Canada did not disadvantage Quebecers in the sense of international law, and that the principle of self-determination applied only in three situations: 1. external self-determination in the case of a former colony; 2. oppression of a people, such as in the case of foreign military occupation; where a definable group is denied meaningful access to government in pursuit of its political, economic, social and cultural development. None of the above three reasons apply to Quebec. Accordingly, the Supreme Court of Canada ruled that the Parliament and the Government of Quebec did not have the right to unilaterally separate Quebec from Canada. The United Kingdom Supreme Court held that the Canadian opinion on the province of Quebec was equally applicable to Scotland and the status of the Scottish people in the United Kingdom, and that Scotland was not in the same situation as Kosovo, and that Scotland therefore did not apply the principle of self-determination. Ultimately, the UK Supreme Court concluded that the question of the referendum was "Should Scotland become an independent country?" as a result of the clause in the Scottish Independence Referendum Bill, which was related to the matter of reservation. Because it involves Scotland, the United Kingdom of England and the United Kingdom Parliament. Although the final conclusion is not clearly stated, according to the content of the conclusion, it can be concluded that it contains two meanings. First, the Scottish independence referendum bill is invalid. Second, it is the most important conclusion. Without the approval of the British government, Scotland is not allowed. Hold an independence referendum. After this ruling, does Scotland's independence come to an end? That is not the case. As mentioned earlier, Scotland held a referendum on independence in 2014. The referendum on Scottish independence in 2014 was actually a similar path to this one. On October 15, 2012, British Prime Minister Cameron and Scottish Chief Minister Salmond signed the "Edinburgh Agreement" (Edinburgh Agreement), agreeing to the Scottish Parliament to hold an independence referendum at an opportunity. To this end, the British Privy Council issued an Order in Council to amend the Scotland Act 1998 and temporarily devolve the power to hold an independence referendum to the Scottish Parliament for a period of December 31, 2014. The British government gave Scotland this opportunity in 2012, and the final facts also proved the judgment of the British government. But this time, the British government has not given Scotland the same opportunity again. Perhaps this choice itself can explain the problem. You and I will be witnesses to the fate of Scotland in the future.

2022-11-28

From the perspective of mineral law | Interpretation of the revised version of the measures for the implementation of safety production license for non coal mining enterprises

In order to strictly regulate the safety production conditions of non-coal mine enterprises and further strengthen the administration of the issuance of safety production licenses for non-coal mine enterprises, the State Administration of Mine Safety Supervision organized the revision of the Measures for the Implementation of Safety Production Licenses for Non-coal Mine Enterprises (formerly State Administration of Work Safety Order No. 20). On November 3, 2022, the State Administration of Mine Safety Supervision issued an official authoritative interpretation of the revision of the implementation measures. Purpose of 1. Revision In order to implement the "Safety Production Law" and other laws and regulations, to strictly regulate the safety production conditions of non-coal mine enterprises, to further strengthen the management of the issuance of safety production licenses for non-coal mine enterprises, to control risks from the source, to eliminate hidden dangers, and to effectively prevent and contain major accidents, starting from August 2021, the State Administration of Mine Safety Supervision shall organize the revision of the Measures for the Implementation of Work Safety Licenses for Non-Coal Mining Enterprises (Order No. 20 of the former State Administration of Work Safety, hereinafter referred to as the Measures). Necessity of 2. revision On May 17, 2004, the State Administration of Work Safety and the State Administration of Coal Mine Safety promulgated the Measures by Order No. 9. On June 8, 2009, the State Administration of Work Safety revised the Measures by Order No. 20. The Measures promulgated on May 17, 2004 were abolished at the same time. On May 26, 2015, the State Administration of Work Safety issued the "Decision of the State Administration of Work Safety on Repealing and Amending Nine Regulations in the Field of Non-Coal Mines" (Order No. 78 of the State Administration of Work Safety), which revised some provisions of the "Measures. Over the years, the Measures have played an important role in regulating the safety production conditions of non-coal mine enterprises, strict safety access, promoting enterprises to increase safety investment, and improving the safety production conditions of enterprises. However, some provisions of the current Measures are no longer applicable to the newly revised laws, regulations and requirements: First, the issuing authority needs to be re-clarified. The "Notice of the State Council on Deepening the Reform of" Separation of Licenses and Licenses "to Further Stimulate the Development Vitality of Market Entities" and the "Decision of the State Council on the Adjustment of the Responsibilities of Administrative Organs in the Institutional Reform of the State Council" require that the national and provincial "two-level" issuance Adjusted to "provincial" issuance. Second, the scope of certification needs to be re-clarified. Documents such as the provisions on the functional allocation, internal institutions and staffing of the State Administration of Mine Safety and the decision of the State Council on canceling a number of administrative license items have adjusted the functions of the State Administration of Mine Safety, redefined non-coal mining enterprises, and no longer issued safety production licenses to oil and gas enterprises, geological exploration units and headquarters