There are six types of joint and several liability under the new Company Law
(Author: Chen Minghe)
Category 1:
Joint and several liability of shareholders and promoters
1. If a shareholder abuses the independent status of the company's legal person and the limited liability of the shareholder to evade debts and seriously damages the interests of creditors, he shall be jointly and severally liable for the company's debts
Paragraph 1 of Article 23 of the new Company Law stipulates that if a shareholder of a company abuses the independent status of the company as a legal person and the limited liability of shareholders to evade debts and seriously damage the interests of the company's creditors, he shall be jointly and severally liable for the company's debts.
Reference: Paragraph 2 of Article 83 of the Civil Code stipulates that the investor of a for-profit legal person shall not abuse the independent status of the legal person and the limited liability of the investor to harm the interests of the creditors of the legal person; Where the independent status of a legal person and the limited liability of investors are abused to evade debts, seriously harming the interests of the legal person's creditors, they shall be jointly and severally liable for the debts of the legal person.
Remarks: [Understanding of the word "abuse"] The "Minutes of the National Conference on the Trial of Civil and Commercial Cases by Courts" records: "2. On the trial of corporate dispute cases (4) on the denial of corporate personality
The independence of corporate personality and the limited liability of shareholders are the basic principles of company law. The denial of the independent personality of the company and the joint and several liability of the shareholders who abuse the independent status of the company's legal person and the limited liability of the shareholders are the exceptions to the limited liability of shareholders, which aim to correct the imbalance of the limited liability system in the protection of creditors when specific legal facts occur. In adjudication practice, it is necessary to accurately grasp the spirit of Article 20, Paragraph 3 of the Company Law. First, it can only be applied if the shareholder abuses the independent status of the company's legal person and the limited liability of the shareholder, and the act seriously damages the interests of the company's creditors. Damage to the interests of creditors mainly refers to the abuse of rights by shareholders to make the company's property insufficient to pay off the claims of the company's creditors. Second, only shareholders who have abused the independent status of legal persons and the limited liability of shareholders are jointly and severally liable for the company's debts, and other shareholders should not bear this liability. Third, the denial of corporate personality is not a comprehensive, thorough and permanent denial of the company's legal personality, but only a violation of the general rule that shareholders are not liable for the company's debts based on specific legal facts and legal relationships in specific cases, and exceptionally order them to bear joint and several liability. The res judicata of a people's court's judgment denying the personality of a company in a single case only binds the parties to the lawsuit, and does not automatically apply to other lawsuits involving the company, and does not affect the existence of the company's independent legal personality. If other creditors file a lawsuit for denial of corporate personality, the facts determined by the effective judgment may be used as evidence. Fourth, the abusive acts stipulated in paragraph 3 of Article 20 of the Company Law, which are common in practice include confusion of personality, excessive domination and control, and significant insufficient capital. When trying a case, it is necessary to make a comprehensive judgment based on the ascertained facts of the case, which should be applied prudently and used when appropriate. In practice, there is a phenomenon of abusing this exceptional system because of a lax grasp of standards, and at the same time, there is also a phenomenon that the legal provisions are relatively principled and abstract, and it is difficult to apply, and they are not good at applying and dare not apply, all of which should be taken seriously.
10. [Confusion of Personalities] The most fundamental criterion for determining whether there is confusion between the personality of the company and the personality of the shareholders is whether the company has independent intentions and independent property, and the most important manifestation is whether the property of the company and the property of the shareholders are mixed and cannot be distinguished. The following factors shall be comprehensively considered when determining whether there is confusion of personalities:
(1) The shareholder uses the company's funds or property free of charge and does not make financial records;
(2) The shareholder uses the company's funds to repay the shareholders' debts, or provides the company's funds to the affiliated companies for free use without making financial records;
(3) The company's account books are not separated from the shareholders' account books, so that the company's property cannot be distinguished from the shareholders' property;
(4) There is no distinction between the shareholders' own earnings and the company's profits, resulting in unclear interests of both parties;
(5) The company's property is recorded in the name of the shareholder and is in the possession and use of the shareholder;
(6) Other situations where personalities are mixed.
