The Supreme People's Court on the Application of the Several Issues Concerning the Interpretation of the Company Law of the People's Republic of China(III)
(Fa Shi [2011] No. 3)
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 (No. 3) were adopted at the 1504th meeting of the Supreme People's Court on December 6, 2010, and are now promulgated and shall come into effect on February 16, 2011.
January 27, 2011
In order to correctly apply the Company Law of the People's Republic of China, and in light of judicial practice, the following provisions are made on the application of the law in the trial of disputes over the establishment, capital contribution, and equity confirmation of companies by the people's courts.
Article 1
The person who signs the articles of association of a company for its establishment, subscribe to capital or shares in a company, and performs the duties of company establishment shall be recognized as the发起人of the company, including the shareholders at the time of the establishment of a limited liability company.
Article 2
The incorporator shall be liable for the contract signed by himself in his own name for the establishment of a company, and the counterparty to the contract may request the incorporator to bear the liability for the contract, which the people's court shall support.
After the establishment of the company, the confirmation of the contract referred to in the preceding paragraph, or the actual enjoyment of the rights of the contract or the performance of the obligations of the contract, the party to the contract requests the company to bear the liability of the contract, the people's court shall support it.
Article 3
The initiator signs a contract in the name of the company to be established, and after the establishment of the company, the counterparty of the contract requests the company to bear the contractual liability, the people's court shall support it.
After the establishment of a company, if there is evidence that the incorporator has signed a contract with a third party for his own benefit in the name of the company in establishment, and the company claims that it is not liable for the contract on this ground, the people's court shall give support, except when the third party is bona fide.
Article IV
The company fails to be established due to certain reasons, and the creditors request all or some of the initiators to bear joint and several liability for the expenses and debts incurred from the establishment of the company, the people's court shall support it.
Where some of the initiators fail to bear the liability in accordance with the provisions of the preceding paragraph, and request other initiators to share the liability, the people's court shall order other initiators to share the liability in accordance with the agreed ratio of liability; where there is no agreement on the ratio of liability, the liability shall be shared in accordance with the agreed ratio of capital contribution; where there is no agreement on the ratio of capital contribution, the liability shall be shared equally.
Where the establishment of a company fails due to the fault of some of its founders, the other founders may claim that the fault party bear the expenses and liabilities arising from the establishment act. The people's court shall determine the scope of liability of the fault party according to the degree of fault.
Article 5
If the initiators cause damage to others in the performance of their duties in the establishment of the company, and the victims request the company to bear the liability for tort after the establishment of the company, the people's court shall support it; if the company is not established, and the victims request all the initiators to bear the liability for tort, the people's court shall support it.
The company or the faultless incorporator shall bear the liability for compensation, and may claim compensation from the incorporator who is at fault.
Article 6
The subscribers of a joint stock limited company fail to pay the purchase money of the shares they have subscribed for on time, and after the promoters of the company urge them to pay, they still fail to pay within a reasonable period, the promoters of the company shall raise funds for such shares separately. The people's court shall hold that such fund-raising act is valid. If the delay in the payment of the purchase money by the subscribers causes loss to the company, and the company requests such subscribers to bear the liability for compensation, the people's court shall support it.
Article 7
Shareholders who contribute property without the right of disposition, and the parties have a dispute over the validity of the contribution, the people's court may refer toProperty LawArticle 106 for determination.
If the currency contributed to obtain shares is obtained through crimes such as embezzlement, accepting bribes, misappropriation, and misappropriation, and the illegal and criminal acts are investigated and punished, the shares should be disposed of by auction or sale when the illegal and criminal acts are investigated and punished.
Article 8
If a contributing shareholder contributes land use rights that are allocated or land use rights that are encumbered with a right burden, and the company, other shareholders, or the company's creditors claim that the contributing shareholder has not fulfilled the obligation to contribute capital, the people's court shall order the parties to handle the land change procedures or to remove the right burden within a reasonable period of time designated; if the procedures are not handled or the right burden is not removed upon expiration, the people's court shall determine that the contributing shareholder has not fulfilled the obligation to contribute capital in accordance with the law.