of non-coal mining enterprises. At the same time, it is required that tailings ponds should apply for safety production licenses. Third, the licensing conditions need to be further adjusted and strengthened. The revision of laws and regulations such as Law on the People's Republic of China Safety Production (Order of the President of the People's the People's Republic of China of China [2021] No. 88), Safety Regulations for Metal and Nonmetal Mines (GB 16423-2020), Safety Regulations for Tailings Pier (GB 39496-2020), and the issuance of documents such as the Notice of the State Administration of Mine Safety on Issuing the Guiding Opinions on Strengthening the Work Safety in Non-coal Mines (No. 2022), new requirements have been put forward for the audit and issuance of safety production licenses for non-coal mining enterprises. In this context, in order to solve the outstanding problems of non-coal mine safety production, promote the non-coal mine industry to achieve safe and high-quality development, effectively improve the intrinsic safety level of non-coal mine enterprises across the country, and protect the safety of people's lives and property, it is necessary to revise the "Measures". Main contents of 3. revision The revised "Measures for the Implementation of Safety Production Licenses for Non-Coal Mine Enterprises (Draft for Comment)" has 7 chapters and 50 articles. Compared with the current "Measures", the number of chapters has not changed, the chapter structure has been adjusted, and the number of content items has been deleted. 7 articles and 6 articles have been added. The main revisions are: (I) adjusting the scope of issuance and clarifying the object of government supervision. First, in accordance with the adjustment of the functions of the State Administration of Mine Safety Supervision, the issuance and management of safety production licenses for oil and gas enterprises have been canceled; in accordance with the provisions of the "Decision of the State Council on Canceling a Batch of Administrative Licensing Matters", the geological exploration units have been canceled. The issuance and management of safety production licenses (Article 2). The second is to increase the safety production license that should be applied for tailings pond mining (Article 19, paragraph 3). Third, in order to further implement the main responsibility of enterprise safety production, the level of certification has been reduced, and it is clear that only the independent production system and its superior legal person enterprises are issued (Article 3). (II) ensure the quality of license approval and clarify the license issuing agencies. In order to improve the mine safety supervision and supervision system of "national supervision, local supervision, and enterprise responsibility", in accordance with the requirements of the "Guiding Opinions", the "national and provincial certification" was revised to "provincial certification" to clarify metal and non-metal underground The issuance and management of safety production licenses for mines and tailings ponds shall not be entrusted to lower-level agencies (Article 4). (III) implement source management and strict safety production conditions. First, in accordance with the relevant provisions of the "Safety Production Law" on the safety production responsibility system, the construction of a dual prevention mechanism for safety risk classification control and hidden danger investigation and management, the establishment of "safety production responsibility system assessment management", "safety risk classification control", and "Accident hidden danger investigation and management" and other safety rules and regulations (Article 6, paragraph 1). Second, in accordance with the requirements of full-time safety production management personnel and full-time technical personnel in the Guiding Opinions, it has clarified the full-time safety management personnel and full-time technical personnel of non-coal mining enterprises, open-pit mines, underground mines, tailings ponds, and mining construction enterprises. The number of requirements and the safety production conditions required on site (Articles 6 to 10). Third, in accordance with the requirements of the "Safety Production Law" that production and business units in high-risk industries and fields should insure production safety liability insurance, the provisions of production safety liability insurance for employees have been added (Article 6, paragraph 7). Fourth, in accordance with the requirements of the "Catalogue of Equipment and Processes Prohibited in Metal and Non-metal Mines" and the "Safety Regulations for Metal and Non-metal Mines" and "Safety Regulations for Tailings Ponders", open-pit mines and underground mines are not allowed to use the prohibited equipment of the state, And the elimination of backward processes and equipment that endanger production safety as stipulated in the process catalog (Article 7, paragraphs 4 and 7, and 8, paragraphs 4 and 8, and 8). (IV) ensure that the enterprise meets the production conditions, additional submission materials. The information required by the enterprise shall be listed according to the classification of the issuing object, and the corresponding information shall be added on the original basis. One is a copy of the professional qualification certificate of registered safety engineer for full-time safety management personnel (Article 11, paragraph 6, Article 12, paragraph 6, Article 13, paragraph 6, Article 14, paragraph 5, and Article 15, paragraph 6). The second is the certification materials for the safety production education and training of other employees of the enterprise (Article 11, paragraph 8). The third is the standard and distribution list of labor protection articles for enterprise employees (Article 11, paragraph 8). The fourth is the certification materials for the insurance of production safety liability insurance (Article 11, paragraph 10, Article 12, paragraph 10, Article 13, paragraph 10, Article 14, paragraph 9, and Article 15, paragraph 8). Fifth, underground mines with medium and above hydrogeological types shall set up special water prevention and control management institutions, photocopies of documents of water exploration