If the former shareholder fails to pay the capital contribution, does he need to be liable for the company's debts?

Author | Jia Xiaoya Lawyer

case

Ye established a one-person company Shenzhen Machinery Company (hereinafter referred to as "Company A") in July 2017 with a registered capital base of 5 million yuan. However, Company A has not actually operated, so in March 2021, Company A was transferred to Ren at a consideration of 1 yuan through an intermediary introduction. After the transfer, Ren transferred Company A to Chen in July 2021 of the same year, and the transfer consideration was 1 yuan.

In April 2022, Company A and a Guangdong Environmental Technology Company (hereinafter referred to as "Company B") signed the "Machinery Leasing Cooperation Agreement", agreeing that Company A would lease machinery to Company B. After the two parties signed the contract, Company B paid 2.10 million yuan in advance to Company A. Company A did not comply with the contract after receiving the prepaid rent. Therefore, there was a dispute between the two parties, and Company A only refunded 500,0

00yuan to Company B during this period.

In July 2022, Company A made a cancellation without notifying Company B.

After inquiry, Company B found that since the establishment of Company A, successive shareholders Ye, Ren and current shareholder Chen have not paid the registered capital base. Therefore, Company B had no choice but to sue the above-mentioned shareholders of Company A in court, demanding joint and several liability for Company A's debts.

In addition, the articles of association of A company stipulate that the amount of capital subscribed by shareholders shall be determined by shareholders according to the actual operating needs of the company.

analysis

The current "Company Law" applies the registered capital subscription system, and the company usually stipulates the period of investment by shareholders in the articles of association. That is to say, before the expiration of the agreed capital contribution period, shareholders can not pay the registered capital. So if the former shareholder transfers the equity before the actual capital contribution, will the former shareholder necessarily bear joint and several liability for the company's debts after the transfer? The answer is not necessarily.

Because it is also necessary to consider the interests of all parties such as the company, shareholders and creditors in combination with the specific circumstances. In order to better understand and interpret various situations, the author has inquired about relevant cases and summarized them, which are basically divided into the following views.

1. Before the expiration of the subscription period, the former shareholder who transfers the equity shall not be jointly and severally liable for the debts that the company cannot repay. (Such as Guangzhou Intermediate Court (2022) Guangdong 01 Minjian No. 1136)

Under the current registered capital subscription system, shareholders enjoy term benefits for capital contribution obligations, but before the expiration of the capital contribution period, shareholders of the company generally do not have the obligation to perform capital contribution.

However, at this time, in order to safeguard their own interests, creditors will often ask shareholders of the company to accelerate the expiration of their capital contribution obligations. According to the provisions of the National Court Civil and Commercial Trial Work meeting notes, there are only two exceptional circumstances in which creditors can request shareholders to accelerate the expiration of capital contribution.

The first is that in the execution procedure, if the court has exhausted the enforcement measures and still has no property to enforce, and the company has the conditions for bankruptcy, but does not apply for bankruptcy, the creditor can request the shareholder to accelerate the expiration of the capital contribution, but it should be limited to the creditor's rights; the second is that after the company's debt is incurred, the shareholder extends the period of capital contribution through the company's internal authority, which is actually a disguised form of the company giving up the due claims to the shareholders, which essentially reflects that the shareholders have damaged the interests of the company's creditors, so the creditor has the right to request the shareholder to accelerate the expiration of the capital contribution obligation.

However, in the above two "accelerated maturity of capital contribution" situations, the shareholders of the seven types should refer to the current shareholders, not arbitrarily expanding to the former shareholders before the equity transfer. Therefore, before the expiration of the subscription capital contribution period, the court's view may hold that the former shareholders of the transferred equity are not jointly and severally liable for the debts that the company cannot repay.

2. Before the expiration of the subscription period, if the former shareholder maliciously transfers the equity after generating debts during the operation of the company, the former shareholder shall be jointly and severally liable for the debts that the company cannot repay. (For example, the Intermediate People's Court of Cangzhou City, Hebei Province (2021) Ji 09 Minzhan No. 64)

The court held that shareholders' capital contribution is an important part of the company's asset source, and the capital contribution subscribed by shareholders is the company's future receivables to the company, which can be said to be an important asset protection for the realization of the company's creditors' interests. Therefore, the size of the shareholder's subscribed capital contribution, the subject of capital contribution, and the period of capital contribution should become important factors for the company's creditors to consider the company's comprehensive strength and then decide whether to engage in business transactions with the company.

If the former shareholders of the company transfer the equity to the transferee who has no financial ability in order to avoid the debt without full payment, it will seriously affect the realization of the interests of the company's creditors.

