The case of forced dissolution of the company. The two shareholders have been opposed for a long time. Why is the company still dissolved with assets and business?
Is it possible for a company that still has plant, inventory and business to be dissolved by a court decision because of a conflict between shareholders? In this case, the two shareholders hold slightly more than half of the shares on one side and nearly half on the other. With the capital contribution, financing, personnel arrangements and business strategy differences, contradictions continue to escalate, the company appeared seal competition, business premises locked and production standstill and other abnormal situations. The key to the case is not whether the enterprise still has assets and operations, but whether the corporate governance mechanism has failed for a long time.
1. Basic Case: From Shareholder Disagreement to Corporate Governance Deadlock
yunnan XX Tea Co., Ltd. is engaged in the production and operation of tea. When the company was established, there were three natural person shareholders. Later, one of the original shareholders transferred the equity to another original shareholder, Pan XX. The company formed a joint shareholding structure of two shareholders: Li XX holds slightly more than half of the shares, and Pan XX holds nearly half of the shares. The structure appears to have a relative controlling shareholder, but it is still highly dependent on cooperation between the two parties when it comes to articles of association amendments, capital increases or decreases, mergers and divisions, and major financing.
In the early stage, the company determined the positions of legal representative, executive director, general manager and supervisor through the shareholders' meeting, but it was not re-elected in time after the expiration of the term of office, and the annual shareholders' meeting did not continue to operate in a standardized manner. At the same time, Zhang Moumou and Li Moumou are husband and wife. Although they are not registered shareholders or registered as directors or senior managers, they participate in shareholder resolutions, preside over meetings, sign contracts on behalf of the company and participate deeply in specific business affairs. The registration status, articles of association arrangement and actual control relationship are seriously out of touch.
The conflict between the two sides initially focused on actual capital contribution, capital use and development thinking, and later expanded to financing, personnel appointment and removal, management and corporate control. During the period when one party kept the company seal, the other party announced and re-engraved the seal on the grounds of loss. Negotiations between the two parties around the acquisition, transfer and handover of shares, as well as third-party mediation, have not resulted in an executable plan. Pan so-and-so then filed a company dissolution lawsuit, Chen Hui lawyer as its first instance, second instance entrusted litigation agent.
The core issues facing 2. customers
first, the company still has assets, inventory and business, can it be determined that "serious difficulties in management"? The company's dissolution lawsuit examines not whether the enterprise is insolvent or who is better at operating, but whether the shareholders' meeting, executive body and supervision mechanism can form the company's will continuously and effectively.
Second, does a shareholding of slightly more than half equate to control of the company? In the case of two shareholders holding nearly 50-50 shares and the disconnection between the rules of the articles of association and the actual management, the apparent majority stake does not automatically resolve the conflicts of voting on major matters, seal and account management, personnel appointment and dismissal and external representation.
Third, how to prove that the company's long-term governance has failed, rather than an ordinary quarrel? The shareholders' meeting has not been held in a standardized manner for a long time, the term of office has not been updated, and no effective resolution has been formed on major issues, etc., all have the characteristics of "negative facts", which can form a chain of evidence together with the seal conflict, suspension of production, alarm and communication records between the two sides.
Fourth, in the case of judicial dissolution is final, how to prove that other solutions have been ineffective? The court usually examines whether the acquisition, transfer, division, joint sale or mediation of shares is still feasible.
Difficulties in 3. cases: Interweaving of shareholding structure, actual control and evidence organization
the case begins with the transformation of a personal conflict between shareholders into a fact of corporate governance impasse that can be reviewed by the courts. If the lawsuit only revolves around mutual accusations between the two parties, the case can easily be understood as an ordinary shareholder dispute; only by stating that the shareholders' meeting cannot make decisions, that the position authority is mutually denied, and that the seal and place of business are out of control, can it be proved that the legal person's intention formation mechanism has been blocked.
