Wahaha AD calcium milk, the childhood memories of a generation
*Materials** on the Internet).
Hangzhou Wahaha Group was founded in 1987, under the leadership of the founder Zong Qinghou, continuous development, forge ahead, 35 years of cumulative sales of 860.1 billion yuan, profits and taxes of 174 billion yuan, taxes of 74.2 billion yuan. Wahaha has 81 production bases and 187 subsidiaries in 29 provinces, municipalities and autonomous regions across the country, with nearly 30,000 employees, and has been in the leading position in the industry in terms of scale and efficiency for 20 consecutive years, ranking among the top 500 Chinese enterprises, China's top 500 manufacturing enterprises, and China's top 500 private enterprises (data** on Wahaha's official website). In 2010, Zong Qinghou topped the Hurun Global 100 List for the first time. On October 12, 2012, Forbes released the 2012 Forbes China Rich List, and Zong Qinghou, chairman of Wahaha, re-ascended to the throne of the richest man with a net worth of $10 billion. (Information ** on the Internet).
As a leading enterprise in China's beverage industry, after the death of the founder of Wahaha, Mr. Zong Qinghou, the issue of equity inheritance gradually surfaced, becoming a key issue affecting Wahaha's future development. Can his only daughter Zong Fuli successfully inherit Wahaha's equity? This article will decipher the legal risks of equity inheritance and the corresponding preventive measures from the judicial cases of equity inheritance disputes, and delve into the important role of equity inheritance in family enterprises, as well as the challenges and opportunities they face, in order to arouse the attention and thinking of other family enterprises on equity inheritance issues.
*Materials** on the Internet).
1. Legal provisions on equity inheritance
In China, equity inheritance is regulated by laws and regulations such as the Company Law and the Civil Code. According to these laws, the equity held by the shareholders can be inherited as an inheritance, and the heirs can acquire the equity through inheritance and become the new shareholders of the company. However, in the process of equity succession, it is also necessary to consider the restrictions and impacts of internal regulations such as the articles of association and shareholders' agreement on equity succession. Article 75 of the current Company Law stipulates that 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. The new "Company Law" divides the issue of equity inheritance into *** and joint-stock companies separately, but its substance is basically the same as the current company law. Article 90 After the death of a natural person shareholder, his lawful heirs may inherit the shareholder qualifications; However, unless otherwise provided in the Articles of Association. Article 167:After the death of a natural person shareholder, his lawful heirs may inherit the shareholder qualifications; However, unless otherwise provided in the articles of association of the shares with restricted share transfers***.
2. Legal risks that may arise in equity inheritance
1. Struggle for rights between heirs
According to the provisions of the current company law, after the death of a natural person shareholder, his legal heirs can inherit the shareholder qualifications. The heir must be a legal heir before obtaining shareholder qualification. The legal heir can inherit the shareholder qualifications, become a shareholder of the company, enjoy the rights and interests of the shareholder, and bear the shareholder responsibility. Heirs include heirs of bequests, maintenance agreements, wills, and statutory successions. According to Article 1123 of the Civil Code, after the commencement of inheritance, it shall be handled in accordance with statutory inheritance; If there is a will, it shall be handled in accordance with the testamentary inheritance or bequest; Where there is a bequest and maintenance agreement, it shall be handled in accordance with the agreement. The inheritance of shareholder qualifications is the same as the inheritance of other legal property, and the bequest and maintenance agreement and testamentary succession are superior to the statutory inheritance. Among them, the scope of heirs in legal succession includes:
First order: spouse, children (including legitimate children, illegitimate children, adopted children and dependent stepchildren), parents (including biological parents, adoptive parents and dependent stepparents);
Second order: siblings (including siblings of the same parents, half-siblings, adoptive siblings, and step-siblings who are in a dependent relationship.) ), grandparents, maternal grandparents.
After the inheritance begins, it is inherited by the first-order heirs, and the second-order heirs do not inherit; If there is no first-order heir, the second-order heir shall inherit.
In judicial practice, in the event of the succession of shareholder qualifications, the number of people who can exercise the right of inheritance may be very large, and at the same time, there is a dispute between the heirs about the inheritance of equity, that is, who among the several heirs will inherit the shareholder qualifications? how to distribute the share of equity among the heirs, etc. The plaintiff Wei and the decedent Chen are husband and wife, and the two defendants Chen X 1 and Chen X 3 are father and daughter. After the death of the decedent on November 21, 2020, the original defendant had a dispute over the 80% equity of the art school company held by him during his lifetime when the estate was divided. The plaintiff then filed a lawsuit with the court, requesting the court to divide the equity share of Chen, a shareholder of the art school company, in accordance with the law. The court ascertained that the company was established on March 30, 1998, during the existence of the marital relationship between Chen and Wei, and the shareholders of the company were only Chen and Wei, and the company should be regarded as jointly owned by the husband and wife. After the death of the decedent Chen, because he did not have a will or bequest for Chen's company's equity share and shareholder qualifications during his lifetime, the corresponding estate of the decedent Chen should be inherited by his first-order heirs Wei, Chen1, and Chen3 in accordance with the statutory inheritance method. The court finally ruled that 50% of the shares and shareholder qualifications of the company under the name of the decedent Chen should be inherited by Wei, Chen1 and Chen3, of which Wei held 66 of the company66% of the equity share, Chen 1 and Chen 3 each hold 16 of the company67% equity share. [Reference Judgment Document: (2022) Jing 0115 Min Chu No. 8081].