and drainage teams, and a list of water exploration and drainage equipment (Article 13, paragraph 6). The sixth is the relevant certification materials for the effective operation of underground mine safety monitoring and monitoring, personnel positioning, communication, online ground pressure monitoring and other systems (Article 13, paragraph 14). (V) strengthen the safe operation, strict license application, review and extension. First, non-coal mining enterprises that apply for a safety production license for the first time shall conduct an on-site review (Article 18). Second, when non-coal mining enterprises apply for extension, they must submit the corresponding materials, which shall be reviewed by the administrative department for issuing production safety licenses again, and cannot directly go through the extension procedures (article 20 of the current "measures" shall be deleted), and the safety status evaluation report shall not be submitted until the first level of standardization is reached (article 20). The third is to clarify that the license expires 3 months before the expiration of the license, apply to the original safety production license issuance management department for extension procedures (Article 20). (VI) matching the administrative licensing law, the additional cancellation of the license situation. Added the need to cancel the safety production license if the safety production license expires without applying for extension (Article 31, paragraph 4).

2022-11-28

Cover character | Select the track to cultivate carefully, music to write legal life

In Zhongcheng Qingtai, there are always a group of senior lawyers who stick to their profession and ideals. They are the role models for the law firm to learn from. They are the guides of future generations. They are also professional lawyers who satisfy their clients and reassure the party and the government. Let's get to know them, walk into their stories and listen to their voices. The second cover character-Li Zhenzhong 01 Where the dream begins In 1997, Li Zhenzhong, who graduated from Shandong University, gave up his bachelor's degree in liberal arts and science. After passing the judicial examination, he opened his path as a lawyer. "In college, I liked to take part in debating competitions very much." Lawyer Li Zhenzhong said: "In the competitions, I was deeply attracted by the careful improvement of the information before the competition, the response to the match and the brainstorming of the debate." The opportunity to debate again and again gave him new points of interest, which was also the most firm reason for him to choose the legal industry in the future. Will love to make a career, is not a simple thing. When I first entered the workplace, I also experienced the stage of confusion, wandering and no improvement. So, Li lawyer is how to insist on the choice? 02 Legal services, to spot trends, seize opportunities In 2005, the share-trading reform of listed companies is being actively promoted, which inevitably involves equity disputes between tradable shareholders, non-tradable shareholders and major shareholders. At that time, the dispute between small and medium shareholders of Sinopec Taishan Petroleum Co., Ltd. v. the general meeting of shareholders was the first case in Shandong and even the whole country, and there was no solution experience to learn from. At that time, many older lawyers did not dare to try easily. As a young junior, lawyer Li Zhenzhong dared to provoke the task and said confidently: "It is a challenge, but also an opportunity." Relying on his momentum and tenacity, and investing a lot of time and energy, Li Zhenzhong won the country's first case of small shareholders suing the invalid resolution of the general meeting of shareholders, and became a model case for handling similar cases for a period of time. Dare to challenge, dare to "eat crabs" also let Li Zhenzhong harvest a large number of similar cases of active contact with agents, he said with a smile: "there is a movie is happiness to knock on the door, I am the source of the case to knock on the door." In 2008, the state of the country to be listed on the company to open the GEM market. At this time, Taian Yuloka Co., Ltd. was the first company in the province to land on the GEM. Li Zhenzhong handled a series of legal issues involved as a signing lawyer and completed the listing recommend. The company created the highest GEM stock price record at that time. Since then, Huayang Technology Co., Ltd. and Harbin Manhattan Group have faced litigation disputes during the acquisition process, and the Ningyang County Government attaches great importance to this project. This is not only related to the company's economic interests, but also related to local economic benefits and social stability. Li Zhenzhong, as the chief lawyer in charge of the case, did not dare to slack off. After two years of investigation, we finally resolved the litigation dispute and successfully guaranteed the listing of Hongda Mining's backdoor Huayang Technology. The case was successfully resolved, and Li's team was cordially received by relevant government leaders in Shandong Province. In this project, Li Zhenzhong's professional ability and business level have been unanimously recognized, and follow-up cooperation has also been carried out with related government projects. Recalling his past experience in handling cases, lawyer Li said: "we should be good at discovering trends, have the courage to keep up with the trend and seize opportunities." Li Zhenzhong Lectures on Legal Popularization 03 Persistence in deep cultivation of professional fields In November 2011, under the encouragement and inspiration of Director Wang Guangren, lawyer Li Zhenzhong joined Zhongcheng Qingtai (Jinan) Law Firm, which also became the starting point for lawyer Li's career to gain greater success. At that time, the "New Third Board" listing policy had just been launched, and major companies and intermediaries were actively promoting related projects. Li Zhenzhong immediately realized that this is a market with great legal demand, and he must give full play to the strength of the team and change the previous legal service model of fighting alone. This kind of business development