The civil judgment of the second instance of the equity transfer dispute between Wan and a company in Suzhou
Subject matter: Equity transfer dispute
Case No.: (2024) Xin 27 Min Zhong No. 334
Published: 2024-07-16
Intermediate People's Court of Bortala Mongolia Autonomous Prefecture, Xinjiang Uygur Autonomous Region
Civil Judgments
(2024) Xin 27 Min Zhong No. 334
Appellant (plaintiff in the original trial): Wan, male, born on November 10, 1965, lives in Xishan District, Wuxi City, Jiangsu Province.
Entrusted litigation agent: Wang Jie, lawyer of Xinjiang Aibo Law Firm.
Entrusted litigation agent: Ding Lu, lawyer of Xinjiang Aibo Law Firm.
Appellant (defendant in the original trial): Suzhou Lan Environmental Protection Technology Co., Ltd., domiciled in Wuzhong District, Suzhou City, Jiangsu Province.
Legal representative: Kong, executive director of the company.
Entrusted litigation agent: Xiong Wei, lawyer of Hunan Xiangding Law Firm.
Appellee (defendant in the original trial): Huang, male, born on January 16, 1956, lives in Wutai Industrial Park, Bortala Mongolia Autonomous Prefecture, Xinjiang Uygur Autonomous Region.
Appellee (defendant in the original trial): Kong, male, born on August 10, 1961, lives in Suzhou Park, Suzhou City, Jiangsu Province.
Appellee (defendant in the original trial): Bozhou Lan Environmental Protection Technology Co., Ltd., domiciled in Nancheng District, Bole City, Bortala Mongolia Autonomous Prefecture, Xinjiang Uygur Autonomous Region.
Legal representative: Chen, general manager of the company.
The appellant Wan and Suzhou Lan Environmental Protection Technology Co., Ltd. (hereinafter referred to as Suzhou Lan Company) appealed to this court against the civil judgment of the Bole Municipal People's Court of Xinjiang Uygur Autonomous Region (2023) Xin 2701 Min Chu No. 2211 due to a dispute over the equity transfer of shares with the appellees Huang, Kong, and Bozhou Lan Environmental Protection Technology Co., Ltd. (hereinafter referred to as Bozhou Lan). After the case was filed on April 16, 2024, this court formed a collegial panel in accordance with the law and conducted a trial in open court on May 20, 2024. Appellant Wan and his entrusted agents ad litem Wang Jie and Ding Lu, appellant Suzhou Lan's entrusted agent ad litem Xiong Wei, and appellee Huang appeared in court to participate in the litigation. The appellee, Kong, and the appellee, Bozhou Lan, refused to appear in court to participate in the litigation without justifiable reasons after being summoned by summons. The case is now closed.
Wan's appeal request: revoke item 4 of the (2023) Xin 2701 Min Chu No. 2211 Civil Judgment of the Bole Municipal People's Court of Xinjiang Uygur Autonomous Region, and order Kong and Bozhou Lan to jointly bear the responsibility for the repayment of all the judgments, and at the same time order Suzhou Lan Company, Kong and Bozhou Lan to jointly bear the preservation fee of 5,000 yuan and the preservation insurance premium of 6,764 yuan in this case, or remand the case for retrial in accordance with law. Grounds for appeal: The first-instance judgment was unclear on some facts, the basis for the judgment was insufficient, the application of law was wrong, and there were omissions, as follows: 1. Kong and Bozhou Lan, as the party to the debt, should jointly bear the responsibility for the repayment of the judgment. First of all, from the penultimate line on page 14 of the first-instance judgment, it is stated that "after Huang withdraws from the 49% equity of the industrial and commercial registration, he no longer bears any obligations to Tong and Wan to transfer equity, that is, to return the equity transfer money, and all the responsibilities and obligations of Tong and Wan to the equity investment of Bozhou Lan Environmental Protection Technology Co., Ltd. (including but not limited to registration or return of equity investment transfer money) are borne by Kong and Lan Environmental Protection Technology Co., Ltd., and the agreement is signed by Huang and Kong." The above-mentioned facts can be made clear that Kong and Bozhou Lan (the legal representative at the time was Kong) had signed an agreement to promise to voluntarily undertake the obligation to return the equity investment transfer money to Wan. However, in the first line on page 26 of the first-instance judgment, the court found that "the plaintiff Wan demanded that the defendant Bozhou Lan Environmental Protection Co., Ltd. and Kong and Suzhou Lan Environmental Protection Technology Co., Ltd. bear joint liability for compensation, but failed to provide evidence to prove that the defendant voluntarily returned the equity transfer money, and this court did not support it", the determination of the reasoning part of the court of first instance was obviously inconsistent with the facts identified earlier, and the judgment that Kong and Bozhou Lan did not bear joint repayment liability based on the inconsistent reasoning part was an unclear determination of facts and insufficient basis for the judgment. Secondly, on May 28, 2023, the "Supplementary Agreement on Equity Transfer" signed by Huang and Kong clearly stipulates that "after Huang withdraws from the 49% equity of industrial and commercial registration, he will no longer bear any obligations such as the obligation to transfer equity to Tong and Wan, that is, return the equity transfer money, and all the responsibilities and obligations of Tong and Wan for the equity investment in Bozhou Lan Environmental Protection Technology Co., Ltd. (including but not limited to registration or return of equity investment transfer money) shall be borne by Kong and Lan Environmental Protection Technology Co., Ltd." The Civil Code of the People's Republic of China had already been promulgated and implemented at the time of the signing of the agreement, and the relevant provisions of the Civil Code of the People's Republic of China should be applied to the content agreed in the agreement, and the content of the entire case should not be determined to be inconsistent with the Civil Code of the People's Republic of China and the laws and judicial interpretations at that time should be applied. According to Article 552 of the Civil Code of the People's Republic of China, "if a third party agrees with the debtor to join the debt and notify the creditor, or if the third party expresses its willingness to join the debt to the creditor, and the creditor does not explicitly refuse within a reasonable period of time, the creditor may request the third party to bear joint and several debts with the debtor within the scope of the debt it is willing to bear". It has been clearly agreed that he and Bozhou Lan, as the debtor joiner, voluntarily assume the responsibility and obligation to return the equity investment transfer money to Tong and Wan. Therefore, Kong and Bozhou Lan, as debtors, should be jointly and severally liable for the repayment of the judgment money. Third, under the control of Kong, Suzhou Lan had no corresponding assets to fulfill the obligation to repay the judgment money, and Bozhou Lan, under the control of Kong, the legal representative at the time, had transferred many assets to Kong's other affiliated companies through numerous related party transactions with Kong's own, his family and relatives' holding companies in the early stage. The court of first instance did not fully consider the actual situation of the performance of the judgment, and unjustifiably gave up the voluntary debts of Kong and Bozhou Lan, and separately awarded the repayment obligations of all the sums to Suzhou Lan, which was almost an "empty shell", and the court of first instance found that the facts were unclear, and the basis for the judgment was insufficient, and it could not protect the legitimate rights and interests of Wan. 2. The court of first instance omitted to make a judgment on Wan's preservation fee and preservation insurance premium in the first-instance litigation claim, and shall supplement and correct it and make a judgment in accordance with law. In the first-instance litigation, Wan's seventh claim is that "the litigation fees, preservation fees, preservation insurance premiums and other expenses of this case shall be borne jointly by defendants 2, 3 and 4", and during the trial of the case, Wan submitted an application for interim preservation to the court, and the court of first instance made a civil ruling (2023) Xin 2701 Min Chu No. 2211 in accordance with the law on September 8, 2023, ruling to preserve the relevant assets of Bozhou Lan Company, Suzhou Lan Company and Kong. Wan X paid a preservation fee of RMB 5,000 and a preservation insurance premium of RMB 6,764, but the judgment did not mention the preservation fee and how the preservation insurance premium should be borne by the judgment, which is an obvious omission of judgment and should be supplemented and corrected and judged in accordance with law. The court of second instance was requested to support Wan's appeal request in accordance with law.
