Equity has both personal and property nature, which usually involves corporate control and other related rights, and shareholders must deal with the issue of equity inheritance after their death, and equity inheritance is often closely related to the development of the company, so properly handling the issue of equity inheritance is the key to corporate governance. Article 75 of the Company Law stipulates the general principle of equity succession, "After the death of a natural person shareholder, his legal heirs may inherit the shareholder qualifications;However, unless otherwise provided in the Articles of Association. It can be seen that the law allows the equity to be legally inherited, but in order to protect the autonomy of the company, the articles of association of the company can limit the succession on its own.
1. The premise of equity inheritance
Inheritance occurs after the death of the decedent, so the premise of equity inheritance is to confirm whether the deceased is a legitimate shareholder, and then confirm its equity ownership, and only after confirming that the equity can be inherited and registered.
2. Equity inheritance of special entities
(1) Can a person without (restricted) capacity for civil conduct inherit the shareholder qualification?
According to the Reply to the Question of Whether Minors Can Become Shareholders of a Company issued by the State Administration for Industry and Commerce, "the Company Law does not make any restrictive provisions on whether minors can become shareholders of a company. Therefore, minors can become shareholders of the company, and their shareholder rights can be exercised by the legal ** person. ”
Therefore, civil capacity does not affect the acquisition of shareholder qualifications, but after a person with no or limited civil capacity obtains shareholder qualifications, a legal person shall exercise shareholder rights on behalf of a legal person.
(2) Can a person with a specific status, such as a civil servant, inherit the shareholder qualification?
Article 59 (16) of the Civil Servants Law stipulates that "civil servants shall abide by discipline and law, and shall not engage in any of the following acts: engaging in or participating in profit-making activities in violation of relevant regulations, or holding concurrent positions in enterprises or other profit-making organizations".
Therefore, civil servants are not allowed to inherit equity and become shareholders of the company, but they can transfer their inheritable equity property interests to other heirs.
(3) Can a foreigner inherit the equity of a domestic company?
China adopts the principle of natural inheritance for equity inheritance, that is, under normal circumstances, subjects with legal inheritance qualifications can inherit equity, unless otherwise provided in the articles of association, so legal heirs with foreign nationality can inherit shareholder qualifications, and according to the Ministry of Commerce's "Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors", if the natural person shareholders of a domestic company change their nationality, it does not change the corporate nature of the company, that is, foreigners can inherit the equity of a domestic-funded company and will not have an impact on the nature of the company.
3. Equity inheritance in equity holding
Equity holding on behalf of the actual investor or equity subscriber refers to a shareholding method in which the actual investor or equity subscriber agrees with others to perform the rights and obligations of shareholders on behalf of the actual investor in the name of others, involving four aspects: law, risk and application. There are usually two situations in the inheritance of equity in nominee holding: the death of the nominee or the death of the nominee.
(1) The death of the nominee
In the event of the death of the nominee holder and the intestacy, the legal heirs usually include parents, spouses, children and actual contributors, among which the parents, spouses and children belong to the legal heirs in the first order, and if the actual contributor wants to get back the equity, he usually needs to participate in the inheritance dispute as a third party, and the equity held by the nominee will be stripped of the estate of the nominee.
(2) The person being held on behalf of the person is deceased
In the event that the nominee dies and does not leave a will, if the legal heirs do not know the existence of the equity holding behavior, the heirs who want to inherit this part of the property must first claim rights from the nominee shareholder, prove that the nominee holding agreement is legal and valid, and then claim to inherit and divide the corresponding part of the property interests after confirming that the decedent is the actual investor of the equity. Article 1151 of the Civil Code stipulates that "the person who has the inheritance shall take proper care of the inheritance, and no organization or individual shall embezzle or compete for it".
Fourth, the relevant issues after inheritance
(1) After the heirs inherit the equity, the number of shareholders of the company is more than 50
Article 24 of the Company Law stipulates that "a limited liability company shall be established by less than 50 shareholders. That is, the maximum number of shareholders of a limited liability company cannot exceed 50. The subject with inheritance qualification usually includes parents, spouses, children, etc., if the above heirs are all qualified as shareholders, it may cause the number of shareholders of the company to exceed the upper limit, for which there are the following solutions:
1. The heirs coordinate with each other
The heirs negotiate the transfer of their inherited shares so that the number of shareholders of the company meets the statutory requirements. If multiple successors do not compromise with each other, they will be qualified as shareholders as a successor community. The inheritance community can only produce one heir as the first person to participate in the operation and management of the company.