method has received strong support from Director Wang Guangren, encouraging a large number of lawyers in the institute to join the Li lawyer team, and at the same time promoting a series of system guarantees and human support. This not only inspires lawyer Li, but also injects strong vitality into the securities business of the whole firm, which enables the follow-up business to be carried out intensively and greatly improves the work efficiency. "At any time, there is the support of the law firm and Director Wang Guangren behind it. It is the platform of Zhongcheng Qingtai that provides me with a broader field." With the support of the whole institute's case source and excellent team, Li Zhenzhong led the team to rapidly promote more than 40 new three-board projects in and outside the province. Zhongcheng Qingtai (Jinan) Law Firm has leapt to the forefront of the province's law firms in the number of new third board businesses, and has been highly recognized by the served companies and the Shandong Provincial Securities Regulatory Bureau. At the same time, it has the honor to participate in the formulation of relevant regulations of the China Securities Regulatory Commission. At the same time, Shandong Expressway, Shandong Railway Investment, Shandong Development Group, Shandong Finance Group, Shandong Luhua Group and many other provincial-level enterprises have established long-term business cooperation relations with Li Zhenzhong's team. In-depth cooperation has been carried out in the field of investment and financing, major project financing, and innovative legal business. Among them, the Shandong Development Investment Group, which Li Zhenzhong provides services, and the Asian Development Bank, the German Promotion Bank, and the French Development Bank jointly established a $10 billion legal service fund. The project won the China World Alliance Capital Market Legal Service Biennial Award. Since practicing, Li Zhenzhong has been engaged in business related to the securities capital market, and has made very remarkable achievements, and he himself is not a major in economics. "Find the right entry point and combination point for the direction of legal services and self-development, continue to learn, continue to work hard, and work for a long time." Lawyer Lee said. Li Zhenzhong assisted in the drafting of the "National Small and Medium-sized Enterprise Share Transfer System Listed Companies Standardized Operation Management Measures" Lawyers are not mechanical retellers of laws and regulations, but more use the law as a tool to integrate into the relevant service areas. Do not limit yourself to the law itself, but to have a cross-study of other fields. After choosing the right track for you, you should learn to plow deeply. A field to achieve the ultimate, let customers mention the first thought is your name. 04 A different kind of lawyer life In his work, lawyer Li Zhenzhong is rigorous and meticulous, calm and restrained. After work, no one would have thought that this big man even likes to play in a band. Li Zhenzhong and law firm lawyers perform in a band. There is a flame in everyone's heart, depending on whether you can light it. li zhenzhong and other lawyers formed the zhongcheng qingtai band and wrote the song "prose poems of zhongcheng qingtai" together. The band not only performed in the annual meeting of the law firm and the annual meeting of the law association, but also appeared on many channels such as Shandong Variety TV. At any age, one must become a warm-blooded person. When it comes to the band, lawyer Li always shines in his eyes: "music brings us power beyond the desk. We feel the more colorful emotional world besides the rigorous legal work." The band also drove all the way to Guangxi and Xinjiang, performing while traveling, feeling the magnificent mountains and rivers and interesting customs of the motherland. Li Zhenzhong and law firm lawyers perform in a band. 05 Listen to him Do a good job in every single business, not because of the size of the business and the inner slack, uphold the belief of being responsible to customers. Young lawyers should not rush to pursue financial interests, but should first cultivate their own reputation. For lawyers, they are famous brands and brands are capital. To maximize the overall interests of the team, keep in mind that the team is a combination of obligations, not a combination of interests. We should be aware of the responsibilities we have to others on our team, whether or not they benefit us. Team concept is the quality that Li Zhenzhong attaches most importance. Under the influence of the concept of teamwork, the capital market department led by him has not only expanded in number and attracted more and more lawyers to join, but also the young lawyers who joined the capital market department have gradually grown into partners. Li Zhenzhong's ability has been recognized by the industry. He has successively won the Pioneer Lawyer issued by the Jinan Municipal Bureau of Justice and the Jinan Law Association, and the China World Law Firm Alliance Capital Market Legal Service Biennial Award. At the same time, Lawyer Li also served as the deputy director of the Securities Professional Committee of the Shandong Law Association. Deputy Director of the Securities Committee of Jinan Lawyers Association. I look forward to Director Li Zhenzhong leading the team to achieve better results and keep my heart full of music blood. I also hope that we can all be inspired: work hard and live happily. Lawyer Profile Lawyer Li Zhenzhong Director of Capital Market Department of Zhongcheng Qingtai (Jinan) Law Firm, Deputy Director of Securities Professional Committee of Shandong Lawyers Association, Deputy Director of Securities Committee of Jinan Lawyers Association. He has rich professional experience in the fields of corporate issuance and listing, mergers and acquisitions, listing on the New Third Board and private placement, shareholding system restructuring, equity incentives, equity investment and financing, private equity funds, major project investment, standardized governance of state-owned enterprises, and commercial business. Served as a perennial legal consultant for many government agencies, large enterprises and institutions.