Suzhou Lan Company argued that after Huang transferred the equity to Kong on May 26, 2023, as a precondition for the transfer, Huang asked Kong to be responsible for the shares of Wan and Tong held on behalf of him, and Kong was responsible for whether it was for industrial and commercial change or share withdrawal. In this case, Mr. Kong and Mr. Huang signed the Supplementary Agreement on Equity Transfer, in which Mr. Kong was clearly the transferee and only made corresponding commitments to the above content on behalf of himself. 2. Kong's commitment to Huang does not conform to the legal characteristics of debt accession, and Wan believes that the commitment constitutes debt accession and has no legal basis.
Huang stated that he signed the equity transfer agreement and the supplementary equity transfer agreement on May 26 and May 28, 2023, and Article 4 of the equity transfer agreement clearly stipulates that after Huang withdraws from the 49% equity of the industrial and commercial registration, he will no longer bear any obligations such as transferring equity to Tong and Wan, that is, returning the equity transfer money. All the responsibilities and obligations of Tong and Wan for the equity investment in Bozhou Lan Company, including but not limited to registration and return of equity investment transfer money, are borne by Kong and Bozhou Lan. I don't have any obligations to Tong and Wan now, and all obligations are borne by Kong and Bozhou Lan. I should not return the equity transfer money.
Suzhou Lan's appeal request: revoke the (2023) Xin 2701 Min Chu Zi No. 2211 Civil Judgment of the People's Court of Bole City, Xinjiang Uygur Autonomous Region. Facts and Reasons: 1. The court of first instance erred in applying the law. In the first instance, it was held that this case was a civil dispute case arising from legal facts before the implementation of the Civil Code, so the Civil Code was not applicable to this case. Article 1 of the Several Provisions of the Supreme People's Court on the Temporal Effect of the Application of the Civil Code of the People's Republic of China: "The provisions of the Civil Code shall apply to civil dispute cases arising from legal facts after the implementation of the Civil Code. In cases of civil disputes arising from legal facts before the implementation of the Civil Code, the provisions of the laws and judicial interpretations at that time shall apply, except as otherwise provided by the laws and judicial interpretations. The provisions of the Civil Code shall apply to civil dispute cases arising from legal facts before the implementation of the Civil Code and after the implementation of the Civil Code, except as otherwise provided by laws and judicial interpretations. "The court of first instance erroneously wrote the legal article as the second paragraph of Article 1 of the Provisions, but in fact the content quoted and expressed was the first paragraph of the first paragraph of the first article of the law. Article 20 of the Provisions: "For a contract established before the implementation of the Civil Code, the performance of the contract shall continue until after the implementation of the Civil Code in accordance with the provisions of the law or as agreed by the parties, and if a dispute arises due to the performance of the contract before the implementation of the Civil Code, the provisions of the laws and judicial interpretations at that time shall apply; If a dispute arises due to the performance of a contract after the implementation of the Civil Code, the relevant provisions of Chapters 4 and 5 of Part 3 of the Civil Code shall apply. "This case belongs to the latter situation, that is, a civil dispute case arising from a legal fact before the implementation of the Civil Code continues after the implementation of the Civil Code. In this case, the Equity Transfer Agreement involved in the case sued by Wan was signed by Suzhou Lan, Huang and Wan on September 26, 2019. However, due to Wan's investment dispute and the insufficient investment funds of Tong, who was not involved in the case, on April 1, 2021, Wan, Suzhou Lan, Huang and Tong, who was not involved in the case, signed the resolution of the No. 20210401 shareholders' meeting of Bozhou Lan. In the second item of the resolution of the shareholders' meeting, the equity subject and quota transferred to Wan were adjusted as follows: Party A (Suzhou Lan Environmental Protection Technology Co., Ltd.) was allowed to transfer 6% of the equity to Party C; Agreed to transfer 14% of the equity of Party B (Huang) to Party C (Wan) and 15% of the equity to Party D (Tong). Item 3: Regardless of whether or not the industrial and commercial change registration is handled, the parties shall not transfer the investment or transfer the equity share within one year from the date of signing this resolution. So far, according to the shareholders' resolution, the parties have revised the transfer of 10% of the shares of Party A's Suzhou Lan Company to Wan as stipulated in the original "Equity Transfer Agreement" to: Party A (Suzhou Lan Company) will transfer 6% of the equity to Party C (Wan). The No. 20210401 shareholders' meeting resolution signed by Wan has replaced the "Equity Transfer Agreement" signed by Wan and Suzhou Lan on September 26, 2019. The court of first instance only extracted the part of the judicial interpretation that was favorable to Wan, but refused to interpret the law in its entirety and correctly. Article 25 of the Provisions: "Where a contract established before the implementation of the Civil Code is not provided for in the laws or judicial interpretations at that time, and the parties have not agreed on a time limit for exercising the right of rescission, and the other party has not demanded it, and the person with the right of rescission knew or should have known the reasons for the termination before the implementation of the Civil Code, and does not exercise it within one year from the date of implementation of the Civil Code, the people's court shall determine that the right of rescission is extinguished in accordance with law; Where the person with the right to terminate knows or should know the reasons for termination after the implementation of the Civil Code, the provisions of paragraph 2 of Article 564 of the Civil Code on the time limit for exercising the right of rescission shall apply. "According to Article 564 of the Civil Code of the People's Republic of China on exercising the right to rescind the contract, Wan's application for rescission of the contract involved in the case shall be made before September 30, 2020. Therefore, in this case, Wan's application for termination of the Equity Transfer Agreement signed by the three parties had expired, and his application for termination of the contract should not be supported by law. 2. The court of first instance erred in its determination of the facts of the case. 1. The second line on page 12 of the first-instance judgment reads: "After trial, this court found the following facts: in May 2018, Wan and Huang signed an Equity Transfer Agreement, which stipulated: Huang will hold 1,000.000 yuan of the equity of Bozhou Lan Environmental Protection Technology Co., Ltd. (specifically based on the company's first phase of investment amount, estimated at 8,000,000 yuan), accounting for about 12% of the equity, and Wan will pay the equity transfer money directly to Huang in a lump sum by transfer. The agreement was signed by Wan and Huang. In the same month, Huang issued a receipt, which read: Today, he received 1,000,000 yuan from Wan for the equity transfer of Bozhou Lan Environmental Protection Technology Co., Ltd. (Huang), and the receipt was signed by Huang. "During the first-instance trial, Suzhou Lan did not hear any relevant statements, and there was no evidence in the first-instance judgment to show that there was such content, and the first-instance trial transcript did not record such content. It is not known what the basis of the court of first instance found this fact. 2. Line 14 on page 12 to line 8 on page 13 of the first-instance judgment: On September 26, 2019, Suzhou Lan Company (Party A), Huang (Party B) and Wan (Party C) signed an Equity Transfer Agreement of Bozhou Lan Environmental Protection Technology Co., Ltd.,。.。.。 The contract is stamped with the official seal of Bozhou Lan and signed by Huang and Wan. The official seal stamped on the contract is actually the official seal of the transferor, Suzhou Lan, not the target company, Bozhou Lan. Judgment, page 16, line 9...... Bozhou Lan appointed chairman of a company...... In fact: Suzhou Lan appointed the chairman of a company. 3. Lines 17 to 19 on page 20 of the first-instance judgment: In 2019, Bozhou Lan issued ordinary VAT invoices to Suzhou Han Technology Co., Ltd., Suzhou Lan and Suzhou Sheng Information Technology Co., Ltd. respectively. In fact, Suzhou Drought Technology Co., Ltd., Suzhou Lan Company, and Suzhou Sheng Information Technology Co., Ltd. issued invoices to Bozhou Lan Company. 3. The first-instance judgment makes a determination of the evidentiary facts that were not submitted and were not debated at trial. Page 20, lines 3 to 9 of the judgment of first instance. As we all know, the 19-year annual report and 20-year annual report of Bozhou Blue Company only have the amount of the company's annual paid-in capital (investment funds), and the name of the investment shareholder will not be displayed in the publicity content. The shareholder's name is only reflected in the company's detailed account, the account has not been submitted and has not been cross-examined, and the company's previous accounts (until March 2022) have been handled by the company's accounting arranged by Huang. 