Honorable Presiding Judge, Judge:
In such a case where the facts are clear and the legal provisions are clear, how the people's court of first instance will rule against us is a question that my client and I are very confused about. It wasn't until we received the verdict of the first instance that the answer was finally revealed. The court of first instance held that "the plaintiff did not have legitimate litigation interests" and therefore did not support its claim.
We have to admire the miracle of the judge of first instance, because no matter how brainy we are, we cannot imagine that the court of first instance would offer such a reason. This reason is ridiculous.
The reason why the eight former shareholders denied in previous court hearings that their actions were a withdrawal of capital contributions was because they also knew that once the withdrawal of capital contributions was determined, it was impossible for them to escape the responsibility of returning the withdrawn capital contributions. However, in the face of ironclad facts, the judge of the first instance could no longer help them according to the old routine, and no matter how reluctant he was, the fact of withdrawing capital contributions could only be determined. As a result, the judge of the first instance found another way, and the argument that "the plaintiff does not have legitimate litigation interests" was newly released. As to whether this is the guidance of a certain high court or the intellectual achievements of the judge of the first instance, we do not want to elaborate here.
What is the logic of the court of first instance's view that "the plaintiff does not have a legitimate interest in litigation"?
The court of first instance held that the appellant's accounts recorded the amount of 2,000 yuan transferred by the company to State Grid Company24.25 million yuan, equipment 30 million yuan, and the above two payments are transferred out of the company's account, which is not concealed and easy to understand, and the current shareholders did not raise any objections when purchasing the equity, so it is presumed that the current shareholders are aware of the withdrawal of capital contributions from the original eight shareholders. Since you are knowing, you should initiate the capital reduction process to reduce the capital. The court also explained to the company whether to initiate the capital reduction procedure, but the company did not respond, which was deemed to have refused to start the capital reduction procedure. Since the refusal to initiate the capital reduction procedure and require the eight original shareholders to return the capital contributions withdrawn, there is no legitimate litigation interest.
The reasons for the judgment of the court of first instance had several obvious loopholes in its logic, and its judgment was erroneous.
First, the transferee shareholder was not aware of the withdrawal of capital contributions, and the "presumption" of the court of first instance was actually a "hypothesis" without evidence, the purpose of which was to deliberately confuse the relationship between the withdrawal and the equity transfer.
First of all, the names of the transfers recorded by the eight former shareholders in the company's accounts are "current payments" and "equipment payments", which is not "not hidden" as stated by the court of first instance, but itself has a certain degree of concealment and deception. Equity transfer is essentially a kind of buying and selling relationship, as the first party has the obligation to truthfully inform, if the first party deliberately conceals the facts or deliberately falsely informs, it should be determined that the first party violates the principle of good faith. In this case, the transferee shareholder, as a party to a bona fide transaction, believed that the "current payment" and "equipment payment" were genuine, which was not in itself a fault, and it could not be determined that the withdrawal of capital contribution was accepted.
Secondly, the eight former shareholders made careful preparations for the withdrawal of capital contributions, and even concocted a "meeting minutes" two days before the withdrawal of capital contributions, falsifying reasons such as joint development of chips and ordering machinery and equipment. In previous court trials, the eight former shareholders insisted that the 50 million yuan transferred out was to purchase equipment and develop chips. In the face of the appellee's fabricated facts, the three judges in the (2019) 0 Hei 01 Min Chu No. 413 case were also deceived and found that there was no fact of evasion of capital contributions. In this case, the court of first instance relied on the judicial means to find out the ** and whereabouts of the money involved in the case, and only then did it determine the fact of the evasion of capital contributions. Why should the transferee shareholders Wang Gang and Ma Hongzhang be required to knowingly withdraw their capital contributions?
That. 3. The time of withdrawal of capital contributions was December 24, 2013, and the time when the current shareholders and the eight appellees signed the Equity Transfer Agreement was December 31, 2014, at which time the withdrawal of capital contributions had been completed for one year. Is there still a chance for the new shareholders to stop the eight former shareholders from fleeing at this time?Whether it was deceived and unaware, or because of one's own negligence, should have known, does it have any effect on the fact that the capital was withdrawn?
