The Company Law amended in 2004 comprehensively stipulates that the shareholders of *** and the promoters of the shares shall be jointly and severally liable for capital contributions, but this provision has been applied less in corporate judicial practice for many years, has not attracted sufficient attention, and there are still many controversies in practice. It was not until the 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) came into force on February 16, 2011, giving creditors the right to claim rights on this basis, and with the widespread implementation of the subscription system, this provision gradually attracted people's attention, and such disputes increased day by day. If the company's promoters fail to subscribe and make capital contributions, should they be jointly and severally liable to each other? Let's start with the following example.
Case review
Company B was established on September 12, 2014, with a registered capital of 1 million yuan at the time of establishment, and the shareholders are Bian, Miao, Wang, and Yin, and the amount of its subscribed capital contribution is 760,000 yuan, 80,000 yuan, 80,000 yuan, and 80,000 yuan respectively, and the subscription capital contribution period is December 31, 2017, and the capital contribution method is currency. Bian is an executive director and legal representative, and the other personnel are not senior management personnel of the company. After the expiration of the subscription period, none of the shareholders paid the capital contribution on time.
In the case of a lease contract dispute between Company A and Company B, the court rendered an effective judgment on December 10, 2020, ordering Company B to pay more than 150 yuan. Later, Company A's application for compulsory enforcement failed, and the court terminated the enforcement procedure. During the enforcement process, Company A applied to the court to add Wang as the person subject to enforcement in this case, and the court ruled on July 13, 2023 to reject Company A's additional request.
Dissatisfied, Company A filed a lawsuit against enforcement, and based on the provisions of Article 13, Paragraph 3 of the 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), it requested that Wang be added as the person subject to enforcement, and that within the scope of the capital contribution of 1 million yuan subscribed by all the promoters, bear supplementary liability for the debts of Company B determined under the effective judgment.
Court decision
After trial, the court held that in this case, Wang signed the articles of association for the establishment of Company B, subscribed for capital contribution, and was a shareholder of Company B at the time of its establishment, and it should be determined that Wang was the initiator of Company B in accordance with Article 1 of the 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). At the time of the establishment of Company B, the capital contributions subscribed by the promoters Bian, Miao and Yin did not meet the payment deadline, and they did not have the obligation to perform capital contributions to the company, and it should not be determined that Bian, Miao and Yin "failed to perform or did not fully perform their capital contribution obligations when the company was established", and according to the third paragraph of Article 13 of the 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), Company A asserted that Wang was jointly and severally liable for the failure of Bian, Miao and Yin to make capital contributions, and the court did not support it. In the end, it was decided that Wang should only bear supplementary liability for the debts of Company B within the scope of the 80,000 yuan that he did not contribute.
What the judge said
There is no controversy in judicial practice that the company may adopt the method of establishment by means of paid-in or semi-paid-in, and the promoters shall bear joint and several liability for the failure of the paid-in capital contribution. However, there has been a dispute over whether the promoters are jointly and severally liable if the subscribed capital contribution for a certain period of time is not in place.
Paragraph 3 of Article 13 of the 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) stipulates that if a shareholder fails to perform or fails to fully perform its obligation to make capital contributions at the time of the establishment of the company, and the plaintiff who files a lawsuit in accordance with the first or second paragraph of this Article requests that the promoter of the company and the defendant shareholder bear joint and several liability, the people's court shall support it; After the promoter of the company bears responsibility, he can recover from the defendant shareholder. There is a view that the above-mentioned judicial interpretation does not explicitly exclude the joint and several liability of the promoters for the subscribed capital contribution, and this should be affirmed in order to protect the interests of the company and creditors. However, we believe that in principle, the promoters are not jointly and severally liable to each other for the subscribed capital contributions. Here's why:
1.From a literal point of view, the third paragraph of Article 13 of the 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) stipulates that "the obligation of capital contribution has not been fulfilled or not fully performed at the time of the establishment of the company", and the subscribed capital contribution is not an obligation to be performed at the time of the establishment of the company, but an obligation that should be performed after the establishment of the company, which is inconsistent with the provisions of this article.