4. The court of first instance improperly allocated the burden of proof. According to the principle of "whoever asserts, who shall provide evidence", in this case, Wan should provide evidence to prove that the failure to handle the industrial and commercial change of equity was caused by Suzhou Lan's company, rather than Suzhou Lan's company itself to prove that the reason for the failure to handle the industrial and commercial change of equity was not caused by Suzhou Lan's company. Wan has no evidence to prove that the failure to handle the industrial and commercial change of the equity involved in the case was because Suzhou Lan refused or prevented it. In fact, Wan signed the "Equity Transfer Agreement" on September 26, 2019 to May 26, 2023, because Huang transferred the equity of Bozhou Lan to Kong to solicit his opinions until Wan sued on September 7, 2023, which lasted nearly four years, including after many shareholders' meetings and once made adjustments to equity changes and industrial and commercial changes, Wan has been in the WeChat group of shareholders of Bozhou Lan Company, and can take various forms to urge or file a lawsuit for confirmation. However, Wan never mentioned the change of his transferred equity, and did not respond to Kong's urging. First of all, the Equity Transfer Agreement of Bozhou Lan Environmental Protection Technology Co., Ltd. signed on September 26, 2019 clearly stipulates that A (Suzhou Lan Company) and B (Huang) promise to actively assist Party C (Wan) in handling the relevant equity transfer procedures, and in this agreement, they are assisting Party C (Wan) in handling the relevant equity transfer and transfer procedures, rather than initiating and handling it on their own initiative. Secondly, item 3 of the resolution of the shareholders' meeting of Bozhou Lan No. 20210401 signed by Wan, Suzhou Lan Company, Huang and Tong on April 29, 2021: Regardless of whether the industrial and commercial change registration is handled, no party shall transfer investment or transfer equity shares within one year from the date of signing this resolution. Accordingly, whether to handle the industrial and commercial change of the equity involved in the case was agreed upon again, and whether the change was handled in a timely manner depended on Wan's own behavior, and no one stopped him, at least Suzhou Lan Company never stopped and refused to cooperate. Again, on January 21, 2022, Wan, Suzhou Lan Company, Huang, and Tong, an outsider to the case, signed the resolution of the shareholders' meeting of Bozhou Lan No. 20220121: agreeing to Huang's transfer of 900,000 yuan (accounting for 3% of the company's shares) to Yue. Wan agreed to the transfer of shares, and did not request to go through the equity industrial and commercial registration of the shares of Bozhou Lan company that he had invested in at the same time. Finally, the WeChat submitted by Wan shows that on May 27, 2023, when Huang withdrew from the equity of Bozhou Lan, Wan and Tong both expressed their stance at the shareholders' meeting of Bozhou Lan: agreed to Huang's unconditional withdrawal from Bozhou Lan's company. Since then, my own investment in Bozhou Blue has been undertaken by Bozhou Blue Company. It has nothing to do with Huang. At that time, when Huang withdrew and no one was transferred, the company's legal counsel and shareholder Yue repeatedly communicated with Wan and Tong, asking Tong and Wan to sign an equity transfer agreement with Huang on the investment in order to handle the industrial and commercial changes. Although Suzhou Lan Company now has no written evidence to show that Wan refused when handling the industrial and commercial change at that time. However, in fact, Wan did not express his position or cooperate with the industrial and commercial changes, and ignored the requests made by the company's legal counsel and shareholder Yue. However, this time at least it shows that Wan did not require the transfer of the shares of Bozhou Lan Company that he invested in at the same time when the company's equity was adjusted. 5. The "Equity Transfer Agreement" shall be established and effective when all parties sign and seal, and the industrial and commercial change is only the confirmation of the identity of the shareholders and the registration of the transfer of real rights. In the past four years, Wan has participated in major decision-making of the company according to the articles of association of Bozhou Lan, and has obtained the status of an associate shareholder of Bozhou Lan. In accordance with the provisions of special law over common law, this case should be handled in accordance with the Company Law of the People's Republic of China. On the day before the second hearing, Wan submitted the industrial and commercial change registration that Kong transferred his equity in Bozhou Lan to a third party after the first hearing. Suzhou Lan company has always stated that it will cooperate with Wan to handle industrial and commercial changes at any time. At the same time, the articles of association of the company clarified the rights and obligations enjoyed by shareholders, and the four "Resolutions of the Shareholders' Meeting" and WeChat records provided by Suzhou Lan showed that Wan participated in the decision-making of every major matter of the company before the lawsuit. and sent Zhao Moumou to serve as the vice president of the company. Although the court did not recognize the witness testimony of the company's employees to prove that Zhao Moumou was a company manager appointed by Wan, the company's appointment and payment of wages and the management documents signed by Zhao Moumou are indisputable facts. Shareholders' participation in the day-to-day management of the company is not an inevitable manifestation of the shareholder's exercise of shareholder power. In the four shareholders' meeting resolutions, including the subsequent transfer of the equity of a Bozhou Lan company held by Huang, although Wan did not form a shareholder in the legal sense of Bozhou Lan without going through the industrial and commercial change, there were handwritten resolutions signed by Wan as a shareholder or solicited his clear opinions in WeChat. It was only after Wan's lawsuit that he did not fulfill the resolution signed by himself to borrow money from shareholders due to the operational difficulties of Bozhou Lan. The lawsuit also explicitly requires the withdrawal of shareholders. Because Wan is not yet the legal shareholder of the company, Wan's signature is not legally required in the equity transfer of Bozhou Lan on November 19, 2023. Wan had always exercised shareholder rights against Bozhou Lan before the lawsuit. The first-instance judgment should state that Wan did not exercise his rights due to the equity transfer, amendment of the company's articles of association, or replacement of directors, and fully understand, discern and judge whether Wan was unable to exercise his rights or unwilling to exercise his rights. If the court of first instance believes that Wan is not a shareholder of the company, Wan's application for termination of the contract has exceeded the exclusion period prescribed by law. 6. Based on the Equity Transfer Agreement signed by Kong and Huang on May 26, 2023 and the Supplementary Agreement on Equity Transfer signed on May 28, 2023, the court of first instance ruled that Suzhou Lan Company should bear full responsibility for the return of Wan's investment funds, which is a legal logical error. The signatory of the equity transfer agreement (including the supplementary agreement on equity transfer) is the transferor Huang and the transferee Kong, and the signing of the agreement also clearly indicates that Kong is the transferee. Although Kong is the legal representative of Bozhou Lan and Suzhou Lan, Kong is not an apparent agent in the signing of the agreement, and has no right to represent Suzhou Lan, and according to the relativity of the contract, Wan has no right to penetrate according to the agreement signed between Kong and Huang, and then requires Suzhou Lan to bear responsibility to him. 7. The court of first instance tampered with the trial cross-examination opinions and statements of Suzhou Lan Company without authorization. During the trial, the agent of Suzhou Lan Company believed that Wan's application for termination of the contract involved in the case exceeded the exclusion period prescribed by law. The presiding judge explained in court that the opinion of the defendant's agent was whether the plaintiff's lawsuit had exceeded the statute of limitations, and further explained that the statute of limitations, period, and exclusion period were the same meaning. The first-instance agent of Suzhou Lan Company was not allowed to modify the record. After three strong protests from the attorney, the clerk amended the transcript to read: The defendant argued that the plaintiff's lawsuit had exceeded the exclusion period, and the trial judge made the same statement (page 23, line 14 of the judgment). This is far from the written statement of the agent of the first instance of Suzhou Lan. As for the last equity change of Bozhou Lan, it occurred on November 19, 2023, not October 16, 2023. It is only because the industrial and commercial agency used the template document of someone else's change when applying for the change, and there is no modification date. The actual application date is not difficult to verify through the agent's computer. The court of second instance is requested to change the judgment in accordance with law and revoke the first-instance judgment.