2022-11-28

Dynamic | Zhongcheng Qingtai Jinan Institute Deng Pu Lawyer for Shandong University (Weihai Branch) Law School Special Online Lecture Successfully Concluded

In order to further promote the internship and employment of the 2023 graduates and build a bridge for talent exchange between the graduates and Zhongcheng Qingtai Law Firm, on November 26, 2022, Lawyer Deng Pu, director and senior partner of Zhongcheng Qingtai Jinan Institute, as the keynote speaker, taught the course "Looking for a Glowing You-Choice and Planning of Lawyer Profession" to the students of Shandong University (Weihai Branch) Law School. Lawyer Deng Pu, as the keynote speaker, cut into the theme from five parts that law students in school are more concerned about: Zhongcheng Qingtai and me, understanding lawyer profession, lawyer career planning and development, how to become a lawyer and capital market lawyer internship program. The first part introduces the institutional layout, office environment and service concept of Zhongcheng Qingtai Law Firm; the second part introduces the professional characteristics of lawyers, the differences and connections between litigation lawyers and non-litigation lawyers; the third part introduces the professional planning and development of lawyers in detail, and provides a clearer path for the employment planning of law students in school; the fourth part introduces how to become a lawyer, and points out the development path for students who take lawyers as their employment targets; finally, it introduces the internship program of the capital market lawyer of Zhongcheng Qingtai Jinan Institute. Due to the epidemic factors, this lecture chose the network format, but still received the enthusiastic participation of outstanding students, making this lecture successfully concluded. Zhongcheng Qingtai Jinan Institute is located on the 50th, 55th and 56th floors of China Resources Center, No. 11111 Jingshi Road, Lixia District, Jinan City. The law firm attaches great importance to the cultivation and introduction of talents, and has set up channels and platforms with many universities to provide internship and employment channels for the vast number of outstanding graduates. It looks forward to the participation of young blood and wishes youth to shine more brightly.

2022-11-28

Point of View... Analysis of the legal relationship of partnership.

1. Foreword In practice, the problem of the identification of the legal relationship of partnership often arises. The understanding and determination of partnership legal relationship and loan legal relationship, joint venture contract relationship, etc. produce disputes and disputes, and this paper analyzes the determination of partnership legal relationship from the perspective of the concept of partnership legal relationship and case analysis. 2. concept Article 967 of the the People's Republic of China Civil Code states that "a partnership contract is an agreement between two or more partners to share benefits and risks for a common business purpose." Partnership refers to the organization established by law, the partners in order to achieve a common purpose and jointly contribute, share income, share risks and share profits. Articles 967-978 of the the People's Republic of China Civil Code provide for partnerships as a typical contract and do not require partnerships to be concluded by written agreement. Article 4 of the the People's Republic of China Partnership Law stipulates that "the partnership agreement shall be concluded in writing by consensus of all partners in accordance with the law" if the partners intend to establish an organization in the form of a partnership, a written partnership agreement shall be signed. The author believes that the above provisions are not contradictory, but distinguish between commercial partnership and civil partnership. Specifically, commercial partnership has a profit purpose, which is adjusted by the partnership law. The main form of commercial partnership is general partnership or limited partnership, which needs to go through industrial and commercial registration, and the operation time is generally long and stable; Civil partnership does not require profit for the purpose, and does not need industrial and commercial registration, It can be temporary, adjusted by the Civil Code. Judicial Determination and Difference of 3. Partnership Legal Relationship 1. Judgment point of view: In judicial practice, even if there is no written partnership agreement, but there is a fact of joint investment and operation, it should be considered as the formation of a de facto partnership. Case 1. Supreme Court (2015) Min Shen Zi No. 1223 The Court held that "(I) is a question about whether Liu Jiuhou's case is a mine funder. In the original trial, Liu Jiuhou submitted receipts issued by Ji Jianeng and Zhang Hengchang on February 19, 2001 and receipts issued by Zhang Hengchang on May 12 and May 13, 2001 to receive transfer fees, proving that the mine was purchased by him. Lu Chengwei submitted an Agreement signed with Xiong Xuguang on December 9, 2002 to purchase mining rights, proving that the mining rights involved in the mine were purchased by Lu Chengwei. Although Lu Ze said that he entrusted Liu Jiuhou to pay for the purchase of the mine, but because Lu Ze failed to provide a payment power of attorney, Liu Jiuhou provided the receipt also did not receive the words of Lu Chengwei's payment, so the claim evidence is insufficient. The original trial found that