Article 9
If a contributing shareholder contributes non-monetary property without appraising and valuing it in accordance with the law, and the company, other shareholders, or the company's creditors request the recognition that the contributing shareholder has not fulfilled his or her obligation to contribute capital, the people's court shall entrust an appraisal institution with legal qualifications to appraise and value such property. If the appraised value is significantly lower than the value stipulated in the company's articles of association, the people's court shall find that the contributing shareholder has not fully performed his or her obligation to contribute capital in accordance with the law.
Article 10
Contributors contribute property such as houses, land use rights, or property that requires the handling of property rights registrationintellectual property rightsand other properties, which have been delivered to the company for use but the property rights registration has not been handled, the company, other shareholders, or the company's creditors claim that the contributor has not fulfilled the obligation to contribute capital, the people's court shall order the parties to handle the property rights registration within a reasonable period of time designated; if the property rights registration is handled within the aforesaid period of time, the people's court shall determine that it has fulfilled the obligation to contribute capital; the contributor claims to enjoy the corresponding shareholder rights from the time when he actually delivers the property to the company for use, the people's court shall support it.
The contributor shall contribute the property specified in the preceding paragraph, and the transfer of property rights has been completed but the property has not been delivered to the company for use. The company or other shareholders claim that he shall deliver it to the company and shall not enjoy the corresponding shareholder rights before the actual delivery. The people's court shall support it.
Article 11
If a contributing shareholder contributes capital in the form of shares of another company, the people's court shall find that the contributing shareholder has fulfilled his or her capital contribution obligation if the following conditions are met:
(1) The shares contributed shall be held by the contributing party in good faith and can be transferred according to the law;
(II) The shares contributed are free from any rights defects or encumbrances;
(3) The contributing party has performed the statutory procedures for the transfer of shares;
(iv) The shares contributed have been valued in accordance with the law.
Share capital contributions that do not comply with the provisions of the preceding paragraph items (1), (2), and (3) shall be subject to the request of the company, other shareholders, or creditors of the company to determine that the contributor has not fulfilled the capital contribution obligation. The people's court shall order the contributor to take corrective measures within a reasonable period of time to meet the above conditions; if the contributor fails to make corrections within the time limit, the people's court shall determine that he has not fully performed his capital contribution obligations in accordance with the law.
Share capital contribution does not comply with the provisions of paragraph (4) of the first paragraph of this Article, the company, other shareholders or creditors of the company request to determine that the contributor has not performed the capital contribution obligation, the people's court shall handle it in accordance with the provisions of Article 9 of these regulations.
Article 12
After the establishment of a company, the company, shareholders, or creditors of the company may request the people's court to determine that a shareholder has withdrawn capital contributions on the grounds that the shareholder's actions conform to one of the following circumstances and have caused damage to the company's interests:
(1) The contribution funds were transferred to the company's account for capital verification and then transferred out;
(II) By fabricating creditor-debtor relationships to transfer its capital contributions out;
(3) preparing false financial accounting statements to overstate profits for distribution;
(iv) Transfer contributions through related party transactions;
(5) Other acts of withdrawing capital without legal procedures.
Article 13
Shareholders who fail to fulfill or fully fulfill their capital contribution obligations shall be required by the company or other shareholders to fully fulfill their capital contribution obligations in accordance with the law. The people's court shall support such requests.
If a shareholder is requested by the company's creditors to make up for or fully fulfill the capital contribution obligation within the scope of the company's debt that cannot be repaid, the people's court shall support it; if the shareholder who has not fulfilled or fully fulfilled the capital contribution obligation has already borne the above liability, and other creditors make the same request, the people's court shall not support it.
Shareholders who fail to contribute capital or fail to fully contribute capital at the time of the establishment of the company, the plaintiff who files a lawsuit in accordance with the first or second paragraphs of this Article, requests the initiators of the company and the defendant shareholders to bear joint and several liability, the people's court shall support it; the initiators of the company shall bear liability after assuming liability, may claim compensation from the defendant shareholders.
Shareholders who fail to contribute or fail to fully contribute their capital when the company increases its capital may be liable for the breach of their duty of care under Article 148, paragraph 1, of the Company Law. If a plaintiff, who has brought an action against the shareholders in accordance with the first or second paragraph of this Article, requests the directors and senior management personnel who have not fulfilled their obligations under Article 148, paragraph 1, of the Company Law to bear corresponding responsibilities for the insufficient capital contribution, the people's court shall support such a request; after the directors and senior management personnel have borne the responsibility, they may claim compensation from the defendant shareholders.