Wan argued that, 1. With regard to the termination of the equity transfer agreement and the liability that Suzhou Lan should bear, the court of first instance found that the facts were clear, the law was correctly applied, and there was no factual and legal basis for Suzhou Lan's appeal request. The "Equity Transfer Agreement of Bozhou Lan Environmental Protection Technology Co., Ltd." signed by Wan, Suzhou Lan and Huang on September 26, 2019 came into effect before the implementation of the Civil Code, and after Wan fulfilled the payment obligation of the equity transfer money according to the contract, the 20% equity involved in the case has not been changed to Wan's name, and Wan has not enjoyed the corresponding shareholder rights that he should enjoy. According to the provisions of Article 1, Paragraph 2 of the Civil Code of the People's Republic of China "Several Provisions on Time Effect", and Article 93 of the Contract Law of the People's Republic of China, Wan claimed to rescind the contract by filing a lawsuit in accordance with the law, and the exclusion period in the Civil Code of the People's Republic of China did not apply, the exercise period was not exceeded, and the return of the equity transfer money and liquidated damages claimed according to the rescission contract did not exceed the statute of limitations, which was legally justified. At the same time, all parties have presented evidence and cross-examined the above facts in accordance with the law. Therefore, the court of first instance found that the facts were clear, the law was correctly applied, and the burden of proof was properly allocated. 2. Suzhou Lan Company has no factual or legal basis for the statement that the facts determined by the court of first instance were "made out of nothing" in the appeal brief. In the first instance, Wan had submitted the "Equity Transfer Agreement" signed by Wan and Huang and the "Receipt" issued by Huang, and Suzhou Lan Company cross-examined the evidence. At the same time, the annual reports of Bozhou Lan in 2019 and 2020 (including the names of shareholders and the amount of paid-in capital) are clearly reflected in the "Enterprise Credit Information Publicity Report of Bozhou Lan Environmental Protection Technology Co., Ltd." submitted by Wan in the first instance. The court of first instance found that the facts were clear and should be upheld by stating that the original trial court had "created something out of nothing" and that it had made a determination of evidence and facts that had not been submitted and had not been cross-examined at trial, and that it had exaggerated its own distorted facts with emotional and non-professional rhetoric. 3. Suzhou Lan's claim that Wan had obtained the status of a prospective shareholder of Bozhou Lan and exercised his shareholder rights was inconsistent with the facts, and its claim had no factual and legal basis. In the trial of the first instance, Suzhou Lan Company claimed that Wan was a hidden shareholder of Bozhou Lan Company and had enjoyed all the rights of shareholders, and on the other hand, without soliciting the opinions of Wan and Tong Mou, who was not involved in the case, or notifying Wan Mou and Tong Mou, who was not involved in the case, without authorization to transfer the equity to Suzhou West Cryogenic Equipment Co., Ltd. and Changde Kai Moute Agricultural Technology Co., Ltd., Wan Mou did not enjoy any shareholder rights and interests in accordance with the law, both formally and substantively. Suzhou Lan company contradicts itself. In addition, Kong's practice as a shareholder caused great damage to the rights and interests of other shareholders and the interests of the company, and directly led to the failure to achieve the basic contractual purpose of Wan's transfer of equity, and Wan had the statutory right to terminate due to the breach of contract of Suzhou Lan. Including when Huang withdrew from Bozhou Lan Company before, Wan and Tong Mou, who was not involved in the case, only agreed to Huang's withdrawal, and the premise of the agreement was that Kong promised to bear the obligation to return the equity transfer money of Wan and Tong Mou, but he did not know about the transfer of equity at zero consideration at that time, and he did not know about the transfer of equity at zero consideration until the relevant evidence of equity change was obtained at the time of litigation. Be able to enjoy the corresponding shareholder rights and interests in the company. The most important right of shareholders is the right to make decisions and dividends, Suzhou Lan company and Bozhou Lan company did not protect Wan Mou's due decision-making rights that are enough to affect the company's direction and interests and the statutory right of first refusal to purchase and transfer equity, and after Wan Mou's real money investment, he has not received any dividends for so many years. Therefore, Suzhou Lan's claim that Wan enjoyed and exercised the rights and interests of shareholders in accordance with the law was inconsistent with the facts, and its claim did not have any factual or legal basis. In addition, among the evidence collected and submitted by Wan to the court of first instance, the last time the registration of Bozhou Lan was changed was November 9, 2023, and the resolution of the shareholders' meeting, equity transfer agreement, and articles of association of Bozhou Lan in the evidence were all formed on October 16, 2023, and the first trial of the first instance was held on October 30, 2023. That is to say, although at the time of the first trial of the first instance of this case, Suzhou Lan had not yet gone to the market supervision department to handle the registration change, but it had actually made major changes to the equity, legal representative, and articles of association of Bozhou Lan. In this case, Suzhou Lan and the other defendants of the original trial still recognized the authenticity and legitimacy of the equity composition of Bozhou Lan Company (i.e., Suzhou Lan Company accounted for 50% of the shares and Kong X held 50% of the shares) that they inquired about through public channels at the time of the first trial, but deliberately concealed the fact that the operation and equity structure of Bozhou Lan Company had undergone major changes, and that their unauthorized transfer of equity for zero consideration had caused significant damage to Wan's shareholders' rights and interests and even the interests of the company. Moreover, the change materials have been formed for half a month, and the changes have not been made until the end of the first trial of the first instance, and the materials were submitted to the market supervision department for changes, and there is a suspicion of false statements in the trial. Moreover, in the last paragraph of the appeal petition of Suzhou Lan Company, it is still quibbling about the date of payment signed by a certain person and stamped by the company, whether it is admitting and emphasizing that Suzhou Lan Company and Bozhou Lan Company submitted false materials to the industrial and commercial department when they changed their registration last time. And whether it is changed on October 16, 2023 or November 19, 2023, Wan's opinion has not been sought, and Wan has not even been notified. 4. Except for some of the issues in Wan's appeal, the court of first instance appropriately allocated the burden of proof and found that the facts were clear. In the appeal, Suzhou Lan claimed that the burden of proof for its failure to handle the registration of equity change should be assigned to Wan, which had no factual and legal basis. As we all know, to handle the registration of equity change in the industrial and commercial department, it is only necessary to submit the equity transfer agreement and the resolution of the shareholders' meeting made by the original shareholders of the company, and the subject of the application should be Bozhou Lan Company, which is actually controlled by Kong, and it is obvious that Wan cannot influence and lead. In the above materials, the tripartite equity transferor agreement has been signed in 2019, and it is only necessary to make a resolution of the shareholders' meeting of Bozhou Lan company with the cooperation of Suzhou Lan and Huang, and submit it to the industrial and commercial department for change of registration. However, Suzhou Lan Company has been claiming without evidence that Wan did not request or cooperate, and that the obligation that should be jointly completed by Suzhou Lan Company and Bozhou Lan Company has not been completed, but Suzhou Lan Company wants to violate the relevant provisions of the Civil Procedure Law and invert the burden of proof to Wan. 5. In addition to some of the issues in Wan's appeal, Wan also partially recognized part of the statement made by Suzhou Lan in the fourteenth line on page 12 of his appeal pleading, and the part of the first-instance court's participation in Kong's debt was logically erroneous and the facts were unclear. In the equity transfer agreement and supplementary agreement signed between Kong and Huang, Kong should bear the corresponding responsibility for the terms of the commitment to return the equity transfer money voluntarily undertaken by Kong. Of course, Kong, as the legal representative of Suzhou Lan Company and Bozhou Lan Company at that time, also clearly represented Lan Environmental Protection Company and its individuals in the terms they signed to reach a commitment to join the debt, and Kong Mou, the debt joiner, assumed the joint and several liability that Suzhou Lan Company and Bozhou Lan Company should return the equity transfer money, and both the equity transfer agreement signed by the parties and the resolution of the shareholders' meeting of Bozhou Lan Company were signed by Kong. Suzhou Lan's company claimed that Kong could not be signed as an apparent agent, and there was no factual or legal basis. Moreover, in the first-instance trial, Suzhou Lan's company, Bozhou Lan's company, and Kong's company were all represented by the same lawyer. Then, even the community of interests that jointly appointed the same agent held that Kong was a debtor and that he should personally bear the responsibility for the refund, and the court of first instance did not make a determination in this part of the case, which was a logical error and the facts were unclear. To sum up, except for Wan's appeal request and the factual reasons, the court of first instance found in the original judgment that the facts were clear and the law was correctly applied, and that Suzhou Lan Company forcibly used excessive rhetoric and distorted facts to smear the court of first instance and the judgment of first instance, and its assertion had no factual and legal basis. The equity transfer contract involved in the case has been substantially unable to be performed, the fundamental purpose of Wan's entry into Bozhou Lan Company cannot be realized, and after Suzhou Lan Company actually received Wan's equity transfer money, it did not protect Wan's initial purpose of becoming a shareholder, and then transferred equity without authorization and changed the legal representative's behavior directly infringed on Wan's legitimate rights and interests, so in this case, the background of Wan's investment has changed significantly due to the breach of contract of Suzhou Lan Company, and the purpose of the contract cannot be realized. It is requested that all appeals of Suzhou Lan Company be rejected in accordance with the law.
