Modify shareholders' capital contribution period, which involves the capital contribution period interests of each shareholder of the company. So is the resolution of the company shareholders' modification of the capital contribution period valid?
Referral Rules
1. Company shareholders abuse their controlling position and pass the amendment of the capital contribution period resolution in a majority-based manner to harm the term rights and interests of other shareholders. If other shareholders request to confirm that the resolution is invalid, they should support - Dispute case of resolution dispute between Yao Moucheng and Hongda (Shanghai) Investment Management Co., Ltd., Zhang Mou and other companies
Case summary: The term of the company's registered capital contribution determined by the articles of association of a limited liability company or the shareholder's capital contribution agreement is the agreement reached between shareholders. Except for situations where there are other reasonable and urgent reasons that require the capital contribution period to be modified, the resolution to amend the capital contribution period shall be unanimously approved by all shareholders. If a company shareholder abuses his controlling position and passes the resolution to amend the capital contribution period in a majority decision, harming the term rights and interests of other shareholders. If other shareholders request to confirm that the resolution is invalid, the people's court shall support it.
Case No.: (2019) Shanghai 02 Minzhong No. 8024
Trial Court: Shanghai Second Intermediate People's Court
Source: "Gazette of the Supreme People's Court" 2021 Issue 3 (Total Issue 293)
2. The shareholders' meeting resolution of shortening the capital contribution period passed by the controlling shareholder in a majority decision is invalid ——Shanghai Free Trade Zone Coffee Trading Center Co., Ltd., Shanghai Junke Business Consulting Co., Ltd., and Shanghai Langhong Investment Management Co., Ltd., the company's controlling shareholder uses its dominant position as a controlling shareholder to pass the shareholder's resolution to shorten the capital contribution period by a majority, which infringes on the legitimate rights and interests of other shareholders, so the shareholder's meeting resolution should be deemed invalid.
Case No.: (2018) Shanghai Minshen No. 188
Trial Court: Shanghai Higher People's Court
Source: China Judgment Document Network Release Date: 2018-04-01
3. The content of the shareholders' meeting resolution formed by the company to advance the capital contribution period of the small shareholders formed by the company to pass the majority decision invalid -Shanghai Chaolu Business Consulting Co., Ltd. and Ni Mouyan Company Resolution Confirm the Dispute Case
Case Summary: The joint actors used the principle of the majority decision of the shareholders' meeting to pass the shareholders' meeting resolution that only targets small shareholders and deprives small shareholders of the capital contribution period, which constitutes a shareholder's abuse of rights to damage the interests of other shareholders, which violates the mandatory provisions of the Company Law , and should be invalid.
Case No.: (2021) Shanghai 02 Minzhong No. 8430
Trial Court: Shanghai Second Intermediate People's Court
Source: China Judgment Document Network Release Date: 2022-01-1
4. The shareholders' meeting resolution that determines the premature expiration of shareholders' capital contribution period by capital majority decision, deprives small shareholders of the capital contribution period interests as company shareholders is invalid ——In a certain country, Zhejiang Liou Environmental Technology Co., Ltd. and other companies' resolution dispute case
Case Summary: The capital majority decision rules should not be applied to the modification of the capital contribution period. Except for other reasonable and urgent reasons that require the modification of the capital contribution period, the shareholders' meeting resolution to modify the capital contribution period shall be unanimously approved by all shareholders. The resolution of the shareholders' meeting in question determines that the shareholders' capital contribution period expires early in the form of a capital majority decision, depriving the small shareholder of the capital contribution period as a shareholder of the company and limiting the legitimate rights and interests of the small shareholders. Therefore, the content of the resolution related to the early maturity of the shareholders' capital contribution is invalid.
Case No.: (2021) Zhejiang 10 Minzhong No. 2840
Trial Court: Taizhou Intermediate People's Court, Zhejiang Province
Source: China Judgment Document Network Release Date: 2021-12-28
5. The shareholder meeting resolution passed by the controlling shareholder abuses the majority decision principle of shortening the capital contribution period is invalid -Feng Mouliang and Luoyang Jinhe Jianxin Agricultural Technology Co., Ltd. Company resolution dispute case
Case Summary: The controlling shareholder of the company takes advantage of the dominant position of its controlling shareholder and shortens the capital contribution period with a majority decision, which infringes on the reasonable expected interests of the small shareholders for the company's capital contribution.Because the capital contribution period involves the basic interests of the shareholders themselves in advance, it plays a decisive role in whether they invest. The company involved in this case did not provide sufficient evidence to prove the rationality and urgency of requiring small shareholders to contribute in advance, nor did it determine the amount and time limit of funds based on the shareholders' economic strength and the urgency of funds required for the company's operation. It should be considered that the major shareholder abused the principle of capital majority, which constituted an oppressive abuse of the small shareholders' rights. According to the provisions of the Company Law, the resolution of the shareholders' meeting should be invalid.