In the case of personality confusion, the following confusion often occurs at the same time: the business of the company and the business of shareholders are mixed; Confusion between the company's employees and shareholders' employees, especially financial personnel; The domicile of the company is mixed with the domicile of the shareholder. When a people's court hears a case, the key is to examine whether there is confusion of personalities, and it is not required to have the confusion of other aspects at the same time, which is often only a reinforcement of the confusion of personality.
11. [Excessive Domination and Control] If the controlling shareholders of the company excessively dominate and control the company, manipulate the decision-making process of the company, make the company completely lose its independence, become a tool or shell of the controlling shareholders, and seriously damage the interests of the company's creditors, the personality of the company shall be denied, and the shareholders who abuse their control shall be jointly and severally liable for the company's debts. Common situations in practice include:
(1) Transferring benefits between parent and subsidiary companies or between subsidiaries;
(2) Transactions between parent and subsidiary companies or between subsidiaries where the profits belong to one party but the losses are borne by the other party;
(3) Withdrawing funds from the original company first, and then establishing a company with the same or similar business purpose to evade the debts of the original company;
(4) The company is dissolved first, and then another company is established with the premises, equipment, personnel and the same or similar business purposes of the original company to evade the debts of the original company;
(5) Other situations of excessive domination and control.
Where a controlling shareholder or actual controller controls multiple subsidiaries or affiliated companies, abuses the right of control, causes the boundaries of the assets of multiple subsidiaries or affiliated companies to be unclear, their finances mixed, their interests transfer to each other, they lose their independence of personality, and they become tools for the controlling shareholders to evade debts, conduct illegal business operations, or even violate the law and commit crimes, they may be denied the legal personality of the subsidiaries or affiliated companies on the basis of the facts of the case, and ordered to bear joint and several liability.
12. [Significant Insufficient Capital] Significant insufficient capital refers to the obvious mismatch between the amount of capital actually invested by shareholders in the company and the risks implied in the company's operation in the course of operation after the establishment of the company. The fact that a shareholder uses a small amount of capital to engage in operations beyond his or her power shows that he has no sincerity in engaging in the company's operation, and in essence maliciously uses the company's independent personality and the limited liability of shareholders to transfer investment risks to creditors. Since the criterion for judging a significant shortage of capital is very vague, especially to distinguish it from the normal business mode of "small and large" adopted by the company, it should be applied with great caution and should be combined with other factors to make a comprehensive judgment. ”
2. If a shareholder of a one-person company cannot prove that the company's property is independent of his or her personal property, he or she shall be jointly and severally liable for the company's debts
Paragraph 3 of Article 23 of the new Company Law stipulates that in a company with only one shareholder, if the shareholder cannot prove that the company's property is independent of the shareholder's own property, he shall be jointly and severally liable for the company's debts.
Reference law: Article 10 of the Interpretation of the Guarantee System of the Civil Code stipulates that if a one-person limited liability company provides guarantee for its shareholders, and the company claims that it does not bear the guarantee liability on the grounds of violating the provisions of the Company Law on the resolution procedure for the company's external guarantee, the people's court will not support it. Where the company is unable to pay off other debts due to the assumption of guarantee liability, and the shareholder at the time of providing the guarantee cannot prove that the company's property is independent of its own property, and other creditors request that the shareholder bear joint and several liability, the people's court shall support it.
3. Shareholders and promoters shall be jointly and severally liable for the debts arising from the establishment of the company
Paragraph 2 of Article 44 of the new Company Law stipulates that if a company is not established, the legal consequences shall be borne by the shareholders at the time of its establishment; If there are two or more shareholders at the time of establishment, they shall enjoy joint and several creditor's rights and bear joint and several debts. Article 107 stipulates that the provisions of Article 44 of this Law shall apply to companies limited by shares.
Paragraph 1 of Article 4 of the Judicial Interpretation III of the Company Law stipulates that if a company is not established for any reason, and the creditor requests all or some of the promoters to bear joint and several liability for the expenses and debts incurred in the establishment of the company, the people's court shall support it. Paragraph 1 of Article 5: If the promoter causes damage to others due to the performance of the duties of the establishment of the company, and the victim requests the company to bear the liability for tort compensation after the establishment of the company, the people's court shall support it; Where the company has not been established, and the victim requests that all the founders bear joint and several liability for compensation, the people's court shall support it.