Huang argued that since I withdrew from May 20, 2023, all registrations and refunds were borne by Kong and Bozhou Lan.
Wan filed a lawsuit with the court of first instance requesting: 1. An order to dissolve the "Equity Transfer Agreement" signed by Wan, Huang and Suzhou Lan; 2. Suzhou Lan was ordered to return 6,000,000 yuan of share transfer money to Wan; 3. Order Suzhou Lan to pay Wan RMB 916,175.34 (based on RMB 6,000,000 and calculated at an annual interest rate of 4.2%) for the period from October 27, 2019 to June 14, 2023; 4. Order Suzhou Lan to pay liquidated damages of RMB 600,000 (RMB 6,000,000 ×10%) to Wan; 5. Order Suzhou Lan to pay Wan the interest on capital occupation from June 14, 2023 to the date of actual repayment (based on 6,000,000 yuan, calculated at an annual interest rate of 3.65%);6. Order Bozhou Lan and Kong to jointly bear the responsibility for the repayment of the above amounts; 7. The defendant shall jointly bear the litigation costs, preservation fees, preservation insurance premiums and other expenses of this case.
The court of first instance found the facts: in May 2018, Wan and Huang signed an Equity Transfer Agreement, which stipulated: Huang would hold 1,000,000 yuan of the equity of Bozhou Lan Company (specifically based on the company's first phase of investment amount, estimated at 8,000,000 yuan), accounting for about 12% of the equity, and Wan would pay the equity transfer money directly to Huang in a lump sum by transfer, and the agreement was signed by Wan and Huang. In the same month, Huang issued a receipt, which read: Today, he received 1,000,000 yuan from Wan for the equity transfer of Bozhou Lan Company (Huang), and the receipt was signed by Huang. On September 26, 2019, Suzhou Lan Company (Party A), Huang (Party B) and Wan (Party C) signed an "Equity Transfer Agreement of Bozhou Blue Environmental Protection Technology Co., Ltd.", which stipulates that Party A and Party B will transfer 20% of the equity of Bozhou Blue Company legally held by Party A to Party C (that is, Party A transfers 10% of Party C's equity and Party B transfers 10% of Party C's equity), and Party A and Party B are shareholders of Bozhou Blue Company and legally hold 100% of the company's equity (Party A's 51%). Party B 49%), Party A and Party B promise to actively assist Party C in handling the relevant equity transfer procedures, and the three parties agree and confirm that the equity transfer amount under the contract is RMB 6,000,000 (RMB 3,000,000 for 10% equity of Party A and RMB 3,000,000 for 10% equity of Party B), and Party C shall pay RMB 3,000,000 for the equity transfer to the transferor within 5 days of signing the agreement, which shall be registered as Party C's paid-in capital. Party A and Party B guarantee to transfer 20% of the equity of Bozhou Lan Company to the name of Party C within one month (the balance will be in place within the year according to the proportion of Party A and Party B's actual funds), and the liquidated damages are 10% of the total price of the equity transfer, and the contract is stamped with the official seal of Bozhou Lan Company, and signed by Huang and Wan. On October 28, 2021, Mr. Huang and Mr. Yue signed a "Letter of Agreement on Agreeing to Equity Transfer", which stipulated: Mr. Huang agreed to transfer 3% of the equity of Bozhou Lan Company of 6,000,000 yuan (accounting for 20% of the company's registered capital) to Mr. Yue, and the transfer price was RMB 1, and the agreement was signed by Mr. Huang and Mr. Yue. On May 26, 2023, Huang (Party A) and Kong (Party B) signed an "Equity Transfer Agreement", which stipulated: Bozhou Lan Company was established on April 13, 2018, with a paid-in registered capital of 30,000,000 yuan, Huang holds 49% of the company's shares, and both parties confirm that Huang transferred 49% of the shares of Bozhou Lan Company held by Huang to Party B, and other shareholders of the company waived their priority to be compensated. Party A agrees to transfer 49% of the shares of Bozhou Blue Company to Party B at 0 consideration, and Party A no longer enjoys the rights and interests of shareholders of Bozhou Blue Company from the date of entry into force of the agreement, nor does it assume obligations to the shares, and the agreement is signed by Huang and Kong. On May 28, 2023, Huang and Kong signed a "Supplementary Agreement on Equity Transfer", which stipulated: Huang agreed to withdraw from Bozhou Lan Company, and after the withdrawal, all the remaining claims and debts of Huang, Bozhou Lan and Kong (including but not limited to the balance of 2,100,000 yuan from Bozhou Lan Company to Huang in 2019 to sign up for bidding for the original Su calcium industry assets, the obligation to pay the capital contribution to Bozhou Lan Company, and other sporadic payments, etc.) have been fully settled. There is no creditor's rights and debts between Bozhou Lan and Kong. Huang does not enjoy any profits, losses and external debts during the existence and operation of Bozhou Lan company, and the 1,000,000 yuan share capital remitted to Huang by Wan in the early stage of Lan's environmental protection (to be held by Huang at that time) has been fully reflected in the settlement of 20% equity owned by Wan, and Wan no longer has the right to recover 1,000,000 yuan of share capital from Huang, and Bozhou Lan company has registered this part of the share capital for industrial and commercial registration, and after Huang withdrew from the 49% equity of industrial and commercial registration, he no longer has the right to Tong, The two shareholders of Wan bear any obligations such as the transfer of equity and the return of the equity transfer money, and all the responsibilities and obligations of Tong and Wan for the equity investment in Bozhou Lan (including but not limited to registration or return of the equity investment transfer money) are borne by Kong and Lan Environmental Protection Technology Co., Ltd., and the agreement is signed by Huang and Kong. On May 4, 2018, Wan transferred RMB 1,000,000 to Huang through Bank of China, with the postscript that it was an investment fund. On September 27, 2019, Wan transferred 2,000,000 yuan to Bozhou Lan through Bank of China, with the postscript that it was an investment fund. On November 7, 2019, Wan transferred RMB 1,000,000 to Bozhou Lan through Bank of China, with the postscript of investment funds. On December 3, 2019, Wan transferred RMB 500,000 to Bozhou Lan through Bank of China, with the postscript as investment funds. On January 16, 2020, Wan transferred RMB 500,000 to Bozhou Lan through Bank of China, with the postscript of investment funds. On March 4, 2020, Wan transferred RMB 1,000,000 to Bozhou Lan through Bank of China, with the postscript that it was an investment fund. On September 18, 2020, Bozhou Lan made a notice on the appointment of Cao and other positions, in which Kong was the general manager with a total salary of 9,000 yuan; Huang is the deputy general manager, with a total salary of 8,000 yuan; Mr. Zhao is the deputy general manager, with a total salary of 8,000 yuan. On April 1, 2021, Bozhou Lan formed a resolution of the No. 20210401 shareholders' meeting, attended by Suzhou Lan Company, Huang, Wan and Tong, and the content of the resolution was: Suzhou Lan Company contributed 13,500,000 yuan in cash, accounting for 45% of the company's shares; Huang's cash contribution is 6,000,000 yuan, accounting for 20% of the company's shares; Wan's cash contribution is 6,000,000 yuan, accounting for 20% of the company's shares; Tong's cash contribution is 4,500,000 yuan, accounting for 15% of the company's shares, agreeing to the transfer of 6% equity of Suzhou Lan company to Wan, agreeing to the transfer of 14% of Huang's equity to Wan, and 15% of the equity transfer to Tong, regardless of whether the equity is changed for industry and commerce, within one year from the date of signing this resolution, the parties shall not transfer the investment or transfer the equity share, the four-party cooperation contract investment, with the proportion of the actual investment of the parties to share the risk and share the profits, Bozhou Lan company appointed the chairman, Suzhou Lan company, Huang, Wan appointed a director, Tong served as a supervisor, and the resolution was stamped with the official seal of Suzhou Lan company, and signed by Kong, Huang, Wan and Tong. On January 21, 2022, Bozhou Lan Company formed a resolution of the No. 20220121 shareholders' meeting, which agreed to the transfer of 900,000 yuan (accounting for 3% of the company's shares) by Huang to Yue. On April 3, 2021, a company in Bozhou Lan formed a resolution of the No. 20210403 shareholders' meeting, which reads: the company needs 6,000,000 yuan of working capital for operation, borrows for 6 months of financing, and the annual interest is 2 cents, and the shareholders share the loan amount according to the company's proportion of