2. The company may refuse to inherit the equity of the heirs
The equity of a limited liability company, by its very nature, includes both the property rights of the shareholders and the identity rights of the shareholders. There is little controversy in general practice about the inheritance of the part of the property rights of shareholders. With regard to the inheritance of identity rights, i.e., shareholder qualifications, the proviso provided for in Article 75 of the current Company Law indicates that, in principle, shareholder qualifications can be inherited, but in order to protect the company's humanity or other commercial considerations, shareholders are allowed to make separate agreements on the succession of shareholder qualifications in the articles of association, which generally refers to prohibiting inheritance or restricting inheritance. If the shareholders have made corresponding provisions on the issue of equity inheritance in the articles of association, and the articles of association have not violated the mandatory provisions of laws and administrative regulations, and the shareholders and the company have always complied with the provisions of the articles of association, the court should respect the autonomous arrangement of the company's articles of association. In judicial practice, the unclear agreement on the inheritance of equity qualifications in the articles of association of the company is one of the important reasons for the frequent occurrence of such disputes.
Zhou's father, Zhou Mouxin, had 42% of the equity in Jiandu Company before his death, and Zhou Mouxin left a will before his death, and all the equity involved in the case was inherited by Zhou, because Zhou's other heirs had no dispute about the will, so Zhou, as the plaintiff, filed a lawsuit with Jiandu Company as the defendant, demanding to inherit his father's shareholder qualifications, and his subject qualifications were in accordance with the law. As to whether its claim can be supported, it mainly depends on how to view the provisions of the articles of association of Jiandu Company. In this case, the company did not explicitly stipulate in the articles of association the treatment of the shareholder's equity after his death, but stipulated in the last revised articles of association that "shareholders who retire at normal age (except for re-employment), long illness, long leave or death shall go through the equity formalities in a timely manner, and if the company has accumulated surplus (audited and confirmed by an accounting firm) when the shareholder withdraws shares, he shall enjoy a return of less than 20% per year according to his or her shareholding amount during the holding period". The court of second instance held that Jiandu Company had the characteristics of a high degree of compatibility and closedness, and that the deceased shareholder should go through the equity transfer procedures in a timely manner, and that the exclusion of shareholder qualification inheritance was the true expression of the articles of association. Moreover, through the resignation of other shareholders, the company's withdrawal of shares once again confirms that the company's articles of association have excluded the inheritance of shareholder qualifications. The court finally ruled that Zhou's request to confirm his shareholder qualifications and request Jiandu Company to go through the procedures for equity change lacked factual and legal basis and was not supported. [Reference Judgment Document: 2018 Supreme Law Min Zhong No. 88].
3. Other shareholders of the company are eyeing each other
Article 16 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 (IV) When a natural person shareholder of a limited liability company changes due to succession, and other shareholders claim to exercise the right of first refusal in accordance with the provisions of paragraph 3 of Article 71 of the Company Law, the people's court shall not support it, unless otherwise provided in the articles of association of the company or otherwise agreed by all shareholders. Shareholder qualification inheritance is a way to inherit the equity, which is different from the ordinary equity transfer, and the company's articles of association or all shareholders do not support other shareholders to exercise the right of first refusal unless there is a special agreement. Succession, as one of the ways to obtain shareholder qualifications, is not the same as equity transfer in the general sense, so the provisions on the exercise of preemptive rights by shareholders in limited liability companies do not automatically apply.
The registered capital of the defendant company is 100 million yuan, and the registered shareholders of the company are the third person Liang Mouwen (holding 25% of the shares) and the third party Wu Mouyu (holding 37% of the shares).5%), the third person Xu Moubiao (holding 1875%）。Zhang (holding 1875%), Zhang died of illness, according to Zhang's will, the plaintiff Han Moubo is Zhang's spouse, should enjoy the status of the defendant shareholder and hold the defendant company1875% equity. The court was requested to confirm that he was a shareholder of the defendant company, and the third party, Xu Moubiao, demanded that the right of first refusal be claimed based on the actual value of the company's assets. After ascertaining the facts, the court found that there was no legal and contractual basis for the exercise of the right of first refusal proposed by the third party, Xu Changbiao, in the absence of a special agreement in the articles of association of the defendant company. The court finally confirmed the defendant company under Zhang's name1875% of the equity is owned by the plaintiff Han Moubo. [Reference Judgment Document: 015 Zha Min Er (Shang) Chu Zi No. 574].
