The Provisions of the Supreme People's Court on the Application of Several Issues of the Company Law of the People's Republic of China (II) was adopted at the 1447th meeting of the Supreme People's Court on May 5, 2008. It is now promulgated and shall come into effect on May 19, 2008.
In order to correctly apply the Company Law of the People's Republic of China, and in light of trial practice, the following provisions are made on the application of law in the trial of cases of company dissolution and liquidation by the people's courts.
Article 1 Shareholders holding more than ten percent of the total voting rights of the Company, either alone or in combination, may file a lawsuit for the dissolution of the Company with the people's court if one of the following reasons applies and meets the provisions of Article 183 of the Company Law:
(1) The company has been unable to convene a shareholders' meeting or general meeting of shareholders for more than two consecutive years, and the company's management and operation have encountered serious difficulties;
(II) The shareholders are unable to reach the quorum or the proportion stipulated in the articles of association, and the company has been unable to make effective resolutions of the shareholders' meeting or the general meeting of shareholders for more than two years, resulting in serious difficulties in the management and operation of the company;
(III) The company's directors are in a long-term conflict and cannot be resolved through the shareholders' meeting or the general meeting of shareholders, and the company's management is in serious difficulties;
(iv) Other serious difficulties in the management and operation of the company, and the continuation of the company would cause significant loss to the shareholders.
Shareholders who claim that their rights, such as the right to inspect the books and records of the company and the right to request distribution of profits, have been violated, or the company is operating at a loss, has insufficient assets to repay all its debts, or the company's business license has been revoked and it has not been liquidated, shall not be accepted by the people's court for the purpose of dissolving the company.
Article 2 Shareholders who file a lawsuit for the dissolution of a company and also apply to the people's court for the liquidation of the company shall not be accepted by the people's court for its application for liquidation. The people's court may inform the plaintiff that, after the people's court rules to dissolve the company, it may organize the liquidation by itself or apply to the people's court for the liquidation of the company in accordance with Article 184 of the Company Law and the provisions of Article 7 of this interpretation.
Article 3 When shareholders file a lawsuit for the dissolution of the company, and apply to the people's court for preservation of property or preservation of evidence, the people's court may grant the preservation if the shareholder provides security and it does not affect the normal operation of the company.
Article 4 Shareholders who file a lawsuit for the dissolution of the company shall name the company as the defendant.
Where the plaintiff brings a lawsuit against other shareholders together with the defendant, the people's court shall inform the plaintiff to change other shareholders into third parties; if the plaintiff insists on not making the change, the people's court shall rule to dismiss the plaintiff's claim against other shareholders.
The plaintiff in a suit to dissolve the company shall inform the other shareholders, or the people's court shall notify them to participate in the litigation. If other shareholders or interested parties apply to participate in the litigation as co-plaintiffs or third parties, the people's court shall allow it.
Article 5 The people's courts shall pay attention to mediation in hearing cases of dissolving a company. If the parties agree to have the company or the shareholders acquire the shares, or to continue the company by reducing the capital, etc., in a way that does not violate the mandatory provisions of laws and administrative regulations, the people's courts shall give support. If the parties cannot reach an agreement to continue the company, the people's courts shall promptly render a judgment.
Where the people's court mediates the company's purchase of the plaintiff's shares, the company shall transfer or cancel the shares within six months from the date of effectiveness of the mediation decision. Before the transfer or cancellation of the shares, the plaintiff shall not, on the ground that the company has purchased his shares, resist the creditors of the company.
Article 6 The judgment of the people's court on the action for the winding up of a company is binding on all the shareholders of the company.
After the people's court rules to dismiss the action for dissolution of the company, the shareholder who initiated the action or other shareholders shall not initiate another action for dissolution of the company based on the same facts and reasons, and the people's court shall not accept it.
Article 7 The Company shall, within fifteen days from the date on which the cause of dissolution arises, establish a liquidation group in accordance with Article 184 of the Company Law and commence self-liquidation.
The people's court shall accept the application of the creditor for the appointment of a liquidation group to carry out the liquidation if any of the following circumstances occur:
(1) The company is dissolved and the liquidation group is not established for liquidation;
(II) Although a liquidation committee has been established, the liquidation is deliberately delayed;
(iii) The illegal liquidation may seriously damage the interests of creditors or shareholders.
