A sponsor agreement in a narrow sense is an agreement signed by the parties to cooperate in the early stages of the establishment of the company. In order to clarify the rights and obligations of each sponsor in the establishment of the company, it is jointly signed by the partie

Preface

In a narrow sense, the sponsor agreement (also known as shareholder agreement, investment agreement, cooperation agreement, establishment agreement, etc.) is an agreement jointly signed by the parties to cooperate in the early stage of the establishment of the company in order to clarify the rights and obligations of each promoter in the process of establishing the company. In practice, in most of the sponsor agreements reviewed by this lawyer, the content of the agreement is not simply limited to the rights and obligations arrangements of the sponsors during the establishment of the company. The more core content is often the arrangements of each promoter for the shareholders' rights and interests enjoyed by the company after the establishment of the company and the arrangements for the company's business management. Since the sponsor agreement covers a wide range of content in practice, this also leads to legal issues such as biased understanding of the content and nature of the agreement, confusing its relationship with the company's articles of association and other cooperation agreements. This article uses two cases and put forward two practical opinions to more effectively realize the role of the sponsor agreement, clarify the relationship between the sponsor agreement and the company's articles of association and other important documents, and help everyone avoid the legal risks of the sponsor agreement.

1. Selected case guidelines

(I) Recognize the cooperative relationship and clarify the nature of the agreement--the company establishment contract? Land use rights transfer contract? Cooperate to develop real estate contracts? ( Hainan Higher People's Court (2012) Qiongmin Erzhong No. 211)

Brief description of the case:

Rongyuan Company and Jinkai Company signed a "Project Cooperation Agreement", which agreed that Jinkai Company should use its own 30 acres of state-owned industrial land use as capital contribution, and Rongyuan Company provides all funds needed to change the land use and project construction. The two parties jointly set up a project company for real estate project development and construction, and allocate real estate according to proportion. After the agreement was signed, Rongyuan Company successively paid 10 million yuan to Jinkai Company. In 2019, Jinkai Company signed a project investment and shareholding contract with a third-party company using the land involved as capital contribution and established a project cooperation company.

Focus of dispute:

The nature of the "Project Cooperation Agreement" judgment result: The "Project Cooperation Agreement" in this case should be classified as a cooperative development real estate contract, not a company establishment contract defined by the first instance court, nor is it a land use right transfer contract claimed by the plaintiff.

Essential of Judgment:

The second instance court held that according to Article 14 of the "Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Contract Disputes in State-owned Land Use Rights Contracts", a contract for cooperative development of real estate by the parties refers to an agreement concluded by the parties to provide the right to transfer land use, funds, etc. as joint investment, sharing profits and sharing risks, and co-development of real estate. According to the agreement of the "Project Cooperation Agreement" signed by Rongyuan Company and Jinkai Company on August 26, 2008, Jinkai Company invested with its own 30 acres of state-owned industrial land use rights, while Rongyuan Company provided all funds for changing the land use and construction. The two parties jointly established a project company for real estate development and construction, and allocated the property in proportion. shows that the Project Cooperation Agreement signed by Rongyuan Company and Jinkai Company is a real estate development agreement. The establishment of a project company for real estate development is only a way of cooperation, namely close cooperation. Jinkai Company, Hongmeidao Company and Deyihe Company’s claim that the agreement is called cooperation, but it is actually a company’s agreement cannot be established. According to Article 24 of the "Interpretation of the Supreme People's Court on the Application of Laws in the Trial of Contract Disputes in State-owned Land Use Rights Contracts", only if the parties who provide land use rights stipulate that the cooperative development real estate contract does not bear business risks and only charge fixed interests, they should be deemed to be a land use rights transfer contract. In this case, the "Project Cooperation Agreement" signed by Rongyuan Company and Jinkai Company did not agree that Jinkai Company will not bear business risks, but will only charge fixed interests; and according to the agreement, the two parties adopted a close cooperation to establish a project company. Close cooperation itself means that both parties share risks and share profits.The essence of Rongyuan Company's payment of a total of 10 million yuan to Jinkai Company is that both parties can adjust the proportion of shares held in the project company to achieve the purpose of adjusting the proportion of real estate distribution. Based on this, the claim that the Project Cooperation Agreement signed by the two parties of Rongyuan Company is a land use right transfer agreement cannot be established. This "Project Cooperation Agreement" is the true intention of both parties and does not violate the mandatory provisions of laws and regulations. It should be valid; the original trial determined the agreement as a company establishment contract and determined the cause of this case as a company establishment dispute, and this court will correct it.

(II) Promoter Agreement and Company Articles of Association--The Company Articles of Association exclude the effect of the promoter agreement? (Shanghai Second Intermediate People's Court (2012) Shanghai Second Intermediate People's Court (Shanghai Second Intermediate People's Court) No. 65)

Brief description of the case:

Chen Moumou and 23 other natural person shareholders concluded a "Shareholder Investment Agreement" of Hongsheng Company and agreed that if the shareholders agree to the agreement, the shareholders' meeting can cancel the shareholder's qualification with the consent of two-thirds of the voting rights. Later, Chen Moumou was sentenced to be disqualified from his shareholder qualification by the company. The content of the resolution Li Moumou's lawsuit to cancel his investor qualifications and hand over his original shareholders' equity to the shareholders' meeting for processing is invalid.