Secondly, the industrial and commercial registration does not fully present the actual power structure. Zhang Moumou did not register his identity, but actually presided over meetings, signed contracts and participated in major operations. The judgment of corporate control should not only look at the shareholding ratio and business license, but also combine the organization of meetings, seal account management, contract signing, personnel decisions and actual business behavior.
Again, the company still has business value is an important reason for the other party to oppose dissolution. Litigation needs to distinguish between "the enterprise owns assets or business" and "the company is able to govern in accordance with the law": the existence of assets and business means that the continued governance impasse may result in greater risks to the company's property and shareholders' equity.
Analysis and Solution of 4. Lawyer
lawyer Chen Hui first restored the legal governance structure according to the industrial and commercial registration, the articles of association, the resolutions of the previous shareholders' meeting and the employment information, and then compared the registered position with the actual business behavior to identify the difference between the nominal manager and the fact controller. The focus of the analysis is not simply to determine who holds more shares, but to determine who is convening meetings, controlling seals, trading on behalf of the company and deciding personnel, and whether these powers are clearly delegated.
In the litigation argument, Chen Hui's case revolves around the three main lines of "governance failure-business consequences-alternative relief is difficult to work. Articles of association, resolutions and appointment documents are used to explain the long-term disorder of shareholders' meetings and management positions. Contracts, meeting presiding and actual management behaviors are used to identify the control relationship; Seal competition, alarm materials, on-site conditions and shutdown facts are used to prove that the governance conflict has affected the operation. Negotiation and mediation are used to show that both parties failed to resume the company's operation through equity transfer or acquisition.
In response to the other party's defense that "the company still has business and therefore should not be dissolved", the litigation idea pulls the judgment standard back to the governance function of the company law, and the operating income can only prove that the enterprise has carried out activities at a certain stage, but not that the shareholders' meeting can make effective decisions and the management body can perform its duties in accordance with the law. For a corporate equity attorney to handle such equity litigation, it is also necessary to assess both the litigation objectives and the business exit objectives. The dissolution judgment resolves whether the company should terminate its existence, and asset preservation, debt reconciliation, tax treatment and distribution of remaining property still need to be completed through liquidation procedures.
5. processing results
the court of first instance determined that there were serious difficulties in the operation and management of the company, and decided to dissolve Yunnan XX Tea Co., Ltd., taking into account the company's shareholding structure, the operation of the governance structure, the actual control relationship, the seal conflict, the fact of production suspension and the failure of mediation for many times. After Li Moumou filed an appeal, the court of second instance rejected the appeal and upheld the original sentence.
6. Case Revelation
1. Judging the company deadlock can not only look at the financial statements. The fact that an enterprise still has customers, inventory and revenue does not mean that the shareholders' meeting, board of directors or executive bodies can make decisions normally.
2. When two shareholders are close to half of the shares, the voting, valuation, equity acquisition, third-party mediation and exit mechanism shall be agreed upon through the shareholders' agreement and the articles of association at the stage of good relationship.
3. Founder control must be implemented into governance documents and management processes. The term of office of directors and senior management, business registration, authorization documents, seal accounts and actual management should be consistent, avoiding "right without name" or "name without right".
4. In case of seal grabbing, seal changing, door locking or business stoppage, the articles of association, resolution, notice, communication, alarm and on-site evidence shall be fixed in time, and the risks of contract performance, fund payment, tax declaration and employee placement shall be controlled.
5. Judicial dissolution should be the final choice after the failure of the alternative path. The feasibility of equity transfer, shareholder acquisition, separation of the company, joint sale or introduction of a neutral manager should be compared before prosecution, and the dissolution action should be evaluated separately from the subsequent liquidation arrangement.
Introduction to 7. Lawyers
lawyer Chen Hui, senior partner of Guangdong
, executive dean of Zhiheng College, has long been focused on corporate legal practices such as corporate equity design, cross-border equity structure design, corporate control, equity incentive, equity investment and financing, merger and reorganization, and shareholder disputes. He has long-term experience in corporate management and corporate equity legal services, and is the author of "Excellent Partner-Equity Design and Incentive" and "A Book to Understand Partner Mechanism".