shares, of which Suzhou Lan company is 2,700,000 yuan, Huang is 1,200,000 yuan, Wan is 1,200,000 yuan, and Tong is 900,000 yuan, and the loan is repaid as agreed, and the chairman is fully responsible. Shareholders should borrow the full amount of the loan to be transferred to the basic account of the company's Bank of China before the end of June 2021, and if the loan is not fully paid within the specified period, it will be in default, and the defaulter must bear the interest on the unpaid loan amount as compensation for the non-compliance. On October 16, 2023, a company in Bozhou Lan formed a resolution of the shareholders' meeting, and the participating shareholders were Suzhou West Cryogenic Equipment Co., Ltd., Suzhou Lan Company, Changde Kai Special Agricultural Technology Co., Ltd., and Kong. After the change of shareholders, the capital contribution is: Suzhou West Cryogenic Equipment Co., Ltd. invested 6,000,000 yuan, and the capital contribution ratio was 20%; Suzhou Lan Environmental Protection Technology Co., Ltd. invested 21,000,000 yuan, with a capital contribution ratio of 70%; Changde Kaimoute Agricultural Technology Co., Ltd. invested 3,000,000 yuan, with a capital contribution ratio of 10%. Agreed to have Xiong as the general manager, remove Kong from the position of the original manager, elect Zhao as the company's supervisor, and remove Yue as a supervisor. Kong voluntarily transferred the 6,000,000 yuan of monetary contribution he held in Bozhou Lan company, accounting for 20% of the registered capital of the equity to a Suzhou Co., Ltd., Kong voluntarily transferred the 3,000,000 yuan of monetary contribution and 10% of the registered capital held by him in Bozhou Lan to Changde Kai Moute Agricultural Technology Co., Ltd., and Kong voluntarily held 5,700,000 yuan of monetary capital in Bozhou Lan company. Accounting for 19% of the registered capital of the equity transferred to Suzhou Lan company, the other original shareholders agreed to the transfer of the equity, and waived the right of first refusal of the above equity, the resolution stamped Suzhou Lan company, Suzhou West Cryogenic Equipment Co., Ltd. and Changde Kai Special Agricultural Technology Co., Ltd. official seal, and signed by Kong. At the same time, the name of the shareholder, the method of capital contribution, and the amount of capital contribution in the articles of association of Bozhou Lan were changed accordingly. Kong signed the "Equity Transfer Agreement" with Suzhou West Cryogenic Equipment Co., Ltd., Changde Kai Moute Agricultural Technology Co., Ltd. and Suzhou Lan Company respectively to stipulate the equity transfer matters, and the content is consistent with the resolution and articles of association of the shareholders' meeting. On January 8, 2024, Bozhou Lan formed a resolution of the 20240108 shareholders' meeting, which reads: 1. On April 29, 2021, Suzhou Lan, a shareholder of the company, agreed to transfer 6% of the company's shares to Wan;2. In 2018, when the company and Suzhou Sheng Information Technology Co., Ltd. purchased a special complete set of equipment with an annual output of 50,000 tons of new organic fertilizer, the original contract price of the equipment was 9,030,000 yuan, and then Huang changed the equipment price to 1,082,360 yuan without authorization. As a result, Huang and Huang (by issuing false labor invoices) obtained a part of the price increase of the equipment in the amount of RMB 1,047,800; 3. On May 9, 2019, the "Memorandum of Shareholders' Discussion of Bozhou Lan Environmental Protection Technology Co., Ltd." agreed to entrust Huang to participate in the auction of Bole Su Calcium Industry Co., Ltd. by the Bole Municipal People's Court. Huang withdrew 3,300,000 yuan from the company, but took the land use rights, factory buildings, and all production equipment of Su's calcium industry company as his own. On April 1, 2020, Huang returned RMB 1,200,000 to the Company in three installments, but the balance of RMB 2,100,000 has not been returned to date; 4. In April 2018, Huang and Huang falsely issued labor invoices to obtain RMB 1,770,171 from the company in the name of collecting technology transfer fees; 5. Huang falsely issued labor invoices and falsely reported expenses of RMB 155,550 to the company. The resolution is: agree to cooperate with Suzhou to transfer 6% of the company to Wan; For the above-mentioned serious infringement of the company's interests by Huang, if Huang cannot return all the embezzled funds in accordance with the law, it is planned to apply for judicial handling. On October 12, 2023, the Bole Municipal Taxation Bureau made a "Matter Investigation Form" for the transfer of individual equity of a company in Bozhou Lan, which reads: The company was established on April 17, 2018, with a registered capital of 30,000,000 yuan, and according to the resolution of the shareholders' meeting on September 12, 2023, Kong transferred 20% of the equity 0 yuan to Suzhou West Cryogenic Equipment Co., Ltd., and transferred 19% of the equity 0 yuan to Suzhou Lan company. The 10% equity of 0 yuan was transferred to Changde Kai Moute Agricultural Technology Co., Ltd., and the undistributed profit in the balance sheet in July 2023 was -5,997,227.05 yuan, and the paid-in capital was 29,920,000 yuan. Because there is no taxable income for the equity transfer, there is no need to declare and pay individual income tax, and there is no need to pay stamp duty because the equity transferor and the two parties transfer the equity at 0 yuan. Bozhou Lan Company was established on April 13, 2018, with a registered capital of 30,000,000 yuan, the type is a limited liability company, the legal representative is Kong, and the shareholders are Suzhou Lan and Huang, of which Suzhou Lan Company subscribed for 15,300,000 yuan and Huang subscribed for 14,700,000 yuan. The company's 2019 annual report stated that the shareholders were Suzhou Lan Company, Huang and Wan, of which Suzhou Lan Company contributed 13,200,000 yuan, Wan contributed 3,000,000 yuan, and Huang contributed 9,020,000 yuan. In the company's 2020 annual report, it is stated that the shareholders are Tong, Huang, Suzhou Lan and Wan, of which Tong contributed 4,500,000 yuan, Huang contributed 7,000,000 yuan, Suzhou Lan invested 13,500,000 yuan, and Wan contributed 5,000,000 yuan. On May 31, 2023, the company will invest in Suzhou Lan and Kong. Suzhou Shengmou Information Technology Co., Ltd. was established on September 11, 2015, and the legal representative is Kong. Suzhou Lan company was established on July 27, 2006, and the legal representative is Kong. Suzhou Dry Technology Co., Ltd. was established on April 3, 2009, and the legal representative is Kong. Kong and Kong are uncles and nephews. In 2019, Bozhou Lan issued ordinary VAT invoices to Suzhou Han Technology Co., Ltd., Suzhou Lan Company and Suzhou Sheng Information Technology Co., Ltd. respectively. In the WeChat group of a shareholders' meeting of Bozhou Lan, Kong Mou posted in the WeChat group on October 18, 2022, "Bozhou Lan staff: The company has gone through three years of difficulty, and finally succeeded in trial production with everyone's efforts, but so far the company has been in difficulty, I have been unable to support it, and I am looking for partners, so I temporarily decided to suspend the company's operation, and I ask you (Cao, Xu, and Gao to stay behind) to leave after settling their salaries at the end of October 2022." Wan agreed that Huang unconditionally withdrew from Bozhou Lan's company. The court of first instance held that the second paragraph of Article 1 of the Several Provisions of the Supreme People's Court on the Temporal Effect of the Application of the Civil Code of the People's Republic of China) stipulates that "in cases of civil disputes arising from legal facts before the implementation of the Civil Code, the provisions of the laws and judicial interpretations at that time shall apply, unless otherwise provided by the laws and judicial interpretations." "The legal facts involved in this case occurred before the implementation of the Civil Code of the People's Republic of China, so the Civil Code of the People's Republic of China should not be applied to this case, but the laws and judicial interpretations at that time should be applied. This case is an equity transfer contract dispute, and according to the arguments of both parties, the focus of the dispute in this case is whether the equity transfer agreement involved in the case can be terminated, and whether Suzhou Lan, Bozhou Lan, Huang and Kong should return the equity transfer money and pay liquidated damages. According to the law, in order for the legal effect of terminating the contract to occur, Wan must have the right to terminate by agreement or the right to terminate by law. Regarding the right to terminate the agreement. Article 93 of the Contract Law of the People's Republic of China stipulates: "The parties may terminate the contract by consensus. The parties may agree on the conditions under which one party may terminate the contract. If the conditions for rescission are fulfilled, the person with the right to terminate the contract may terminate the contract. "In this case, the equity transfer agreement involved in the case did not stipulate the conditions for terminating the contract, and the two parties did not agree to terminate the contract through negotiation, so in this case, Wan did not enjoy the right to terminate by agreement. Regarding the statutory right of rescission. Article 94 of the Contract Law of the People's Republic of China stipulates: "The parties may rescind the contract under any of the following circumstances: (1) the purpose of the contract cannot be achieved due to force majeure; (2) Before the expiration of the performance period, one of the parties clearly expresses or shows by its own conduct that it will not perform the main obligation; (3) One of the parties delays the performance of the main debt and fails to perform it within a reasonable period of time after being reminded; (4) One of the parties delays the performance of its obligations or has other breaches of contract, resulting in the inability to achieve the purpose of the contract; (5) Other circumstances provided for by law. "In this case, the key to judging whether Wan can exercise the statutory right of rescission is to determine whether the purpose of the equity transfer agreement involved in the case cannot be realized, that is, to determine whether it constitutes a fundamental breach of contract, which should be comprehensively judged in combination with the purpose of the contract, the nature of the breach, and the consequences caused by the breach. The purpose of Wan is to realize the shareholding of Bozhou Lan and exercise the rights of shareholders as a shareholder, and the purpose of Bozhou Lan is to obtain the share transfer price, and the core is the rights of shareholders. Equity is a comprehensive property right, which includes not only the right to property income, but also the voting rights of shareholders and other rights. Combined with the evidence provided by the original defendant, Wan paid 5,000,000 yuan for the equity transfer to Bozhou Lan Company, and Suzhou Lan Company, Bozhou Lan Company, and Kong argued that the 1,000,000 yuan paid by Wan to Huang on May 4, 2018 had nothing to do with the equity transfer involved in the case, and could not be determined to be the equity transfer money paid by Wan, but according to the "Supplementary Agreement on Equity Transfer" signed by Huang and Kong, it was agreed that Wan remitted 1 to Huang in the early stage of Lan's environmental protection. The share capital of 000,000 yuan (to be held by Huang at that time) has been fully reflected in the settlement of 20% of the equity owned by Wan, and Wan no longer has the right to recover the share capital of 1,000,000 yuan from Huang, and the industrial and commercial registration of this part of the share capital by Bozhou Lan Company can confirm that the 1,000,000 yuan paid by Kong to Wan has been regarded as equity transfer money, and the arguments of Suzhou Lan Company, Bozhou Lan Company, and Kong are inconsistent with their contractual provisions and are not accepted. Although it is confirmed that Wan has attended the shareholders' meeting according to the evidence provided by Suzhou Lan, it cannot be proved that Wan participated in the revision of the articles of association of Bozhou Lan, the replacement of directors and other matters to exercise shareholder voting rights, nor can it be confirmed that Wan has appointed management personnel to participate in the management of the company, and it cannot be proved that Wan has achieved the contractual purpose of the equity transfer plan. Now Kong and Suzhou Lan have transferred the company's equity, which has affected Wan's realization of shareholders' rights. Suzhou Lan Company, Bozhou Lan Company, and Kong argued that Wan's lawsuit had exceeded the exclusion period, and the right to terminate the contract was a right of formation, which was calculated from the date on which the right holder knew or should have known that the right had arisen, and the provisions on the suspension, interruption and extension of the statute of limitations did not apply. The Equity Transfer Agreement was a contract established before the implementation of the Civil Code, and the law at that time did not stipulate the time limit for exercising the right of rescission. According to the relevant provisions of the Civil Code, the right of rescission shall be exercised within one year from the date on which the person knows or should know the cause, or if it is not exercised within a reasonable period of time after being urged by the other party, the right shall be extinguished. Bozhou Lan did not go through the equity change procedures within one month of signing the contract, that is, before October 26, 2019, as agreed in the contract, and Suzhou Lan argued that it had been cooperating with Wan to handle the registration of equity change, because it did not submit an application for change, but failed to provide evidence to substantiate that the court of first instance believed that the fault for not being able to handle the change registration lay with Suzhou Lan Company, but Wan still had the possibility of expecting the performance of the contract, and Wan was still in the shareholder group of Bozhou Lan by 2022. On October 16, 2023, Suzhou Lan transferred the equity to an outsider without notifying Wan, and the behavior of Suzhou Lan Company ultimately made it impossible to achieve the purpose of the contract. Therefore, Wan claimed to terminate the contract in accordance with the law by filing a lawsuit, and he did not exceed the time limit for exercising. The return of the equity transfer money is based on the claim arising after the termination of the contract, and the starting point of the statute of limitations for the claim should be calculated from the time when the contract is terminated, so Wan's lawsuit did not exceed the statute of limitations, and the defense of Suzhou Lan and Bozhou Lan on exceeding the statute of limitations was not accepted. Wan directly filed a lawsuit to claim the termination of the "Equity Transfer Agreement" signed with Huang and Suzhou Lan in accordance with the law, and supported it. Legal consequences of rescission of the contract. After the contract is terminated, if the performance has not been performed, the performance shall be terminated, and if the contract has already been performed, the parties may request restoration of the original state or take other remedial measures according to the performance and the nature of the contract, and have the right to claim compensation for losses; If the contract is terminated due to breach of contract, the person rescinding may request the breaching party to bear the liability for breach of contract, unless otherwise agreed by the parties. Therefore, Suzhou Lan Company should return the equity transfer money of 5,000,000 yuan paid by Wan, and the 1,000,000 yuan paid by Wan to Huang has been confirmed by Kong as the equity transfer money paid to Bozhou Lan Company, and it is clearly agreed that Wan no longer enjoys the right to claim against Huang, so the money should also be returned by Suzhou Lan Company, and Wan's litigation claim that Suzhou Lan Company return the equity transfer money of 6,000,000 yuan is supported. Wan demanded that Suzhou Lan pay RMB 916,175.34 in interest on capital occupation from October 27, 2019 to June 14, 2023, and interest during the period of capital occupation from June 14, 2023 to the date of actual repayment. Wan demanded that Suzhou Lan pay liquidated damages of RMB 600,000, because Suzhou Lan and Kong failed to complete the registration of equity change in accordance with the contract, and failed to provide evidence to prove that the reason for the failure to change was attributed to Wan, so Suzhou Lan Company had constituted a breach of contract, and the liquidated damages were 10% of the equity transfer price according to the contract. Wan demanded that Bozhou Lan and Kong and Suzhou Lan bear joint liability for compensation, but failed to provide evidence to prove that Kong and Bozhou Lan voluntarily returned the equity transfer money, which was not supported. First-instance judgment: 1. Terminate the "Equity Transfer Agreement" signed by Wan, Huang and Suzhou Lan Environmental Protection Technology Co., Ltd. on September 26, 2019; 2. Suzhou Lan Environmental Protection Technology Co., Ltd. returned 6,000,000 yuan of equity transfer money to Wan within 10 days after the judgment took effect; 3. Suzhou Lan Environmental Protection Technology Co., Ltd. paid liquidated damages of RMB 600,000 to Wan within 10 days after the judgment took effect; 4. Reject Wan's other litigation claims.
