According to different modes of conduct, the breach of capital contribution obligations by shareholders can be manifested in three forms: complete non-performance, incomplete performance and improper performance.
Utter non-fulfillmentIt refers to the fact that the shareholder has not contributed capital at all, and it can be divided into refusal to make capital contribution, inability to make capital contribution, false capital contribution, and withdrawal of capital contribution.
a.Refusal to contributeIt refers to the refusal of shareholders to make capital contributions in accordance with the regulations after the establishment agreement or share subscription agreement is established and takes effect.
b.Contributions are not possibleIt refers to the inability to perform the obligation of capital contribution due to changes in the objective conditions of shareholders, such as the damage or loss of the real estate contributed before the transfer of property rights.
c.False contributionsIt refers to the fact that it claims that it has contributed capital but in fact has not made such a contribution, and its nature is fraudulent.
d.Withdrawal of capital contributionsIt refers to the withdrawal of the capital contribution paid after the establishment of the company or the capital verification, which is also fraudulent in nature.
Incomplete performance may also be referred to as underperformanceIt means that the shareholder has only fulfilled part of the capital contribution obligation and has not paid the full amount according to the prescribed amount, including the insufficient monetary capital contribution, and the value of the non-monetary capital contribution such as physical and industrial property rights of the capital contribution is significantly lower than the price determined by the articles of association.
Improper performanceIt refers to the non-compliance with the provisions in the time, form or formality of capital contribution, including delayed capital contribution and defective capital contribution.
a.Deferred capital contributionsIt refers to the shareholder's failure to deliver capital contributions or go through the formalities for the transfer of property rights such as physical goods within the prescribed time limit.
b.Defective contributionsIt refers to the defects in the rights or things of the property delivered by the shareholder with non-monetary contributions, such as the legal rights of a third party or the failure to meet the agreed quality standards.
According to the time when the act occurs, the shareholder's breach of the capital contribution obligation can be divided into non-performance before the establishment of the company and non-performance after the establishment of the company. Failure to perform before the establishment of the company may lead to the failure of the company, failure to perform after the establishment of the company may lead to the change of the registered capital or dissolution of the company, and in serious cases, it may also lead to the revocation of the company.
If a shareholder violates the obligation to make capital contributions, it may lead to capital contribution disputes between the company and shareholders, shareholders and shareholders, and shareholders and creditors. The company registration authority will order the shareholders to make corrections and impose administrative penalties, and if the circumstances are serious, they will also need to bear criminal liability, such as: the crime of false declaration of registered capital and the crime of false capital contribution and capital evasion.
In judicial practice, common shareholder capital contribution disputes in the trial of corporate cases include the following categories:
1. False capital contribution disputes
False capital contribution refers to the situation where shareholders subscribe for capital contributions but do not actually make capital contributions and obtain the company's equity. The specific manifestations of false capital contribution include: fraudulent capital verification reports with false bank receipts and statements with no actual cash circulation; Fraudulent acquisition of capital verification reports by false in-kind capital contribution procedures; Contributions in kind, intellectual property rights, and land use rights, but no property rights transfer procedures have been completed. There is also a situation where the company raises funds through borrowing or other means to transfer funds to the capital verification account on behalf of shareholders, and returns them immediately after completing the capital verification, or simply relies on the one-stop service of the establishment, capital verification and licensing of the agency, and the company established without capital contribution should also be called false capital contribution.
2. Disputes over insufficient capital contribution
Insufficient capital contribution refers to the situation where the shareholder only fulfills part of the capital contribution obligation or fails to make up the capital contribution within the agreed time limit. The specific manifestations of insufficient capital contribution include: monetary contribution only fulfills part of the capital contribution obligation; The actual value of the physical goods, intellectual property rights and land use rights as capital contributions is significantly lower than the price set in the articles of association. The existence of the legal rights of a third party in the subject matter of delivery, and the impact on the possession, use and disposal of the subject matter by the company are all manifestations of insufficient capital contribution.
3. Disputes over overdue capital contributions
Overdue capital contribution refers to the situation where shareholders do not pay up the capital contribution on time. The Company Law allows registered capital to be paid in installments and stipulates the limit of initial capital contribution. In practice, a common dispute arises when a shareholder's initial capital contribution complies with the provisions and agreements of the law, but fails to fulfill the obligation of capital contribution in installments after the initial capital contribution within the prescribed time.
4. Disputes over withdrawal of capital contributions
Withdrawal of capital contribution refers to the illegal withdrawal of capital contribution by shareholders after the establishment of the company. The specific manifestations of the withdrawal of capital contributions include: the company makes false financial and accounting statements and inflats profits for distribution; transfer out its capital contribution through fictitious creditor-debtor relationships; The company uses related party transactions to transfer capital contributions; Other acts of withdrawing capital contributions without legal procedures.