Liu Jiuhou was transferred to the mine and Lu Chengwei was transferred to the mining rights, and each paid the corresponding transfer fee, and it was not improper for both parties to invest together ...... (III) the question of whether there is a partnership between the two parties. Although there is no written contractual relationship between Lu Chengwei and Liu Jiuhou, Lu Chengwei has no evidence that he entrusted Liu Jiuhou to pay the money involved in the purchase of the mine, nor has there been evidence that he has paid wages to Liu Jiuhou for many years, and there is an employment relationship between the two parties. Lu Zifa acts as an agent for Lu Chengwei to invest and manage the mine. The mine has always been operated and managed by Liu Jiuhou. Both parties invest and operate together. It should be determined that there is a de facto partnership between the two parties." Case Analysis: The Original Supreme People's Court on Implementation<中华人民共和国民法通则>Article 50 of the opinions on certain issues stipulates that "if there is no written partnership agreement between the parties and has not been approved and registered by the administrative department for industry and commerce, but other conditions for partnership are met, and two or more non-interested parties prove that there is an oral partnership agreement, the people's court may recognize it as a partnership." In my opinion, joint contribution, shared management, shared risk and shared income are the criteria for identifying the legal relationship of the partnership, and the proof of more than two non-interested parties cannot be used as the formal elements for identifying the legal relationship of the partnership. 2. Referee's view: Whether the partnership parties have joint capital contribution and joint operation is an important factor in determining whether the partnership is formed, sharing income and sharing risks are the necessary elements of the partnership, and the establishment of a partnership cannot be determined in the absence of the above conditions. Case 2. (2018) Supreme Famin No. 216 The Court held that "although Han Chao has always advocated the existence of a partnership between him and Zhuang Zhikun, according to the facts that have been identified in this case, no formal written partnership agreement has been signed between Han Chao and Zhuang Zhikun, and the partnership advocated by Han Chao has not been approved and registered by the administrative department for industry and commerce. Secondly, according to Han Chao's statement, Xinghua Company was able to contract the interior decoration project of InterContinental Haitang Bay Hotel due to its operation during the bidding period of the project. According to the facts that have been ascertained in this case, after Xinghua Company contracted the interior decoration project of Haitang Bay Intercontinental Hotel from Xintianfang Company, Xinghua Hainan Branch has signed "Contract Agreement" with Zhuang Zhikun and Han Chao on May 27, 2013 and June 1, 2013 respectively, agreeing to contract out the banquet hall, restaurant and underground first floor conference room of the second bid section of Haitang Bay Intercontinental Hotel interior decoration project to Zhuang Zhikun for construction, the marine restaurant, gym, children's activity center and SPA center project will be contracted to Han Chao for construction. From the point of view of the constituent elements of the partnership, the existence of joint capital contribution and joint operation of the partners is an important consideration in determining whether the partnership is formed. Even though this case, as Han Chao said, paid the bidding fees and later maintenance fees for the project involved in the case, Zhuang Zhikun denied that there was a partnership between him and Han Chao, while the interior decoration project contractor of Haitang Bay Intercontinental Hotel was Xinghua Company, and Han Chao was only the actual constructor of part of the project. It cannot be ruled out that Han Chao's payment of the above funds was based on advance payment for Xinghua Company or Zhuang Zhikun. In other words, in the absence of other valid evidence to support the case, the case can not simply because Han Chao claims to have the above-mentioned payment behavior, that is, of course, to determine that there is a joint capital contribution and joint operation between him and Zhuang Zhikun on the project involved in the case. Thirdly, the 6.3 million yuan involved in the case was paid to Han Chao by Xinghua Hainan Branch from August 2013 to November 2013. Han Chao claimed that the amount was drawn according to the proportion of 30% of the total project cost involved in the case. Although Zhuang Zhikun signed the above payment documents to confirm, but because Han Chao withdraw the above-mentioned funds when the project is still in the construction period, at this time Han Chao that is, according to a certain proportion of the total cost of the project to collect money, obviously contrary to the sharing of income, sharing the risk of the necessary elements of the partnership. Fourth, although Han Chao claimed that it was under the witness of Wang Guangkai, head of Xinghua Hainan Branch, that he reached an oral agreement with Zhuang Zhikun on matters related to the project in the cooperative contract case, and applied for Wang Guangkai to testify in court during the original trial, Wang Guangkai also testified in court. However, the cooperative contract cannot be directly