2.On the whole, the fourth paragraph of Article 13 of the 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) stipulates that if a shareholder fails to perform or fails to fully perform the obligation of capital contribution when the company increases its capital, and the plaintiff who files a lawsuit in accordance with the first or second paragraph of this Article requests that the directors and senior managers who have not paid up the capital contribution bear the corresponding liability for failing to fulfill the obligations stipulated in the first paragraph of Article 147 of the Company Law, the people's court shall support it. After the directors and senior management assume responsibility, they may recover from the defendant shareholders. It can be seen that in the process of operation after the establishment of the company, the main body of the shareholders who fail to fulfill the obligation of capital contribution and assume management responsibility is the senior management personnel of the company, excluding shareholders. However, the failure to pay the subscribed capital contribution is the failure of the shareholders to make capital contributions arising from the company's operation, so it is not appropriate to order the promoter shareholders to bear joint and several liability for this.
3.From the perspective of the unity of rights and responsibilities, under the paid-in system, the capital contribution obligation should be fully completed at the establishment stage, which is part of the performance of the establishment duties by all the promoters, and they have the obligation to urge and verify the shareholders' capital contributions. For the subscribed capital contribution, the company does not need to be paid when it is established, but at the expiration of the subscription period, the company is mainly operated and managed by directors and senior managers, not led by the promoter, and even the promoter shareholder may no longer be a shareholder. Based on the fact that the promoter shareholders no longer have the obligation to supervise and verify the subscribed capital contributions, they are jointly and severally liable to each other, which violates the legal principle of "unity of rights and responsibilities".
4.From the perspective of fairness, it is unfair to allow a minority shareholder of a promoter to bear joint and several liability for the failure of other promoters to make large subscribed capital contributions to other promoters when the company does not hold any position, or even after leaving the company and does not enjoy any management responsibilities of the company, and the interests of the promoters are not fully respected and protected.
Judge's tip
While the Company Law confers special rights on the promoter shareholders, it also imposes special obligations on them, such as the joint and several liability of the promoters for the paid-in capital contribution at the establishment stage of the company in this case. With power comes responsibility, and "promoter", "shareholder", "boss", etc. are not empty names, but are accompanied by corresponding responsibilities and obligations. Before starting or investing in a company to become a promoter or transfer equity to become a shareholder, it is necessary to have a detailed understanding of the relevant provisions of the Company Law and other laws, consult legal professionals, fully understand the legal risks, take precautions against various risks, and then make a prudent decision. Don't leave anything to chance, don't wait until after the "accident", and regret it.
As a promoter shareholder, do not think that everything will be fine if your capital contribution is in place, and you must also perform the obligation of urging and verifying the paid-in capital contributions of other shareholders in the establishment stage of the company to ensure that the paid-in capital contributions of other shareholders are also in place, otherwise you may be judged to be jointly and severally liable for the capital contribution obligations of other shareholders.
At the same time, it should be noted that the Company Law was just revised at the end of December 2023 and came into effect on July 1, 2024. Article 50 of the Company Law, as amended in 2023, stipulates that if a shareholder fails to actually pay the capital contribution in accordance with the provisions of the articles of association at the time of the establishment of a limited liability company, or the actual value of the non-monetary property actually contributed is significantly lower than the subscribed capital contribution, the other shareholders at the time of establishment shall be jointly and severally liable with the shareholder to the extent of insufficient capital contribution. It can be seen that Article 50 of the newly revised Company Law in 2023 is a reaffirmation and improvement of the provisions of Article 13, Paragraph 3 of Interpretation III of the Company Law, emphasizing that when a company is established, the promoters fail to actually pay capital contributions in accordance with the provisions of the articles of association, and the promoters will bear joint and several liability.
*: Beijing No. 2 Intermediate People's Court Golden Scale.
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