2. Restrictions on the articles of association
The company has the right to restrict the inheritance of equity in the articles of association, and shareholders can transfer equity in accordance with the articles of association or negotiation. At the same time, it may be agreed that after the death of a shareholder, only one person can inherit the equity on behalf of other heirs, including shareholder qualifications.
3. Set up a trust for equity
The most important feature of equity is the right to dividends, and when there are multiple heirs, the equity can be set up in a trust. Equity trust refers to the trust company using trust funds to make equity investment in the project, dividends, bonus income and maturity transfer of equity as a form of trust income, the trust holds equity only as a ** count, but the number of its beneficiaries is not subject to any restrictions, so multiple heirs can be the beneficiaries of the trust, through the beneficiary to receive dividends of equity or equity disposal proceeds.
(2) After the heir inherits the equity, there is a conflict with other shareholders
After shareholders inherit the equity, there is often a situation where they cannot get along with other shareholders, which will lead to the company being in a deadlock, which can be dealt with in the following ways:
1. The company buys back equity
When there are statutory reasons stipulated in Article 74 of the Company Law, the company may be requested to repurchase its equity and reduce its capital.
2. The company was dissolved
When the successor inherits the equity and reduces the company's operating ability, or has irreconcilable conflicts with other shareholders resulting in the company's **, the shareholders holding more than 10% of the voting rights can file a lawsuit for dissolution of the company to avoid further expansion of losses.
(3) The heirs renounce the inheritance
When the amount of debt of the deceased is greater than the value of the inherited equity, the heir is unwilling to inherit the shareholder qualification, which can be dealt with in the following ways:
1. The heir transfers the equity to other shareholders
2. The heir transfers the equity to a third party outside the company.
Fifth, Ping's theory
1. Equity has both personal and property nature, which usually involves the right to control the company and other related rights, and the issue of equity inheritance must be dealt with after the death of shareholders, and equity inheritance is often closely related to the development of the company, therefore, properly handling the issue of equity inheritance is the key to corporate governance. Inheritance occurs after the death of the decedent, so the premise of equity inheritance is to confirm whether the deceased decedent is a legal shareholder, and then confirm the ownership of its equity, and only after confirming that it is correct can the equity be inherited and registered.
2. For the equity inheritance of special subjects, civil capacity does not affect the acquisition of shareholder qualifications, but after a person without civil capacity or a person with limited civil capacity obtains shareholder qualifications, the statutory person shall exercise shareholder rights on behalf of the person;Civil servants are not allowed to inherit equity and become shareholders of the company, but they may transfer their inheritable equity property rights and interests to other heirs;Foreigners can inherit the equity of a domestic company without affecting the nature of the company.
3. Equity inheritance in equity nominee involves a dispute over the interests of the legal heir and the nominee, in which, if the nominee dies and does not leave a will, if the legal heir does not know the existence of the equity nomineeIf the heir wants to inherit this part of the property, he must first claim the rights to the nominee shareholder, prove that the nominee holding agreement is legal and valid, and then claim to inherit and divide the corresponding part of the property interests after confirming that the decedent is the actual contributor of the equity.
4. After inheritance, there are usually problems such as shareholders not getting along well and the number of shareholders exceeding the upper limitThe company should take precautions and make provisions in advance on matters related to equity succession in the articles of associationIf it is stipulated that the heir can only inherit the property rights of the part of the equity, but cannot directly become a shareholder of the company, if he wants to become a shareholder of the company, he must obtain the consent of more than half of the other shareholders;or impose certain restrictions on the voting rights of the heirs.
That's all for today's sharing, for more legal issues of equity and M&A, welcome to pay attention to and consult Dr. Wang Ping, co-founder of ZhongYin Guangzhou Law Firm and a practical equity and M&A lawyer.