Reference law: Paragraph 1 of Article 75 of the Civil Code stipulates that the legal consequences of civil activities engaged in by the founders for the establishment of legal persons shall be borne by the legal person; Where a legal person is not established, the legal consequences shall be borne by the founder, and if there are two or more founders, they shall enjoy joint and several creditor's rights and bear joint and several debts.
4. If the shareholder or promoter fails to pay in the capital contribution in accordance with the articles of association or the value of the non-monetary property as capital contribution is significantly lower than the subscribed capital contribution, the other promoters and shareholders shall be jointly and severally liable with the shareholder or promoter within the scope of insufficient capital contribution
Article 50 of the new Company Law stipulates that if a shareholder fails to make the actual 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 amount of 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 the insufficient capital contribution. Article 99 stipulates that if the promoter of a company limited by shares fails to pay the share payment according to the shares subscribed for, or the actual value of the non-monetary property as capital contribution is significantly lower than the shares subscribed, the other promoters shall be jointly and severally liable with the promoter to the extent of the insufficient capital contribution.
Article 13 of the Judicial Interpretation III of the Company Law stipulates that if a shareholder fails to perform or fails to fully perform its capital contribution obligations, and the company or other shareholders request that they fully perform their capital contribution obligations to the company in accordance with the law, the people's court shall support it. Where the company's creditors request that the shareholders who have not performed or have not fully performed their capital contribution obligations bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the unpaid capital and interest, the people's court shall support it; Where shareholders who have not fulfilled or have not fully performed their capital contribution obligations have already borne the above-mentioned liabilities, and other creditors make the same request, the people's court will not support it. Where 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 initiates a lawsuit in accordance with the first or second paragraph of this article, and requests that the company's founders and the defendant shareholders 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.
5. All shareholders shall be jointly and severally liable for the debts before the cancellation of the registration of the company through the simplified procedure if the promise that the company has not incurred debts during the existence period or that all debts have been paid off are false
Paragraph 1 of Article 240 of the new Company Law stipulates that if a company has not incurred debts during its existence, or has paid off all its debts, it may cancel the company's registration through simplified procedures in accordance with the provisions with the commitment of all shareholders. Paragraph 3 stipulates that if a company deregisters the company through a simplified procedure, and the shareholders make false promises to the contents specified in the first paragraph of this article, they shall be jointly and severally liable for the debts before the deregistration.
Paragraph 2 of Article 20 of the Judicial Interpretation II of the Company Law stipulates that if a company is deregistered without liquidation in accordance with law, and the shareholders or a third party undertake to bear responsibility for the company's debts when the company registration authority deregisters the company, and the creditor claims that it bears the corresponding civil liability for the company's debts, the people's court shall support it in accordance with the law.
6. The shareholder who withdraws the capital contribution shall bear supplementary liability for the part of the company's debts that cannot be discharged within the scope of the interest on the withdrawn capital, and the other shareholders who assist the shareholder in withdrawing the capital contribution shall be jointly and severally liable for this
Article 14 of Judicial Interpretation III of the Company Law stipulates that if a shareholder withdraws his or her capital contribution, and the company or other shareholders request that the company or other shareholders return the capital interest to the company or assist other shareholders, directors, senior managers or actual controllers who assist in the withdrawal of capital contributions, they shall be jointly and severally liable. Where a creditor of the company requests that the shareholder who withdraws the capital contribution bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the interest on the withdrawn capital, and that other shareholders, directors, senior managers or actual controllers who assist in withdrawing the capital contribution bear joint and several liability for this, the people's court shall support it; If the shareholder who withdraws the capital contribution has already borne the above-mentioned liabilities, and other creditors make the same request, the people's court will not support it.
Category II:
Joint and several liability of the actual controller
1. If the controlling shareholder or actual controller instructs the director or senior executive to engage in acts that harm the interests of the company or shareholders, the director or senior executive shall be jointly and severally liable [the new company law clarifies for the first time the joint and several liability of the actual controller]
Article 192 of the new Company Law stipulates that if the controlling shareholder or actual controller of a company instructs a director or senior management to engage in an act that harms the interests of the company or its shareholders, it shall be jointly and severally liable with the director or senior manager. Paragraph 1 of Article 1169 of the Civil Code stipulates that a person who instigates or assists others to commit tortious acts shall be jointly and severally liable with the perpetrator.