That. 4. The court of first instance deliberately confused the relationship between the transfer of shareholders' equity before and after and the withdrawal of capital contributions by former shareholders. In terms of time, the time difference between the two actions is more than a year. At the time of the withdrawal of capital contributions, the company was under the control of eight shareholders, and even if the capital reduction was made, it should have been carried out during this period. From the perspective of the main body, the evasion was carried out independently by the eight former shareholders and was the product of the conspiracy of the eight shareholders. The equity transfer is jointly completed by the shareholders before and after, and is the result of consensus. From the perspective of legal relations, the act of evasion is an infringement of the company and a violation of the principle of maintaining the company's capital, and the Company Law shall be applied to the handling of the act of evasion. Equity transfer is the normal circulation of equity and market transactions, and the legal relationship between the two parties is contractual, which should be adjusted by the Contract Law (Contract Part of the Civil Code).
Second, the company cannot and cannot initiate the capital reduction procedure in response to the withdrawal of capital contributions.
First of all, the withdrawal of capital contribution is essentially an act that damages the interests of the company, and its direct consequence is the reduction of the company's liability property, which may affect the creditor's claim to be unrealized. The most direct and effective remedy against the evasion of capital contributions is to recover the withdrawn funds from the fugitives. Instead of letting the company "suffer dumb losses", the evasion of capital contributions will be eliminated through the capital reduction process.
Secondly, it is also inconsistent with the spirit of the Company Law to solve the problem of withdrawing capital contributions by reducing the company's capital. The principle of capital maintenance is the most important principle of corporate law. Under normal circumstances, the company can reduce its capital due to the repayment of debts, the adjustment of excessive capital, the payment of additional dividends, the merger and division of the company or the divestment of the business department, etc., but it is absolutely impossible to reduce the capital because the shareholders have withdrawn their capital contributions. When a company reduces its capital, it is necessary to submit an application to explain the reasons for the capital reduction, and if it is possible to write on the application form that the capital reduction is necessary because the shareholders have withdrawn their capital contributions?The Company Law stipulates strict procedures for the reduction of the company's capital and requires notice to creditors. Can such a reason for capital reduction be recognized by creditors?
That. Third, the capital reduction is also not in line with the company's business needs. The company was established to undertake the currency sorting and destruction work of the People's Bank of China and other commercial banks, and has also undertaken related business. The company has to clear hundreds of millions of dollars in cash every day and destroy some residual coins. Because there are huge risks in related businesses, the company is required to meet the corresponding capital standards, which is also the fundamental reason why the company has paid in a registered capital of 50 million yuan. Reducing the registered capital means that it is impossible to continue to undertake the relevant business of the People's Bank of China and other commercial banks, and it is not known whether the company can survive. This is also an important reason why the eight former shareholders could not get back their capital contributions by way of capital reduction, or solve the problem by way of capital reduction after withdrawing capital contributions.
That. 4. The idea of the court of first instance to reduce the registered capital could not be realized by itself. Eight shareholders fled 5,00024.25 million yuan, and the company's registered capital is 50 million yuanIf you smoke 500024.25 million yuan was all reduced, and the company's registered capital became -2425 yuan?If part of the capital is reduced, then what to do with the part that is not reduced?Do you want to return it proportionally?
That. Fifth, resolving the problem of withdrawing capital contributions by means of capital reduction is an indulgence and encouragement of the withdrawal of capital contributions, and is contrary to the concept of governing the country according to law. Eight former shareholders withdrew their capital contributions, but asked the company and current shareholders to solve the problem by reducing their capital. This disguised legalization of capital withdrawal is not only unfair to the current shareholders, not only an infringement of the company's interests, but once such a judgment takes effect, it will have a very bad exemplary effect, and it destroys the foundation of the rule of law.
Third, the failure to initiate the capital reduction procedure has no relevance to the "lack of legitimate litigation interests".
First of all, as mentioned above, whether to initiate the capital reduction procedure is the scope of corporate governance, and it is also carried out by the company in strict accordance with the statutory procedures under the premise of meeting the statutory conditions. The lawsuit filed against the eight defendants is a self-help act that the company has to take in the event that the registered capital is withdrawn, which is not only a right granted by law, but also an obligation that the company must perform to defend the principle of capital maintenance and safeguard the legitimate interests of the company, shareholders and creditors. Isn't it legitimate interest to recover the evacuated funds, restore the company's full state of funds, ensure the smooth performance of the contracts that the company has signed, and avoid the company being questioned by creditors or even having unsustainable operations?