3. Analysis of Wahaha's equity succession
Through the above legal analysis in this article, let's take a look at Wahaha's equity inheritance issue: judging from the company information currently queried on the Internet, Wahaha involves many companies, such as 217 companies served by Zong Qinghou, 104 companies served by Zong Fuli, and some companies have cross-shareholdings, and the shareholding structure is relatively complex. From the perspective of the intricate equity relationship, it can be roughly divided into two systems, the Wahaha system in charge of Zong Qinghou and the Hongsheng system in charge of Zong Fuli. The Wahaha system in charge of Zong Qinghou is mainly involved in equity inheritance, and for the sake of convenience, we will only take Hangzhou Wahaha Group as an example to illustrate.
First of all, at the level of legal heirs, combined with the current online disclosure information, Zong Qinghou only has one wife and one daughter, and if there is no specific testamentary arrangement, his wife and daughter are the legal heirs and have the right to inherit the equity held by Zong Qinghou in Wahaha Group Company. Second, whether Wahaha's internal articles of association prohibit or restrict the succession of shareholder qualifications may be the key to whether Zong Fuli can inherit the equity. Third, whether other shareholders can exercise the right of first refusal, and whether the articles of association of the company provide otherwise. At present, judging from the equity of Wahaha Group Company inquired by Tianyancha, the existing shareholders of the company are Hangzhou Shangcheng District Cultural and Commercial Tourism Investment Holding Group *** referred to as "Shangcheng Cultural Tourism"), Zong Qinghou, Hangzhou Wahaha Group *** Grassroots Trade Union Joint Committee (Employee Stock Ownership Association). It remains to be seen whether other shareholders will assert the right of first refusal to exercise Zong Qinghou's equity in accordance with the articles of association.
*Materials** on the Internet).
To sum up, there should be no problems at the level of Zong Fuli's legal heir, and she has been serving in Wahaha for many years, and her inheritance shareholder qualification is obviously more beneficial to the development of the enterprise. As for whether Zong Fuli can successfully inherit the equity in the end, it still depends on the internal articles of association of each company, and whether there are additional arrangements or restrictions on equity inheritance. Issues such as whether the shareholder qualification can be inherited, such as when the shareholder qualification can be obtained and when the shareholder rights can be exercised, are also common issues of dispute in judicial practice. Equity succession may lead to adjustments in the company's governance structure and business strategy. The new shareholders may bring new management concepts and development directions, and there may be differences with the original shareholders and management. How to achieve a smooth transition of equity inheritance while maintaining the stable development of the company is an important challenge faced by Wahaha.
Fourth, the way to solve the smooth inheritance of equity
As the older generation of entrepreneurs gets older, their children's status and influence in the company gradually increases. Family members may have different business philosophies and interests, leading to disputes and power struggles in the process of equity succession. This internal conflict may not only affect the stable operation of the company, but also may lead to legal disputes and negative impacts. On the issue of equity inheritance, how private enterprises, especially some family enterprises, can smoothly and effectively inherit has become an urgent problem to be solved.
1. Formulate a clear equity succession plan
For natural person shareholders, a clear equity succession plan should be planned in advance, and key elements such as the selection criteria, timing and method of succession should be clarified. By making a detailed plan, you can reduce the possibility of family disputes and power struggles, and ensure the smooth progress of equity succession.
2. Strengthen internal communication and consultation
Communication and consultation between family members, shareholders and management should be strengthened, and the opinions and demands of all parties should be fully listened to, and consensus and compromise should be sought. By strengthening internal communication and consultation, potential contradictions and differences can be resolved, and a harmonious and stable internal environment can be created for equity inheritance.
3. Improve the company's articles of association and shareholders' agreement
The company should improve the internal regulations such as the articles of association and the shareholders' agreement, and clarify the relevant terms and restrictions on equity succession. By improving the internal regulations, the behavior and decision-making procedures in the process of equity inheritance can be standardized, such as whether the shareholder qualification can be inherited by the heirs after the death of the shareholder; If the qualifications of inherited shareholders are allowed, the procedures for the succession of shares by multiple heirs can be stipulated, as well as the treatment plan when the number of shareholders exceeds the maximum number of shareholders in the legal capacity. It is stipulated that if the inheritance of shareholder qualifications is not allowed, it may be stipulated that its equity shall be acquired by the company or other shareholders in a reasonable (clear and specific determination method), and the heir can only inherit the resulting equity transfer money.
Combined with a team of professional lawyers, we provide legal advice, risk assessment and dispute resolution services for the company to ensure that the equity inheritance process meets the requirements of laws and regulations, and ensure the legitimacy and effectiveness of equity inheritance.
Finally
Wahaha has experienced the classic battle of "Dawa equity", I believe that the elder of the sect should make corresponding and perfect arrangements at the equity level, and we also expect Wahaha to be not only our childhood memories, but also hope that Wahaha will continue to create legends among the new generation of ** people.
The author of this article: lawyer Guo Bin, proofreader: Tian Xiaoye, paralegal].
Special Statement
The full text and opinions are for reference only and should not be regarded as issuing any form of legal opinion or recommendation. If you need to ** or quote any content of the article, please send a private message to communicate the authorization and indicate ** at the beginning of the article**.
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Zhengde Commercial Legal Service Team.
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