2. The shareholder who withdraws the capital contribution shall bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the interest on the capital withdrawn, and the actual controller who assists the shareholder in withdrawing the capital contribution shall be jointly and severally liable for this
Article 14 of Judicial Interpretation III of the Company Law stipulates that if a shareholder withdraws his or her capital contribution, and the company or other shareholders request that the company or other shareholders return the capital interest to the company or assist other shareholders, directors, senior managers or actual controllers who assist in the withdrawal of capital contributions, they shall be jointly and severally liable. Where a creditor of the company requests that the shareholder who withdraws the capital contribution bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the interest on the withdrawn capital, and that other shareholders, directors, senior managers or actual controllers who assist in withdrawing the capital contribution bear joint and several liability for this, the people's court shall support it; If the shareholder who withdraws the capital contribution has already borne the above-mentioned liabilities, and other creditors make the same request, the people's court will not support it.
3. The actual controller's abuse of the company's independent status as a legal person to evade debts and seriously damage the interests of creditors is equivalent to the shareholder's abuse of the company's independent status as a legal person, and the provisions of Article 23 of the new Company Law (Article 20 of the original Company Law) can be applied by analogy to deny the company's personality, and the actual controller shall be jointly and severally liable for the company's debts
Article 23 of the new Company Law provides that if a shareholder of a company abuses the independent status of the company's legal person and the limited liability of shareholders to evade debts and seriously damage the interests of the company's creditors, he shall be jointly and severally liable for the company's debts.
Where a shareholder uses two or more companies under its control to carry out the acts specified in the preceding paragraph, each company shall be jointly and severally liable for the debts of either company.
In a company with only one shareholder, if the shareholder cannot prove that the company's property is independent of the shareholder's own property, he shall be jointly and severally liable for the company's debts.
Reference cases: Supreme People's Court (2019) Zui Gao Fa Min Zhong No. 20, (2021) Zui Gao Fa Min Shen No. 4488, (2020) Gao Gao Fa Min Zhong No. 503
For example, the Supreme People's Court held in the (2019) Zui Gao Fa Min Zhong No. 20 case that "Anfa Company, Shenglong Company and Lude Company are all under the actual control of Chen Kegen and others, and belong to the same interest entity. Under the control of the same actual controller, under the circumstance that Shenglong Company and Lvde Company were heavily indebted, the three companies transferred the huge assets of Shenglong Company and Lvde Company to Anda Company through false litigation. Anda, Shenglong and Lvde lacked independent will and did not have independent personality, and their legal personality became a tool for the actual controller to maliciously transfer assets to evade the huge debts of Shenglong and Lvde, seriously harming the interests of creditors. The above-mentioned acts are contrary to the purpose of the establishment of the legal person system and the principle of good faith, and the nature and harmful results of their acts are equivalent to the circumstances stipulated in the third paragraph of Article 20 of the Company Law of the People's Republic of China, so the provisions of the third paragraph of Article 20 of the Company Law of the People's Republic of China should be referred to, and Anda Company shall be jointly and severally liable for the debts of Shenglong Company and Lvde Company. ”
(Note: For the understanding of the word "abuse", please refer to the "Remarks" section of "Category 1: Joint and Several Liability of Shareholders and Promoters".) ）
Category III:
Joint and several liability of directors, supervisors and senior executives
1. If a shareholder withdraws capital and causes losses to the company, the responsible directors, supervisors and senior executives shall be jointly and severally liable for compensation
Article 53 of the new Company Law stipulates that after the establishment of a company, shareholders shall not withdraw their capital contributions. In case of violation of the provisions of the preceding paragraph, the shareholders shall return the capital contributions withdrawn; If losses are caused to the company, the responsible directors, supervisors and senior managers shall be jointly and severally liable for compensation with the shareholders.