Article 14
Shareholders who withdraw capital contributions, the company or other shareholders may request them to return the capital contributions with interest, and other shareholders, directors, senior management personnel or actual controllers who assist in the withdrawal of capital contributions shall bear joint and several liability for this. The people's court shall support this.
Shareholders who withdraw capital contributions and other shareholders, directors, senior management personnel or actual controllers who assist in the withdrawal of capital contributions are requested to bear supplementary liability for the portion of the company's debts that cannot be repaid within the scope of the capital contributions that have been withdrawn, and the shareholders who withdraw capital contributions have already borne the above responsibilities, and other creditors who make the same request are not supported by the people's court.
Article 15
The third party, who advances funds to assist the sponsor in establishing a company, and the sponsor clearly agree that the capital contribution of the sponsor will be withdrawn to repay the third party after the company's capital verification or after the company's establishment, the sponsor withdraws the capital contribution to repay the third party in accordance with the above agreement, but fails to make up the capital contribution, the relevant rights holder requests the third party to bear joint and several liability for the corresponding responsibilities of the sponsor arising from the withdrawal of the capital contribution, the people's court shall support it.
Article 16
After the contributing shareholder contributes non-monetary property in accordance with the legal conditions, if the contributing property is devalued due to market changes or other objective factors, the company, other shareholders, or the creditors of the company may request the contributing shareholder to bear the responsibility of making up the contributed capital, the people's court shall not support it. However, if the parties have other agreements, it shall be除外.
Article 17
Shareholders who fail to fulfill or fully fulfill their capital contribution obligations or withdraw their capital contributions shall be subject to corresponding reasonable restrictions on their rights to profit distribution, preemptive rights to new shares, and rights to distribution of remaining assets, as made by the company's articles of association or shareholders' general meeting resolutions. If a shareholder requests the court to declare such restrictions invalid, the people's court shall not support such requests.
Article 18
The shareholders of a limited liability company who fail to fulfill their capital contribution obligations or withdraw all their contributions, after being urged by the company to pay or return the capital, still fail to pay or return the capital within a reasonable period, the company may terminate the shareholder's status as a shareholder by a resolution of the shareholders' meeting. If the shareholder requests the people's court to confirm that the termination act is invalid, the people's court will not support it.
In the circumstances stipulated in the preceding paragraph, the people's court shall explain in its judgment that the company shall timely handle the statutory reduction procedure or that other shareholders or a third party shall pay the corresponding capital contribution. Before the statutory reduction procedure is handled or other shareholders or a third party pay the corresponding capital contribution, the creditors of the company may request the relevant parties to bear the corresponding liability in accordance with Article 13 or Article 14 of these regulations. The people's court shall support such requests.
Article 19
Shareholders of a limited liability company who fail to fulfill or fully fulfill their capital contribution obligations and then transfer their shares, and the transferee knows or should know this, the company may request such shareholder to fulfill their capital contribution obligations and the transferee to bear joint and several liability for this. The people's court shall support this; the company's creditors may file a lawsuit against such shareholder in accordance with the second paragraph of Article 13 of this规定, and at the same time request the above-mentioned transferee to bear joint and several liability for this, and the people's court shall support this.
The assignee shall be liable for the obligations in accordance with the provisions of the preceding paragraph, and shall be entitled to claim compensation from the shareholder who fails to contribute or fails to contribute fully. However, this shall not apply if the parties have otherwise agreed.
Article 20
If the shareholders of a company fail to perform or fail to fully perform their capital contribution obligations or withdraw their capital contributions, and the company or other shareholders request the defendant shareholder to fully perform their capital contribution obligations or return the capital contributions, the defendant shareholder's defense based on the statute of limitations shall not be supported by the people's court.
The creditor's claim of the company is not time-barred, and he requests the shareholder who has not fulfilled or fully fulfilled his capital contribution obligation or who has withdrawn his capital to bear the liability for compensation in accordance with the provisions of the second paragraph of Article 13 and the second paragraph of Article 14 of this regulation, the defendant shareholder's defense that the capital contribution obligation or the obligation to return the capital has exceeded the period of time is not supported by the people's court.