Where the circumstances specified in paragraph 2 of this Article exist, and the creditor fails to apply for liquidation, the shareholders of the company may apply to the people's court for the appointment of a liquidation group to liquidate the company, and the people's court shall accept the application.
Article 8 The people's court shall promptly appoint relevant personnel to form a liquidation group upon accepting a case of company liquidation.
Liquidation group members may be selected from the following individuals or institutions:
(1) Company shareholders, directors, supervisors, and senior management personnel;
(II) Law firms, accounting firms, bankruptcy liquidation firms, and other social intermediary agencies established in accordance with the law;
(III) Personnel who have obtained professional qualifications in relevant professional knowledge and are employed in law firms, accounting firms, bankruptcy liquidation firms and other social intermediary agencies established in accordance with the law.
Article 9 The members of the liquidation group designated by the people's court shall be replaced by the people's court at the request of creditors or shareholders, or ex officio, if any of the following circumstances occur:
(1) There are violations of laws or administrative regulations;
(II) Loss of professional capacity or civil capacity;
(III) There is a serious act of damage to the company or the creditors.
Article 10 Before the company has completed the liquidation and handled the cancellation registration according to law, civil litigation related to the company shall be conducted in the name of the company.
If the company has established a liquidation group, the person in charge of the liquidation group shall represent the company in the litigation; if the liquidation group has not yet been established, the original legal representative shall represent the company in the litigation.
Article 11 The liquidation group shall, in accordance with Article 186 of the Company Law, notify all known creditors in writing of the company's dissolution and liquidation, and make public announcement in newspapers of influence at the national level or in the province where the company is registered, depending on the size of the company and the scope of its business operations.
The liquidation group fails to perform the obligations of notification and announcement as stipulated in the preceding paragraph, resulting in the creditors' failure to declare their claims in time and not being compensated, the creditors claim that the members of the liquidation group bear liability for compensation for the losses caused thereby, the people's court shall support it according to the law.
Article 12: When the company is liquidated, if the creditors have objections to the creditor's rights verified by the liquidation group, they may request the liquidation group to re-verify. If the liquidation group does not re-verify, or if the creditors still have objections to the re-verified creditor's rights, the creditors may file a lawsuit with the people's court to request confirmation with the company as the defendant. The people's court shall accept the case.
Article 13 The creditors who fail to declare their claims within the period specified shall be registered by the liquidation group if they make a supplementary declaration before the termination of the company's liquidation procedure.
The termination of the company's liquidation procedure refers to the confirmation of the liquidation report by the shareholders' meeting, the general meeting of shareholders, or the people's court.
Article 14 The creditor's supplementary declaration of claim can be settled in accordance with the law from the company's undistributed property. If the company's undistributed property cannot be fully settled, the creditor claims that the shareholder shall settle it with the property he has obtained in the distribution of the remaining property, the people's court shall support it; except that the creditor fails to declare the claim within the prescribed period due to gross negligence.
Creditors or liquidation groups, on the grounds that the company's undistributed property and the property obtained by shareholders in the distribution of residual property cannot fully repay the supplemented declared claims, may not apply to the people's court for bankruptcy liquidation.
Article 15: In the event of liquidation by the company itself, the liquidation plan shall be submitted to the shareholders' meeting or the general meeting of shareholders for resolution and confirmation; in the event of liquidation organized by the people's court, the liquidation plan shall be submitted to the people's court for confirmation. The liquidation plan shall not be implemented without confirmation.
The execution of an un confirmed liquidation plan causes loss to the company or creditors, the company, shareholders or creditors claim the liquidation group members to bear the liability for compensation, the people's court shall support it according to law.
Article 16 If the people's court organizes the liquidation, the liquidation group shall complete the liquidation within six months from the date of its establishment.
In case of special reasons, if the liquidation group is unable to complete the liquidation within six months, it shall apply to the people's court for an extension.
Article 17 The liquidation group designated by the people's court may negotiate with creditors to formulate a debt repayment plan when it finds that the company's assets are insufficient to repay the debts during the liquidation of the company's property, the preparation of the balance sheet and the inventory of property.
Where a debt repayment plan is confirmed by all creditors and does not harm the interests of other stakeholders, the people's court may rule to recognize it upon the application of the liquidation group. After the liquidation group has settled the debts according to the repayment plan, it shall apply to the people's court for a ruling to terminate the liquidation process.
