Shareholders who have not fulfilled their capital contribution obligations shall not be required to pay in advance due to company debts.
[2] Compiled from: Huaiyin District Court
[3] If a creditor claims that a company is unable to repay due debts and requests shareholders whose capital contribution period has not yet expired to assume supplementary compensation liability for the company’s unpaid debts within the scope of their unpaid contributions, will the court support this?
Case review
[4] On January 26, 2018, Guoqiang Company was established and registered, with Zhang as one of the shareholders, subscribing a capital contribution of 40 million yuan, a contribution ratio of 40%, and a contribution deadline of March 18, 2050. On March 29, 2018, Wang transferred 1 million yuan to Guoqiang Company, with the transfer note marked as "loan." Guoqiang Company issued an IOU to Wang, stating that the company borrowed 1 million yuan from Wang, with an expected repayment date before April 15, 2018. Later, Guoqiang Company failed to repay the loan. Wang sued Guoqiang Company and Zhang in Huaiyin District Court, requesting a judgment ordering Guoqiang Company to repay the 1 million yuan loan and Zhang to assume joint supplementary compensation liability for the 1 million yuan loan within the scope of the unpaid 40 million yuan principal and interest. Guoqiang Company and Zhang did not appear in court and did not submit a defense.
[1] Court Opinion
[5] The focus of the dispute in this case is: Should Zhang bear the repayment liability?
[6] The court, after review, held that a lawful loan relationship is protected by law. In this case, Guoqiang Company borrowed 1 million yuan from Wang, as evidenced by the IOU and transfer voucher, and the court supports this. Guoqiang Company shall repay 1 million yuan to Wang.
[1] Regarding whether Zhang Mou bears liability for repayment. This court holds that under the registered capital subscription system, shareholders are legally entitled to the benefit of time limits. Guoqiang Company is a limited liability company, and the prerequisite for its shareholders to assume supplementary compensation liability for company debts before the expiration of their capital contribution period is that the company, as the subject of enforcement, has no property available for execution after the people's court has exhausted all enforcement measures, has already met the conditions for bankruptcy but has not applied for bankruptcy, or after the company's debts arise, the shareholders' meeting resolves or otherwise extends the shareholders' capital contribution period. According to Guoqiang Company's business registration information, Zhang Mou's capital contribution date is March 18, 2050, and the subscription period has not yet expired. Wang Mou has also failed to provide evidence proving that Guoqiang Company falls under the aforementioned circumstances. Wang Mou alleges that Guoqiang Company used the loan in question for Zhang Mou's personal consumption and non-company business matters, and that the company lacks the ability to repay its debts, but has not submitted valid evidence to support this claim, so this court does not accept it. Therefore, Wang Mou's request for Zhang Mou to assume repayment liability is not supported by this court.
Company Law of the People's Republic of China
[2] Article 26
[3] The registered capital of a limited liability company is the total amount of capital subscribed by all shareholders as registered with the company registration authority. Where laws, administrative regulations, or decisions of the State Council have other provisions on the paid-in registered capital or the minimum registered capital of a limited liability company, those provisions shall prevail.
[4] Enterprise Bankruptcy Law of the People's Republic of China
[5] Article 35
[6] After the people's court accepts a bankruptcy application, if the debtor's capital contributors have not fully fulfilled their capital contribution obligations, the administrator shall require such capital contributors to pay the subscribed capital contributions, without being subject to the time limit for capital contribution.
[1] The author's perspective
The "Nine Civil Minutes" issued by the Supreme People's Court clearly stipulates that under the registered capital subscription system, shareholders legally enjoy the benefit of term limits regarding whether shareholder capital contributions should be accelerated. If a creditor claims that a company cannot pay its due debts and requests that a shareholder whose contribution term has not yet expired bear supplementary compensation liability for the company's unpaid debts within the scope of their unpaid contribution, the people's court will not support it. However, the following circumstances are exceptions: first, when the company is the subject of enforcement proceedings and the people's court has exhausted all enforcement measures but finds no property available for execution, and the company already meets the conditions for bankruptcy but does not apply for bankruptcy; second, when after the company's debt arises, the shareholders' meeting or other means extend the shareholders' contribution term. After the company's bankruptcy or compulsory liquidation, its legal personality will terminate, and upon termination, the shareholders' contribution term will expire, making it impossible for shareholders to fulfill their contribution obligations according to the original schedule. If the company cannot require shareholders to make early contributions, shareholders may evade their contribution obligations, thereby harming the legitimate interests of the company's creditors and other shareholders. In this case, Zhang's contribution term had not expired, and Guoqiang Company did not have the above exceptions, so Zhang legally enjoys the benefit of the subscription term and does not need to bear liability in this case.