Article 21
Where the parties have a dispute over whether the capital contribution obligation has been performed, the plaintiff shall provide evidence of reasonable doubt about the shareholder's performance of the capital contribution obligation, and the defendant shareholder shall bear the burden of proof for the performance of the capital contribution obligation.
Article 22
When a party files a lawsuit with the People's Court to confirm its shareholder status, the company should be named as the defendant, and persons who have a stake in the disputed shares should participate in the litigation as third parties.
Article 23
When there is a dispute between the parties over the ownership of shares, and one party requests the people's court to confirm that it enjoys the shares, it shall prove one of the following facts:
(i) Have already contributed capital to the company or subscribed for capital in accordance with the law, and do not violate laws and regulations mandatory provisions;
(II) The transfer of shares in the Company has been completed or the shares in the Company have been inherited by other means, and such transfer or inheritance does not violate the mandatory provisions of laws and regulations.
Article 24
Where a party has lawfully performed its capital contribution obligation or has lawfully succeeded to the equity, the company has not issued a capital contribution certificate in accordance with Article 32 and Article 33 of the Company Law, recorded it in the register of shareholders and handled the registration with the company registration authority, and the party requests the company to perform the aforesaid obligations, the people's court shall give support.
Article 25
The actual investor and the nominal investor of a limited liability company enter into a contract stipulating that the actual investor shall contribute capital and enjoy the investment rights, and the nominal investor shall act as the nominal shareholder. If there is a dispute over the validity of this contract between the actual investor and the nominal shareholder, unless there arethe circumstances stipulated in Article 52 of the Contract Law, the people's court shall determine that this contract is valid.
The actual investor specified in the preceding provisions and the nominal shareholder shall be subject to the dispute over the ownership of the investment rights, and the actual investor shall claim his rights against the nominal shareholder on the ground that he has actually performed the obligation of investment, the people's court shall give support. The nominal shareholder shall not deny the rights of the actual investor on the ground that the company's shareholder register is recorded and the company's registration authority is registered.
The actual investor, who has not obtained the consent of more than half of the other shareholders, requests the company to change the shareholders, issue the certificate of capital contribution, record in the register of shareholders, record in the articles of association and handle the registration with the company registration authority, the people's court shall not support it.
Article 26
The nominal shareholder transfers,pledges,or otherwise disposes of the shares registered in his name, and the actual investor, based on his actual rights to the shares, requests the validity of the disposal of the shares to be recognized, the people's court may refer to Article 106 of the Property Law to deal with it.
If the nominal shareholder disposes of the shares, causing loss to the actual investor, and the actual investor requests the nominal shareholder to bear the liability for compensation, the people's court shall support it.
Article 27
Shareholders of a company who fail to fulfill their capital contribution obligations, as registered with the company registration authority, are requested to bear supplementary liability for the portion of the company's debts that cannot be repaid, within the scope of the unpaid capital and interest. Shareholders who claim that they are only nominal shareholders and not actual investors will not be supported by the people's court.
Where the nominal shareholder is liable for compensation in accordance with the preceding provisions, the people's court shall support the claim of the nominal shareholder for indemnity from the actual investor.
Article 28
The transfer of shares has not yet been registered with the company registration authority, and the original shareholder will still register the transfer, pledge, or other disposal of the shares in his name, the transferee shareholder may request the people's court to declare the act of disposing of the shares invalid on the grounds that he enjoys actual rights to the shares, the people's court may refer to Article 106 of the Property Law to deal with it.
The original shareholders shall bear liability for compensation for the loss of the shareholders who acquire the shares if the original shareholders dispose of the shares, and the shareholders who acquire the shares may request the original shareholders to bear liability for compensation and the directors, senior management personnel or actual controllers who are at fault for the failure to handle the change of registration in time to bear corresponding liability. The people's court shall support it; if the shareholders who acquire the shares are also at fault for the failure to handle the change of registration in time, the liability of the above directors, senior management personnel or actual controllers may be mitigated appropriately.
Article 29
Where a person makes an investment in the name of another and causes the other person to be registered as a shareholder in the company registration authority, the person who engaged in the false registration shall bear the corresponding liability; a company, other shareholders, or creditors of a company shall not be supported by the people's court to request the person who was registered as a shareholder in the name of another to bear the liability for making up the investment or the liability for compensating the part of the company's debt that cannot be repaid.