Focus of dispute:

After the company's articles of association is formally formulated, the "Stockholder Investment Agreement" previously concluded by shareholders is still legally binding on shareholders, that is, whether the effectiveness of the investment agreement will be terminated naturally after Hongsheng Company completes the conversion and the corresponding company's articles of association are formulated.

Judgment result:

As long as the "Stockholder Investment Agreement" does not violate the mandatory provisions of the law or conflicts with the provisions of the company's articles of association, it will have normative and binding effect on each contracting investment shareholder in accordance with the law.

Referee Essence:

The second instance court held that a shareholder investment agreement usually refers to an agreement concluded by all investors before the establishment of the company. Its main function is to indicate the purpose of the promoter's establishment of the company, determine the basic nature and structure of the company, and allocate and coordinate the rights and obligations between the promoters. The essence of the agreement should belong to a contract and be regulated and adjusted by the general rules of my country's " Contract Law " in accordance with the law. As for the company's articles of association signed by shareholders who subscribe to registered capital during the establishment of a company, it has the nature of corporate autonomy norms and falls within the scope stipulated in my country's " Company Law " in accordance with the law, and has standardized and restrictive effect on signed shareholders, companies, company directors, supervisors and other personnel. Therefore, the shareholder investment agreement and the company's articles of association are two types of agreement arrangements formed by investors. The two should be parallel to each other rather than being in the front and back legal relationship. Based on this, whether the validity of the shareholder investment agreement exists or not has any correlation with the formulation of the company's articles of association. It is limited by the provisions of the agreement itself and the relevant adjustments and regulations of my country's "Contract Law" according to law. In fact, in the shareholder investment agreement concluded by investors, there are both matters before the establishment of the company, and the rights and obligations between shareholders and between shareholders after the establishment of the company, as well as the corporate governance structure. And for various reasons, many of these contents were not included in the subsequent articles of association. Moreover, sometimes there are certain agreed contents in the shareholder investment agreement that are inconvenient to include in the company's articles of association. In addition, the contents of the agreements specially agreed between many shareholders cannot be included in the company's articles of association due to the industrial and commercial administrative departments requiring the drafting of the company's articles of association. In this case, the shareholders' investment agreement actually assumes the function of a regular agreement outside the company's articles of association. Therefore, after the company completes the industrial and commercial registration and establishment of , the shareholder investment agreement concluded by all investors still has legal effect. It involves the content of the agreement with the rights and obligations between shareholders and between shareholders after the company is established. As long as it does not violate the mandatory provisions of the law or conflicts with the provisions of the company's articles of association, it will have a normative and binding effect on each contracting investment shareholder in accordance with the law. It should be noted that the spirit of recognition of this effect is reflected in the legislation of our country's company. Article 84, paragraph 2 of the "Company Law" stipulates: "If the promoter does not pay the capital in accordance with the provisions of the preceding paragraph, he shall bear the liability for breach of contract in accordance with the promoter's agreement." The above provisions indicate that the legal effect of the promoter's agreement is still confirmed after the company is established. The above analysis opinions show that after the establishment of the company, the shareholders' investment agreement will not be naturally terminated or replaced by the validity of the company's articles of association after the establishment of the company, but in the judicial proceedings in specific cases, the two have different proof and application objects, and there is no problem of which of the two shall prevail.

2. Practical Guide

(I) In combination with the purpose of establishing a company, carefully formulate and design the core terms of the sponsor agreement

The establishment of a limited liability company is the entire activity process of the founder from mutual negotiation to establishing a company to obtaining an industrial and commercial registration and obtaining a business license for the enterprise. It specifically includes a series of legal acts such as conclusion of a establishment agreement, formulating a company articles of association, paying capital contribution, establishing a company institution, and handling company registration. Therefore, in order to avoid the risk of "the establishment contract of a company is similar to the case 1, which is actually the cooperative development contract " or "the name is the cooperative development contract, but the establishment of a company contract" and combined with the previous experience of drafting agreements of this lawyer, suggests that each promoter should set up the following core terms when signing the "Initiator Agreement":

(II) Multiple measures to ensure that the "Sponsor Agreement" and the articles of association are applied in coordination

After the company is established, the company's articles of association, details and other legal documents can provide the company with a complete set of governance rules. But in these prior company agreements, such as the subscription of shares, loan repayment plans, and other important issues that usually do not appear in the company's official documents, the sponsor often hopes that the company will continue to be applicable after its establishment.Therefore, in order to avoid conflicts between the sponsor agreement and the articles of association or the inability to adjust the established company and shareholders, this lawyer suggests that the following measures can be taken:

. The agreement directly stipulates the applicable rules

When signing the sponsor agreement, the relevant terms should be set directly to stipulate the relevant contents of this agreement and the applicable rules for the articles of association. For example: "If all parties unanimously agree that there is a conflict between the agreement in this agreement and the company's articles of association, in principle, the company's articles of association shall prevail; if the company's articles of association does not agree, the agreements of this agreement shall prevail."

2. After the company is established, the company and all shareholders will recognize the agreement in the promoter's agreement in writing.

3. Shareholders agree separately

If personalized arrangements are made for the inter-share interests of the company after the establishment of the company in the promoter's agreement, in order to avoid defects in the effectiveness of the agreement due to the successful establishment of the company, shareholders with special equity arrangements can sign a new "Shareholder Agreement" in accordance with the provisions of the articles of association.

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