equated with a partnership, and according to Han Chao's statement during the original trial, it has a cooperative relationship with Xinghua Company for many years. The reason why Xinghua Company was able to contract the interior decoration project of InterContinental Haitang Bay Hotel also benefited from Han Chao's operation. In addition, as mentioned above, the 6.3 million yuan involved in the case was paid to Han Chao by Xinghua Hainan Branch from August 2013 to November 2013. If there is no partnership between Han Chao and Zhuang Zhikun in this case, Xinghua Hainan Branch will lose its basis in claiming to pay 6.3 million yuan to Han Chao according to the oral agreement between Han Chao and Zhuang Zhikun. Therefore, in this case, not only Xinghua Company and Han Chao have interests, but also Xinghua Hainan Branch and its head Wang Guangkai also have interests with Han Chao as a branch of Xinghua Company, a party signing the Contract Agreement and the actual payment subject of 6.3 million yuan. Therefore, the statements made by Xinghua Company and Xinghua Hainan Branch in this case about the existence of an oral partnership between Han Chao and Zhuang Zhikun and the testimony made by Wang Guangkai about the existence of an oral partnership between Han Chao and Zhuang Zhikun cannot be used as the basis for determining the existence of a partnership between Han Chao and Zhuang Zhikun. In summary, the existing evidence in this case is not sufficient to determine the existence of a partnership between Han Chao and Zhuang Zhikun." Case analysis: cooperative operation is a mode of operation in which all parties to the cooperation enjoy rights and assume obligations in accordance with the contract, and all parties to the cooperation shall assume their respective obligations and responsibilities to the outside world in accordance with the agreement. Cooperative operation is different from partnership, the partnership parties share the proceeds, share the risk, the partnership parties enjoy joint and several claims and bear joint and several liability for the partnership project. The party who claims the existence of partnership legal relationship needs to prove the existence of partnership agreement, and whether there is joint investment and joint operation is an important reference factor. In this case, the party who claims the existence of partnership legal relationship provides witness testimony, payment certificate and other evidence to prove the existence of partnership agreement and joint investment. However, considering that the testimony expresses the interest relationship between cooperation and witnesses, the payment may be advance payment and other factors, the Supreme Court finally corrected the original trial's determination that the case was a partnership legal relationship on the grounds of insufficient evidence. The author thinks that the commercial subject should sign a written agreement to clarify the rights and obligations of the parties, the rights and obligations are equal, and the attempt to achieve the purpose of not taking risks by not signing a contract may also mean the loss of the benefits of the commercial partnership. 3. Referee's view: the name of the partnership but the actual non-participation in business management, the partnership profit and loss distribution in the existence of a guarantee clause, only a fixed return does not bear the business risk may be considered to belong to the "named partnership, actually a loan" Case 3. (2019) Supreme Law Minzong No. 35 The Court held that "the nature of the legal relationship between the parties. Article 14 of the" Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Disputes Involving State-owned Land Use Rights Contracts "stipulates:" The cooperative development of real estate contracts referred to in this interpretation refers to the provision of land use rights, funds, etc. An agreement with the basic content of joint investment, shared profits, and shared risks to cooperate in the development of real estate. "article 26 stipulates:" If the parties to the cooperative development of real estate contract agree to provide funds do not bear business risks and only collect a fixed amount of money, it shall be recognized as a loan contract. "in this case, the memorandum of cooperation signed by both parties stipulates that Ma Zhongying will invest 30 million yuan in Lunhua company in his own name. The starting date of investment is October 6, 2011, the investment period is three years and six months, and the exemption period is one year, that is, the latest return date of investment return is April 6, 2016, and the total return of principal and investment return is 110 million yuan. The above agreement shows that although Ma Zhongying handled matters related to the cooperation project and participated in project management as agreed, Ma Zhongying provided funds only to receive a fixed amount of return and did not bear operational risks. Therefore, the legal relationship between the parties does not have the element of sharing risks, and is not a cooperative development real estate contract in legal nature, and should be recognized as a loan relationship." Case analysis: Private lending refers to the act of financing between natural persons, legal persons and other organizations and between them, and the nature of both parties is debt. In determining whether it is in line with the legal relationship called partnership is actually a loan, the focus should be on whether it is in line with the nature of the partnership of "risk sharing, income sharing", if the agreement has a guarantee clause, fixed income clause, etc. may be considered to belong to the loan legal relationship, rather than the partnership legal relationship. 