Second, can the interests of shareholders and the interests of the company be confused?Of course not. Although the capital contribution of a company is made up of the capital contribution of the shareholders, the company without shareholders ceases to exist. But after all, the company has an independent personality, and the company is completely independent of the shareholders in terms of property. Once the capital contribution of shareholders is completed and enters the company, it becomes the property of the company, and the shareholders are not allowed to dispose of it without authorization. Specifically, in this case, the eight former shareholders withdrew their capital contributions, stealing the company's property, and it was the company itself that suffered direct losses. The company has made a valid expression of intent to protect its rights through litigation, and will not stop acting because a certain leader does not agree. The transferee shareholder also has another identity, that is, the party to the contract that signed the Share Transfer Agreement with the eight former shareholders. Their act of signing the equity transfer contract is also independent of the company, and the dispute between them and the other party to the contract must be resolved by themselves, and the dispute with the company's equity cannot be confused at all. To be precise, even if there is a dispute between the shareholders before and after the shareholders in the process of performing the "Equity Transfer Agreement", it cannot be resolved by withdrawing capital contributions. The court also cannot regard the evaded capital contributions as the price that Wang Gang and Ma Hongzhang must pay for failing to fulfill the necessary duty of care.
Fourth, the eight appellees shall bear the responsibility for the return of capital contributions.
First of all, it is the contractual obligation of the Appellee to bear the creditor's rights and debts during the operation period. The Equity Transfer Agreement signed on October 31, 2014 and the Supplemental Agreement signed on December 2, 2014 both have relevant provisions. Article 6 of the Equity Transfer Agreement stipulates that "Party A's creditor's rights and debts and various taxes and fees during the business period shall be handled by Party A, and Party A guarantees that the creditor's rights and debts handled have legal guarantees." Article 6 of the Supplemental Agreement makes the same provision. The withdrawal of the eight former shareholders occurred on December 24, 2013, during the operation of "Party A". The act of evasion gives rise to an obligation to return to the company, which is a debt to the company and should be handled by the eight former shareholders as agreed.
Second, the eight appellees bear the responsibility for restitution without violating the principle of fairness. The appellee once raised that if the company had 50 million yuan, why should it be transferred for 20 million yuan?It cannot be ruled out that the judge of the first instance also holds this view, but it cannot be put on the surface. In fact, this view is untenable. The equity transfer is the result of the consensus of both parties, and the transferor obviously has the right to decide, if you do not agree, the transferee cannot forcibly buy. In the first instance, the judge asked "the transfer of ** at that time was determined to be 20 million, what factors did the parties consider the pricing", and the defendant replied that "the assets of the existing company at that time, the company's book funds and the company's foreign debts, these comprehensive factors determined the company's **" see page 34 of the trial transcript). So what was the state of the company like at that time?The "Equity Transfer Agreement" records that all shareholders agree to the transfer "due to poor management". On page 38 of the trial transcript, the defendant claimed that "the business with the bank could not be carried out without the care of relevant leaders, so it can be said that there were some cases of being deceived in the performance of the contract with the State Grid Company", while in a written opinion on July 29, 2022, it stated that "the leaders of the Beijing head office promised to help open up business in four cities as soon as possible to make up for the losses" and "even if there were mistakes and losses in the investment of 50 million yuan, there was no direct relationship with the case of evading funds". These fully illustrate that during the operation of the eight former shareholders, there were serious problems in the company's operation, which caused huge losses. The 50 million yuan transferred by the company to the State Grid Company, even if it is a real investment, cannot be determined that the company has 50 million yuan in cash or in kind, but can only be determined to have an investment of 50 million yuan, and the investment may be lost. Moreover, the 50 million yuan is not an operating investment, but a siphoned off fund. After the eight shareholders withdrew all the escaped funds, they sold a shell company for 20 million yuan, which is the white wolf with empty gloves. Therefore, in this case, there was no issue of the appellant trying to buy the company of 50 million yuan with a capital contribution of 20 million yuan, but the appellee evaded all the capital contribution of 50 million yuan and sold the company's shares for 20 million yuan by concealing the truth.