Case No.: (2021) Yu 03 Minzhong No. 568
Trial Court: Luoyang Intermediate People's Court, Henan Province
Source: China Judgment Document Network Release Date: 2021-04-22
6. The content of shareholders' meeting resolution on shareholders' accelerated capital contribution is the act of shareholders who account for the majority of the shares abuse the majority voting rights, infringing on the interests of other shareholders' basic shareholders, and should be invalid -Nanjing Kejin New Materials Research Institute Co., Ltd. and Li Company's resolution confirmation of the effectiveness of dispute case
Case summary: The shareholder's capital contribution rights and investment period are the basic rights of shareholders. The company has not provided evidence to prove that it has serious operating difficulties. If the company's operation is not accelerated, the content of shareholders' accelerated investment in the shareholders' meeting resolution it passed is a behavior of shareholders with a majority share abuse of majority voting rights, lacking corresponding basis, infringing on the interests of other shareholders' basic shareholders, and it should be invalid.
Case No.: (2020) Su 01 Minzhong No. 5188
Trial Court: Nanjing Intermediate People's Court, Jiangsu Province
Source: China Judgment Document Network Release Date: 2020-08-27
Judicial Views
1. Modification of shareholders' capital contribution period does not apply to the capital contribution rules
Modification of shareholders' capital contribution period, involving the interests of the company's shareholders' capital contribution period, and it is not a general matter of modifying the company's articles of association, and the capital majority decision rules cannot be applied. The reasons are as follows:
First of all, my country implements the company capital subscription system, except where otherwise provided by law. Article 28 of the Company Law stipulates that "shareholders shall pay the capital contribution amount they subscribed in the company's articles of association in full on time", that is, the law grants the company's shareholders the capital contribution period interest and allows the company's shareholders to pay capital contributions in accordance with the capital contribution period stipulated in the articles of association. "The shareholder's capital contribution obligation can be regarded as a debt that the shareholder has to attach a term to the company, and this period is determined by the shareholders themselves. Before the term arrives, shareholders who are debtors enjoy the right to not repay the debt, and the benefits that this right can bring are called 'term interests', and claiming that 'term interests' is a statutory right granted to shareholders under the Compulsory Law ." Even if the company's creditors require the shareholders to expiry their capital contribution period to accelerate, it is only limited to the two special circumstances stipulated in the Minutes of the Nine Civil Meetings. The interests of shareholders' capital contribution period are the core essence of the company's capital subscription system and are the statutory rights of each shareholder of the company. If the company's shareholders are allowed to resolve to modify the capital contribution period in a majority decision, shareholders who account for the majority of the capital can modify the capital contribution period at any time, thereby depriving other small and medium shareholders of the legitimate rights and interests.
Secondly, modifying the shareholder's capital contribution period directly affects the fundamental rights of each shareholder, and its nature is different from the company's capital increase, capital reduction, dissolution and other matters. The matters that the latter resolutions are generally directly related to the company, but do not directly affect the inherent rights of the company's shareholders. If the shareholders who do not agree to the capital increase during the capital increase process, the equity of the subscribed or paid-in part of the shareholders has not changed, and the share ratio may be diluted only due to the capital increase. The modification of the shareholder's capital contribution period is directly related to the vital interests of each shareholder of the company. If the capital majority is allowed to be applied, shareholders who do not agree to early capital contribution may be deprived or restricted of shareholder rights due to failure to early capital contribution, which will directly affect the fundamental interests of shareholders. Therefore, modifying the shareholder's capital contribution period cannot be simply equivalent to the company's capital increase, capital reduction, dissolution and other matters, nor can it simply apply the capital majority rule.
Again, the period of shareholder investment is a consensus formed between the shareholders of the company when the company is established or the shareholders join the company to become shareholders. Although the shareholders' timely investment is the obligation of each shareholder to the company, it is essentially a consensus agreement between each shareholder, not a company's business management matter. The law allows corporate autonomy, but it must be based on the premise that it does not infringe on the legitimate rights and interests of others.During the company's operation, if there are any circumstances stipulated by law, if each shareholder needs to contribute capital in advance or expiration accelerated, it is due to legal provisions, and cannot be changed by the will of the majority shareholders by changing the will of the majority shareholders.
(Excerpt from Zhuang Longping, Li Chao, and Liu Jiang: "Rules on Capital Majority Decisions that Modify the Capital Majority Decision Period of Shareholders", published in " People's Judicial " No. 26, 2021.)
2. A company resolution that abuses capital majority decisions should be deemed invalid
The company's major shareholder violates the obligation of good faith when exercising his or her voting rights purely for the sake of pursuing his or her own or other third-party interests, and uses capital majority decisions as a means to form unfair resolutions. If the interests of the company or minority shareholders are infringed on the interests of the company or minority shareholders, it constitutes abuse of rights, and the resolutions they make are resolutions that abuse the majority decisions. There are different opinions on this theory about the effectiveness of shareholders' meeting resolutions that abuse capital majority. There are three main views: One view believes that the resolution of the shareholders' meeting is not specifically illegal, because the majority shareholder sacrifices the interests of the company or the minority shareholders to pursue the interests of oneself or third parties, regardless of the specific provisions or spirit of the company, does not exceed the framework set by the law. At most, there are reasonableness issues and are not legality issues, so it should be considered legal and valid. Another view is that if the resolution of the shareholders' meeting is determined to be made because the majority shareholder abuses the result of the majority decision, then it can be considered that the content of the resolution violates the principle of public order and good customs in and is invalid, so the resolution should be considered invalid. There is another view that the illegality of the content of the resolution made by the abuse of the majority decision should not be handled in the same way. The resolution should be revoked or confirmed to be invalid based on the specific case decision.