2. The shareholder who withdraws the capital contribution shall bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the interest on the capital withdrawn, and the directors and executives who assist the shareholder in withdrawing the capital contribution shall be jointly and severally liable for this
Article 14 of Judicial Interpretation III of the Company Law stipulates that if a shareholder withdraws his or her capital contribution, and the company or other shareholders request that the company or other shareholders return the capital interest to the company or assist other shareholders, directors, senior managers or actual controllers who assist in the withdrawal of capital contributions, they shall be jointly and severally liable. Where a creditor of the company requests that the shareholder who withdraws the capital contribution bear supplementary liability for the part of the company's debts that cannot be paid off within the scope of the interest on the withdrawn capital, and that other shareholders, directors, senior managers or actual controllers who assist in withdrawing the capital contribution bear joint and several liability for this, the people's court shall support it; If the shareholder who withdraws the capital contribution has already borne the above-mentioned liabilities, and other creditors make the same request, the people's court will not support it.
Category 4:
Joint and several liability of the equity transferor and the transferee
If the transferee of the equity transferor fails to pay the capital contribution on time or the actual value of the non-monetary property used as the capital contribution is significantly lower than the amount of the subscribed capital contribution, and the transferee is aware of this, the transferor and the transferee shall be jointly and severally liable to the extent of insufficient capital contribution
Paragraph 2 of Article 88 of the new Company Law stipulates that if a shareholder fails to pay the capital contribution on the date of capital contribution specified in the articles of association of the company or the actual value of the non-monetary property used as capital contribution is significantly lower than the subscribed capital contribution amount transfers equity, the transferor and the transferee shall be jointly and severally liable to the extent of the insufficient capital contribution; If the assignee does not know and should not have known of the existence of the above-mentioned circumstances, the assignor shall be liable.
Article 18 of Judicial Interpretation III of the Company Law stipulates that if a shareholder of a limited liability company transfers equity without performing or without fully performing its capital contribution obligations, and the transferee knows or should know about it, and the company requests the shareholder to perform the capital contribution obligation and the transferee bears joint and several liability for this, the people's court shall support it. Where a creditor of the company initiates a lawsuit against the shareholder in accordance with the second paragraph of Article 13 of these Provisions, and at the same time requests that the aforesaid transferee bear joint and several liability for this, the people's court shall support it. Where, after the transferee assumes responsibility in accordance with the provisions of the preceding paragraph, recovers compensation from the shareholder who has not performed or has not fully performed its obligation to make capital contributions, the people's court shall support it. However, unless otherwise agreed by the parties.
Category 5:
Joint and several liability between affiliates
Where a shareholder takes advantage of the independent status of a legal person and the limited liability of the shareholders of two or more companies under its control to evade debts, the companies shall bear joint and several liability to each other [the new Company Law establishes a "horizontal personality denial" system for the first time]
Paragraph 1 of Article 23 of the new Company Law stipulates that if a shareholder of a company abuses the independent status of the company as a legal person and the limited liability of shareholders to evade debts and seriously damage the interests of the company's creditors, he shall be jointly and severally liable for the company's debts. Paragraph 2 stipulates that if a shareholder uses two or more companies under its control to carry out the acts specified in the preceding paragraph, each company shall be jointly and severally liable for the debts of either company.
Paragraph 2 of Article 11 of the above-mentioned Minutes of the National Work Conference on the Trial of Civil and Commercial Cases by Courts clearly stipulates: "Where a controlling shareholder or actual controller controls multiple subsidiaries or affiliated companies, abuses his or her control to make the property boundaries of multiple subsidiaries or affiliated companies unclear, their finances mixed, their interests transfer to each other, they lose their personality independence, and they become a tool for controlling shareholders to evade debts, conduct illegal business operations, or even violate the law and commit crimes, they may, on the basis of the facts of the case, deny the legal personality of the subsidiary or affiliated company, and order them to bear joint and several liability." ”
Category 6:
Joint and several liability of the company after the spin-off
If the company fails to reach a written agreement with the creditor on the assumption of debts before the division, the company after the division shall be jointly and severally liable for the debts of the company before the division
Article 223 of the new Company Law stipulates that the debts of the company before the division shall be jointly and severally liable by the company after the division. However, unless otherwise agreed in the written agreement between the company and the creditor on the repayment of debts before the division. Paragraph 2 of Article 67 of the Civil Code stipulates that where a legal person is divided, the rights and obligations of the separated legal person shall be jointly and severally entitled to creditor's rights and bear joint and several debts, unless otherwise agreed between the creditor and the debtor. Statement: This article is edited and sorted out by the official account of "Supreme Precedent", organized by: Chen Minghe, editor: Fa Yan, please indicate.