5. * The Supreme People's Court has inquired about the cases publicly released, and there is no case in which the shareholders who have withdrawn their capital contributions are not liable for the return.
The so-called argument that there is no legitimate litigation interest only exists in some cases of "knowingly buying fakes". In the relevant case, the people's court, on the basis of finding that the plaintiff knew that the plaintiff had purchased the counterfeit goods, found that he did not have the status of an ordinary consumer, and did not support his request for compensation of ten or three times, but also supported his request to terminate the contract and return the price. In contrast, it is clear that this case is not comparable to the case of "knowingly buying counterfeit goods" within the scope of consumer rights protection, and the court of first instance's attempt to transfer the view of "not having legitimate litigation interests" to this case is obviously unsuccessful.
The Beijing No. 3 Intermediate People's Court heard the case of a shareholder capital contribution dispute between the appellant Beijing Yinglian Dental Equipment and the appellee Ruikang Pharmaceutical Group and Beijing Ruikang Yinglian Medical Equipment Technology Development, which is basically the same as the facts of this case. The civil judgment of the case (2022) Jing 03 Min Zhong No. 4289 held that "although the Equity Transfer Agreement stipulates that "although the Equity Transfer Agreement stipulates that Ruikang Pharmaceutical Company owes Ruikang Yinglian Company the amount of 7.67 million yuan and that the parties agree to waive the liability of other parties for breach of contract under the original agreement, the Equity Transfer Agreement is an internal agreement between the two shareholders, and from the perspective of ensuring the security of the company's creditors and the company's transactions, the internal agreement of the shareholders cannot deny the fact that Ruikang Company has withdrawn its capital contribution and the determination of the specific withdrawal." Therefore, in accordance with the above-mentioned legal provisions, the litigation request of Yinglian Dental Company, as a shareholder of the company, to demand the return of the principal and interest of 12.6 million yuan of capital contributed by Ruikang Company is based on evidence, and this court supports it. Judging from the effective judgment, even if the shareholders have made an agreement on the issue of withdrawing funds, it will not affect the determination of the fact of evasion and the assumption of responsibility for the return.
The Supreme People's Court held in the trial of the case of Fang Haitao v. Shenzhen Bosch Automotive Electronics Technology Co., Ltd. (2015 Min Shen Zi No. 1467 Civil Ruling) that whether a shareholder has withdrawn capital contribution is based on whether the shareholder has damaged the company's property rights and interests, and has nothing to do with whether other shareholders are aware of the withdrawal of capital contribution. Therefore, regardless of whether Wang Chunfu knew or agreed to Fang Haitao's withdrawal of 1 million yuan from the account of the Expo Company, as long as Fang Haitao could not prove that the withdrawn money was used for the production and operation of Bosch Company, it would not affect Fang Haitao's determination that the withdrawal of capital contributions constituted. If other shareholders know and assist in withdrawing their capital contributions, they will have the legal consequences of being jointly and severally liable. However, Wang Gang and Ma Hongzhang, who were the transferee of the company's shares in this case, did not know about the withdrawal of capital contributions, let alone assist in the withdrawal of capital contributions, so it was unreasonable for the court of first instance to make the transferee shareholders and the company bear the consequences of the withdrawal of registered capital.
It is inconceivable that a case that is not complicated should last for four years. Whether the first-instance judgment of this case consulted a certain high court, or even obtained someone's instructions, the truth will not be concealed for too long. The people behind some of the former shareholders have been investigated and dealt with by the Central Commission for Discipline Inspection and transferred to the procuratorate for review and prosecution. Before the trial of this case, some people were also speculating whether the court of second instance would dismiss the appeal on the simple statement that "this court believes that it is not improper for the court of first instance to find that the appellant did not have the legitimate interest in the litigation". We really don't want a fair outcome to a case if you leave a certain territory, as people say. However, as an appellant and as a company whose interests have been seriously harmed, the appellant has the courage to bring the lawsuit to the Supreme People's Court and the Supreme People's Procuratorate.
Client: lawyer Liu Zhiyong.
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