If the creditors do not confirm the debt repayment plan or the people's court does not recognize it, the liquidation group shall apply to the people's court for the declaration of bankruptcy in accordance with the law.
Article 18 Shareholders of a limited liability company, directors of a joint stock limited company, and controlling shareholders who fail to establish a liquidation group to commence liquidation within the statutory period, resulting in a decrease in the value of the company's assets, loss, damage, or disappearance of the assets, and creditors claim that they shall bear liability for compensation within the scope of the loss caused, the people's court shall support such claims in accordance with the law.
Shareholders of a limited liability company, directors of a joint stock limited company, and controlling shareholders who fail to perform their duties, resulting in the loss of the company's main property, books, important documents, etc., and making it impossible to liquidate, the creditors claim that they bear joint and several liability for the company's debts, the people's court shall support it according to the law.
The above situation is caused by the reasons of the actual controller, and the creditor claims that the actual controller shall bear the corresponding civil liability for the company's debts, the people's court shall support it according to the law.
Article 19 Shareholders of a limited liability company, directors and controlling shareholders of a joint stock limited company, and the actual controller of the company shall be liable for corresponding compensation for loss of creditor's rights caused by malicious disposal of company property after the company's dissolution, or for obtaining the cancellation registration of the legal person by means of a false liquidation report without legal liquidation, and creditors shall claim their liability. The people's court shall support it according to the law.
Article 20 The company's dissolution shall be applied for the cancellation registration after the legal liquidation is completed. If the company handles the cancellation registration without liquidation, resulting in the company's inability to liquidate, and the creditors claim that the shareholders of the limited liability company, the directors and controlling shareholders of the joint stock limited company, and the actual controllers of the company shall bear the responsibility for the liquidation of the company's debts, the people's court shall support it according to the law.
The company is not liquidated according to law, and the shareholders or third parties promise to bear the responsibility for the company's debts when the company is canceled in the company registration authority, the creditors claim that they bear the corresponding civil liability for the company's debts, the people's court shall support it according to law.
Article 21 Shareholders of a limited liability company, directors and controlling shareholders of a joint stock limited company, and actual controllers of the company shall bear civil liability in accordance with Article 18 and the first paragraph of Article 20 of this regulation. If one or more of them claim that other personnel shall bear liability in proportion to their faults, the people's court shall support such claim in accordance with the law.
Article 22 When the company is wound up, the capital contributions not yet paid by the shareholders shall all be included as part of the winding-up property. The capital contributions not yet paid by the shareholders include the capital contributions due and payable but not yet paid, as well as the capital contributions to be paid in installments which have not yet reached the due date for payment, in accordance with Article 26 and Article 81 of the Company Law.
When the company's assets are insufficient to repay its debts, the creditors may claim that the shareholders who have not paid in their capital, as well as the other shareholders or initiators at the time of the company's establishment, bear joint and several liability for the company's debts within the scope of their unpaid capital. The people's court shall support such claims in accordance with the law.
Article 23 The members of the liquidation group shall be liable for compensation if they cause loss to the Company or its creditors in the course of handling the liquidation affairs in violation of laws, administrative regulations or the articles of association of the Company. If the Company or its creditors claim that the members of the liquidation group shall bear the liability for compensation, the people's court shall support such claim in accordance with the law.
Shareholders of a limited liability company, shareholders of a joint stock limited company who have held more than one percent of the company's shares for more than one hundred and eighty consecutive days, may, in accordance with Article 152, Paragraph 3, of the Company Law, file a lawsuit with the people's court on the grounds that the members of the liquidation group have the acts described in the preceding paragraph, and the people's court shall accept such cases.
The company has been liquidated and canceled, and the above shareholders, in accordance with Article 152, Paragraph 3 of the Company Law, directly file a lawsuit against the liquidation group members as被告 and other shareholders as third parties to the people's court, the people's court shall accept it.
Article 24: Litigation for the dissolution of a company and the liquidation of a company shall be under the jurisdiction of the people's court at the place of business of the company. The place of business of the company refers to the location of its main office. If the location of the company's office is not clear, the people's court at the registered place of the company shall have jurisdiction.
The basic-level people's court has jurisdiction over the cases of the dissolution of companies and the liquidation of companies approved by the company registration authorities of the county, county-level city or district; the intermediate people's court has jurisdiction over the cases of the dissolution of companies and the liquidation of companies approved by the company registration authorities of the district, prefecture-level city or above.