Therefore, in the above case, the court will hold that the agreement between the transferee of the equity and the transferor on the obligation of capital contribution shall not be against the company's creditors, and the transfer of equity does not mean that the obligation of capital contribution has been transferred, so the liability of the former shareholder cannot be exempted.

3. If the investment period expires or the shareholders' investment time is not specified in the company's articles of association, if it is determined that the company's property is not enough to pay off the debt, the previous shareholders may need to bear responsibility for the scope of insufficient payment of investment. (For example, Shenzhen Intermediate People's Court (2019) No. 16084, Guangdong 03 Minzhan, Guangdong Province First People's Court of Dongguan City (2021) No. 266, Guangdong 1971)

The articles of association of some companies stipulate that "the amount of capital subscribed by the shareholders of the company shall be determined by the shareholders according to the actual needs of the company's operation", as in this case. Judging from the articles of association of the company, in fact, the company did not specify a specific time for capital contribution. The court held that such an agreement is inconsistent with the provisions of Article 25 of the Company Law on the articles of association of the company, which will make the company's liability property legally uncertain, and will also pose serious hidden dangers to the company's creditors to realize their claims.

Therefore, in order to balance and protect the interests of creditors, if the articles of association do not record the period of capital contribution and confirm that the company's property is currently insufficient to pay off its debts to creditors, shareholders should perform their capital contribution obligations at any time and no longer enjoy the term benefits.

Returning to the above case in this article, it is just in line with the last situation. This also reminds the shareholders of the company that the higher the registered capital base is not, the better, and the longer the subscription period is not. According to the specific circumstances, the amount of registered capital of the company should be set reasonably, and when transferring the company's equity, take risk prevention measures to avoid putting themselves in the company's debt risk.

Legal basis

"Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III) " (Legal Interpretation [2020] No. 18)

Article 13, paragraph 2, provides that:

If a shareholder fails to fulfill or fully fulfill its capital contribution obligations, and the company or other shareholders request that it fully perform its capital contribution obligations to the company according to law, the people's court shall support it. If the company's creditors request that the shareholders who fail to fulfill or fully perform their capital contribution obligations bear supplementary compensation liabilities for the part of the company's debt that cannot be paid off within the scope of the principal and interest of the unfunded capital contribution, the people's court shall support it; if the shareholders who fail to fulfill or fully perform their capital contribution obligations have already assumed the above responsibilities, and other creditors make the same request, the people's court shall not support it.

Article 18 states:

If a shareholder of a limited liability company transfers equity without fulfilling or fully fulfilling the obligation to contribute capital, and the transferee knows or should know about it, the people's court shall support the company's request for the shareholder to fulfill the obligation to contribute capital and the transferee shall bear joint and several liability for it; if the company's creditors file a lawsuit against the shareholder in accordance with paragraph 2 of Article 13 of these Provisions, and at the same time request the aforementioned transferee to bear joint and several liability, the people's court shall support it.

If the assignee, after assuming responsibility in accordance with the provisions of the preceding paragraph, pursues compensation from the shareholder who has failed to perform or has not fully performed the obligation of capital contribution, the people's court shall support it, unless otherwise agreed by the parties.

2. Provisions of the Supreme People's Court on Several Issues Concerning the Alteration and Addition of Parties in Civil Enforcement (Legal Interpretation [2020] No. 21)

Article 19 states: "If a company that is subject to enforcement has insufficient assets to pay off the debts determined in the effective legal documents, and its shareholders transfer their equity if they fail to fulfill their capital contribution obligations according to law, and the promoter who applies for enforcement applies to change or add the original shareholder or is jointly and severally liable for the capital contribution in accordance with the company law is the person subject to enforcement. If it bears responsibility within the scope of not making capital contributions according to law, the people's court shall support it."

3. National court civil and commercial trial working meeting notes (Law [2019] No. 254)

Article 6 Under the registered capital subscription system, shareholders enjoy term benefits according to law. Where a creditor, on the grounds that the company cannot pay off its due debts, requests that the shareholders who have not completed the term of capital contribution bear supplementary compensation liability for the debts that the company cannot pay off within the scope of capital contribution, the people's court will not support it. However, except in the following circumstances:

(1) In a case where the company is the person subject to enforcement, the people's court has exhausted the enforcement measures and has no property available for enforcement, and there are reasons for bankruptcy, but does not apply for bankruptcy;

(2) After the company's debt is incurred, the company's shareholders (general meeting) resolve or otherwise extend the period of shareholder investment.

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