4. Judgment point of view: the two parties to the agreement have not established a joint venture. The newly established company is a company established by one party to the agreement. The other party to the agreement has not participated in the operation and management of the newly established company. The newly established company relies on the resources and conditions provided by both parties to the agreement. Therefore, the two parties to the agreement have established a cooperative joint venture instead of a partnership joint venture. Therefore, the "guaranteed clause, does not violate the legal prohibition of legal and effective. The terms of the investment income agreed in the agreement and the terms of the payment of fees by one party to the other are legal and valid. Case 4. (2022) New 21 Minzong No. 63 The court of first instance held that a joint venture contract is an agreement between enterprises or between enterprises and institutions to achieve a certain economic purpose. This case is a dispute over a joint venture contract. The signing of the Agreement on Joint Mining of East Lake Limestone Mine and the Supplementary Agreement between the plaintiff and the defendant is an expression of the true intention of both parties. It does not violate the mandatory provisions of the law and should be deemed legal and effective and binding on both parties. In this case, although the plaintiff and the first defendant agreed in the contract to jointly form the East Lake Tianshan Turpan Mineral Development Company, and the assets invested by both parties as the assets of the newly formed enterprise, joint operation and management. However, in actual performance, only one party to the contract, the defendant Xinjiang Tianshan Cement Company, established the Donghu Mining Branch of Xinjiang Tianshan Cement Company, which is now Turpan Tianshan Cement Company. The company used the resources and conditions provided by both parties to conduct business activities. The parties did not establish a partnership and the plaintiff could not directly participate in the management. It is essentially a collaborative joint venture relationship. The Supreme People's Court's Answers to Several Questions Concerning the Trial of Disputes over Joint Venture Contracts (abolished by the Supreme People's Court on January 1, 2021) stipulates: "The guaranteed clause in a joint venture contract usually refers to the clause that although one party of the joint venture invests in the joint venture and participates in the joint operation and shares the profits of the joint venture, it still has to recover its capital contribution and collect fixed profits when the joint venture loses money. The guarantee clause violates the principle of shared profit and loss and risk-sharing that should be followed in the joint venture activities, harms the legitimate rights and interests of other associates and the creditors of the joint venture, and should therefore be recognized as invalid". The above-mentioned provisions on the "invalidity of the minimum guarantee clause" in the joint venture contract apply to the type of joint venture established by the joint venture parties, that is, the corporate type joint venture and the partnership type joint venture, while for the cooperative type joint venture, because there is no joint venture, each joint venture shall bear civil liability with the property owned or managed by each joint venture, and shall not be bound by the above-mentioned provisions. Therefore, the law allows cooperative joint venture parties to freely agree on the distribution of benefits. Article 33 of China's partnership law stipulates: "the profit distribution and loss sharing of partnership enterprises shall be handled in accordance with the agreement of the partnership agreement; if the partnership agreement is not agreed or the agreement is not clear, it shall be decided by the partners through consultation; if the negotiation fails, the partners shall distribute and share according to the proportion of paid-in capital; if the proportion of capital contribution cannot be determined, equally distributed and shared by the partners". It can be seen that even if a partnership is established, the distribution of profits and losses is first handled in accordance with the partnership agreement. China's Civil Code also provides for the distribution of profits and losses of partnerships in accordance with the agreement of the partnership contract. The agreement of the parties in this case is not contrary to the spirit of the above-mentioned legal principles. The so-called "guaranteed clause" in the contract involved in the case is the true intention of both parties, which is a valid agreement and should be protected by law. Therefore, the court did not support the defendant's claim that the relevant provisions of the contract involved in the case were invalid. A contract established in accordance with the law shall be legally binding on the parties, and both parties shall perform it strictly in accordance with the contract. Article 5 of the Agreement on Joint Mining of East Lake Limestone Mine stipulates that "Party B shall ensure that Party A receives an annual investment income of 1 million yuan (exceeding the quota</中华人民共和国民法通则>

2022-11-26