generally believes that in the current situation where there are no specific specific provisions on the abuse of majority decision in my country, it can be handled in accordance with and in combination with Article 20 of the Company Law. Paragraph 1 of this article clearly stipulates: "Company shareholders shall abide by laws, administrative regulations and the company's articles of association, exercise shareholder rights in accordance with the law, and shall not abuse shareholder rights to harm the interests of the company or other shareholders." Paragraph 2 of this article further clarifies: "If a company shareholder abuses shareholder rights to cause losses to the company or other shareholders, he shall bear the liability for compensation in accordance with the law." Resolutions passed by shareholders' abuse of capital majority decisions can also be acts that violate Article 20 of the Company Law, and the rules prohibiting the abuse of rights are actually mandatory provisions of the law. Since the abuse of majority decision violates the principles of prohibiting the abuse of rights and honesty and trustworthiness, it is in nature a violation of the mandatory law norms. Therefore, the abuse of the resolutions of the company's shareholders' meeting, shareholders' meeting, or board of directors in the majority decision can be regarded as a violation of the law and administrative regulations and invalid. In addition, according to the legal principles of abuse of rights in civil law, if the exercise of rights is a legal act, when the exercise of rights constitutes abuse of rights, the act does not take legal effect, and the resolution should also be deemed invalid.
(Excerpt from Yu Zhengping: "Case Teaching of the Company Law (Volume 2), People's Court Press, 2012 edition, page 1067.)
Legal Articles
" Company Law of the People's Republic of China " (amended in 2018)
Article 20 Company shareholders shall abide by laws, administrative regulations and company articles of association, exercise shareholder rights in accordance with the law, and shall not abuse shareholder rights to damage the interests of the company or other shareholders; shall not abuse the independent legal status of the company and the limited liability of shareholders to damage the interests of the company's creditors.
If a company shareholder abuses shareholder rights to cause losses to the company or other shareholders, he shall bear the liability for compensation in accordance with the law.
If a company shareholder abuses the company's independent legal status and shareholder limited liability to evade debts and seriously damages the interests of the company's creditors, he shall bear joint and several liability for the company's debts.
Article 22 The resolutions of the company's shareholders' meeting or shareholders' meeting or board of directors violate laws and administrative regulations and are invalid.
If the meeting convening procedures and voting methods of the shareholders' meeting or the board of directors violate the laws, administrative regulations or the company's articles of association, or the content of the resolution violates the company's articles of association, the shareholders may request the people's court to revoke it within 60 days from the date of the resolution.
If a shareholder filed a lawsuit in accordance with the provisions of the preceding paragraph, the people's court may require the shareholders to provide corresponding guarantees at the request of the company.
If a company has completed the change registration according to the resolution of the shareholders' meeting, the general meeting of shareholders or the board of directors, and after the people's court declares the resolution invalid or revokes the resolution, the company shall apply to the company registration authority to revoke the change registration.
Article 28 Shareholders shall pay the capital contributions they subscribed in the company's articles of association in full on time. If a shareholder contributes capital in currency, he shall deposit the capital in full into the account opened by the limited liability company in the bank; if he contributes capital in non-monetary property, he shall handle the transfer procedures of his property rights in accordance with the law.
If a shareholder fails to pay the capital contribution in accordance with the provisions of the preceding paragraph, in addition to paying the capital contribution in full to the company, he shall also bear the liability for breach of contract to the shareholders who have paid the capital contribution in full on time.
Article 37 The shareholders' meeting exercises the following powers:
(I) Decide the company's business policy and investment plan;
(II) Election and replacement of directors and supervisors who are not employee representatives, and decide on the remuneration of directors and supervisors;
(III) Review and approve the report of the board of directors;
(IV) Review and approve the report of the board of supervisors or supervisors;
(V) Review and approve the annual financial budget plan of the company , final accounts plan;
(VI) Review and approve the company's profit distribution plan and loss-making plan;
(VIII) Make resolutions on the increase or decrease of the company's registered capital;
(VIII) Make resolutions on the issuance of corporate bonds;
(Nine) Make resolutions on the merger, division, dissolution, liquidation or change of the company's form;
(10) Modify the company's articles of association;
(11) Other powers stipulated in the company's articles of association.
If the shareholders unanimously agree to the matters listed in the preceding paragraph in writing, they may make a decision directly without convening a shareholders' meeting, and all shareholders shall sign and seal the decision document.
●23 important matters that can be agreed upon by the company's articles of association
●Share shareholders' capital contribution accelerate maturity trial ideas and key points of judgment
●Do shareholders who have not fulfilled their capital contribution obligations have the right to request the company to be dissolved?
Statement: This article is reprinted from the WeChat official account of "Faxin". Thank you here!
Edit: Pan Yuanyuan
Typesetting: Meng Xiangyu
Review: Liu Chang
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