5. Disputes over accelerated expiration of capital contributions
Accelerated maturity of capital contribution refers to the situation that when the company's assets are insufficient to repay the company's due debts, the shareholders are deprived of the term benefits and make them perform their capital contribution obligations in advance, without considering the unexpired capital contribution period subscribed by shareholders. Article 6 of the Minutes of the National Conference on the Trial of Civil and Commercial Cases by Courts clearly states that under the registered capital subscription system, shareholders are entitled to the benefit of the term in accordance with the law. Where a creditor requests a shareholder who has not yet completed the capital contribution period to bear supplementary liability for the company's unpaid debts within the scope of the unpaid capital contribution on the grounds that the company is unable to pay off its debts due to the company's inability to pay off its debts, the people's court will not support it. However, there are two exceptions:
a.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 to be enforced, and the cause of bankruptcy is already met, but it does not apply for bankruptcy;
b.After the company's debts are incurred, the company's shareholders' (general meeting) resolution or other means extend the period of shareholders' capital contribution.
Regulations of the People's Republic of China on the Administration of Registration of Market Entities
Article 13 Except as otherwise provided by laws, administrative regulations or decisions, the registered capital or capital contribution of a market entity shall be subject to a subscription registration system, which shall be expressed in RMB.
The method of capital contribution shall comply with the provisions of laws and administrative regulations. Shareholders of a company, investors who are not corporate enterprise legal persons, and members of professional farmer cooperatives (cooperatives) shall not make capital contributions in the form of labor services, credit, names of natural persons, goodwill, franchise rights, or property subject to guarantees.
Company Law of the People's Republic of China
Article 27: [Methods of Capital Contribution]Shareholders may make capital contributions in monetary terms, or in kind, intellectual property rights, land use rights, and other non-monetary assets that can be valued in monetary terms and can be transferred in accordance with law; However, there is an exception for property that is not allowed to be used as capital contribution as stipulated by laws and administrative regulations.
The non-monetary property used as capital contribution shall be appraised and verified, and the property shall not be overvalued or undervalued. Where laws and administrative regulations have provisions on appraisal valuation, follow those provisions.
Article 28 [Obligation to Make Capital Contribution] Shareholders shall pay in full and on time the amount of capital contribution subscribed by each of them as stipulated in the articles of association of the company. If the shareholder makes a monetary contribution, the full amount of the monetary contribution shall be deposited into the bank account opened by the limited liability company; Where non-monetary assets are used to make capital contributions, the formalities for the transfer of property rights shall be completed in accordance with law.
If a shareholder fails to pay the capital contribution in accordance with the provisions of the preceding paragraph, in addition to paying the full amount to the company, it shall also bear the liability for breach of contract to the shareholder who has paid the capital contribution in full on time.
Article 35 [No Withdrawal of Capital Contribution] After the establishment of the company, shareholders shall not withdraw capital contribution.
Article 199 [Legal Responsibility for False Capital Contribution] Where the promoters or shareholders of a company make false capital contributions and fail to deliver or fail to deliver the monetary or non-monetary assets used as capital contributions on time, the company registration authority shall order them to make corrections and impose a fine of not less than 5% but not more than 15% of the amount of the false capital contribution.
Article 200 [Legal Responsibility for Withdrawal of Capital Contribution] If the promoters or shareholders of a company withdraw their capital contributions after the establishment of the company, the company registration authority shall order them to make corrections and impose a fine of not less than 5% but not more than 15% of the amount of capital contributions withdrawn.
Criminal Law of the People's Republic of China
Article 158 [Crime of Falsely Reporting Registered Capital] Whoever applies for the registration of a company uses false supporting documents or adopts other fraudulent means to falsely declare the registered capital, deceives the competent department for company registration, obtains company registration, and falsely declares the amount of registered capital is huge, the consequences are serious, or there are other serious circumstances, shall be sentenced to fixed-term imprisonment of not more than three years or short-term detention, and/or a fine of not less than 1% but not more than 5% of the amount of the falsely declared registered capital.
Where a unit commits the crime in the preceding paragraph, the unit is to be fined, and the directly responsible managers and other directly responsible personnel are to be sentenced to up to three years imprisonment or short-term detention.
Article 159 [Crime of False Capital Contribution or Withdrawal of Capital Contribution] Where the founders or shareholders of a company violate the provisions of the Company Law by failing to deliver money or goods or transfer property rights, make false capital contributions, or withdraw their capital contributions after the establishment of the company, and the amount is huge, the consequences are serious, or there are other serious circumstances, they shall be sentenced to fixed-term imprisonment of not more than five years or short-term detention, and/or a fine of not less than 2% but not more than 10% of the amount of false capital contributions or the amount of capital contributions withdrawn.
Where a unit commits the crime in the preceding paragraph, the unit is to be fined, and the directly responsible managers and other directly responsible personnel are to be sentenced to up to five years imprisonment or short-term detention.
In the follow-up, we will analyze several cases of shareholder capital contribution disputes.
to be continued ※