During the second instance of this court, the parties submitted evidence in accordance with the law around the appeal request. This court organized the parties to exchange evidence and cross-examine evidence. Wan submitted: 1. General payment of non-tax income 2, Xinjiang VAT electronic ordinary invoice 3, and civil ruling of the People's Court of Bole City, Xinjiang Uygur Autonomous Region (2023) Xin 2701 Min Chu No. 2211, to prove: 1. Wan had paid the litigation preservation insurance premium of 6,764 yuan in the first instance. 2. Wan had already paid a preservation fee of RMB 5,000 in the first instance. After cross-examination, Suzhou Lan Company believes that the evidence belongs to the evidence formed or generated before the deadline of the first-instance evidence presentation period, and Wan failed to submit the property preservation ruling, the receipt of the property preservation fee, and the receipt of the property preservation insurance premium during the first-instance evidence presentation period, which is an overdue evidence, and Suzhou Lan Company does not agree to cross-examine the group of evidence, and does not express an opinion on the authenticity, relevance, and legality of the evidence. Huang recognized the authenticity and relevance of the evidence. This court confirms the authenticity of the above evidence.
The facts disputed by the parties in the second instance are found by this court as follows: Wan X applied for property preservation during the trial of the first instance of this case, and the court of first instance issued the (2023) Xin 2701 Cai Bao No. 2211 Preservation Ruling, and Wan X paid a preservation fee of RMB 5,000 and a litigation preservation insurance premium of RMB 6,764. This court affirms other facts ascertained by the court of first instance.
This court believes that the focus of the dispute in this case is: 1. Is there a factual and legal basis for Wan to terminate the Equity Transfer Agreement signed on September 26, 2019 and require Suzhou Lan to return the equity transfer money and pay liquidated damages? 2. Is there any factual and legal basis for Wan's request for Suzhou Lan to return the preservation fee and preservation insurance premium? 3. Is there any factual and legal basis for Wan to request Bozhou Lan and Kong to bear joint payment liability? According to the second paragraph of Article 1 of the Several Provisions of the Supreme People's Court on the Temporal Effect of the Application of the Civil Code of the People's Republic of China, "In cases of civil disputes arising from legal facts before the implementation of the Civil Code, the provisions of the laws and judicial interpretations at that time shall apply. "In this case, the signing of the equity transfer agreement and the payment of the equity transfer money by Wan occurred before the implementation of the Civil Code, so the provisions of the laws and judicial interpretations at that time should be applied as the basis for adjudication, and the law was applied correctly in the first instance, and this court affirms it. Regarding the first focus of dispute, in this case, Wan argued that the breach of contract by Suzhou Lan Company caused the "Equity Transfer Agreement" involved in the case to be unable to achieve the purpose of the contract and should be terminated. The court held that according to Article 94 of the Contract Law of the People's Republic of China, "the parties may rescind the contract under any of the following circumstances: (1) the purpose of the contract cannot be achieved due to force majeure; (2) Before the expiration of the performance period, one of the parties clearly expresses or shows by its own conduct that it will not perform the main obligation; (3) One of the parties delays the performance of the main debt and fails to perform it within a reasonable period of time after being reminded; (4) One of the parties delays the performance of its obligations or has other breaches of contract, resulting in the inability to achieve the purpose of the contract; (5) Other circumstances provided for by law. "The actual transfer of equity depends on the actual performance of the agreement between the two parties, and the purpose of Wan's transfer of the equity of Bozhou Lan held by Suzhou Lan Company and Huang is to become a shareholder of the company and obtain a return on investment. Article 94 (4) of the Contract Law of the People's Republic of China is a clear provision for fundamental breach of contract, which effectively gives the non-breaching party the right to rescind the contract if the breaching party constitutes a fundamental breach. In this case, Wan has fulfilled the obligation to pay the equity transfer money since he signed an equity transfer agreement with Suzhou Lan and Huang on September 26, 2019, but 20% of the equity of Bozhou Lan has not been changed and registered in Wan's name. Suzhou Lan Company appealed, claiming that Wan had participated in the company's major decision-making and had obtained the status of a prospective shareholder of Bozhou Lan Company. Although it is confirmed that Wan has attended the shareholders' meeting based on the evidence provided by Suzhou Lan, it cannot be proved that Wan participated in the revision of the articles of association of Bozhou Lan, the replacement of directors and other matters to exercise shareholder voting rights, nor can it be proved that Wan has appointed management personnel to participate in the management of the company, and it cannot be confirmed that Wan has achieved the contractual purpose of the equity transfer plan. Now Kong and Suzhou Lan Environmental Protection Technology Co., Ltd. have transferred the company's equity, which has an impact on Wan's realization of shareholders' rights and interests. Suzhou Lan's breach of contract for failing to change the equity in accordance with the contract made the purpose of the "Equity Transfer Agreement" unable to be realized, and Wan's request to terminate the agreement was in accordance with the law. Suzhou Lan Company appealed that the reason that the Equity Transfer Agreement did not meet the statutory conditions for termination could not be established, and this court did not accept it. According to the provisions of the Contract Law and relevant judicial interpretations, there is no statutory exclusion period for the right to terminate a contract, and the right of termination can be exercised at any time after one of the parties has enjoyed the right of termination in accordance with the agreement or the provisions of the law. Suzhou Lan's appeal asserted that Wan's exercise of the statutory right of termination exceeded the exclusion period prescribed by law, which had no factual and legal basis, and this court did not support it. According to Article 97 of the People's Republic of China Contract Law: "After the contract is terminated, if it has not been performed, the performance shall be terminated; If it has already been performed, the parties may request restitution, take other remedial measures, and have the right to claim compensation for losses, depending on the performance and the nature of the contract. In this case, due to the breach of contract of Suzhou Lan Company, the "Equity Transfer Agreement" was terminated, and Wan had the right to require Suzhou Lan Company to return the equity transfer money in accordance with the above-mentioned legal provisions. In the first instance, Wan submitted the equity transfer agreement signed with Huang in May 2018, the receipt issued by Huang in May 2018, and the electronic receipt of Bank of China's online banking on May 4, 2018, confirming that Wan and Huang signed an equity transfer agreement in May 2018, and Wan transferred RMB 1,000,000 to Huang. The above evidence corroborates the contents of the equity transfer agreement and supplementary agreement signed between Huang and Kong on May 26 and 28, 2023, and confirms that the RMB 1,000,000 paid by Kong, as the legal representative of Suzhou Lan, to Wan has been regarded as an equity transfer. Therefore, the first-instance trial found that the equity transfer money of RMB 1,000,000 paid by Wan to Huang was also returned by Suzhou Lan Company to Wan, and that Wan's request for Suzhou Lan Company to return RMB 6,000,000 of the equity transfer money was correct and upheld by this court. The equity transfer agreement involved in the case stipulated that the liquidated damages were 10% of the equity transfer price, and Wan's request for Suzhou Lan to pay liquidated damages of RMB 600,000 was in line with the contract between the two parties. With regard to the second focus of the dispute, in the second instance, Wan submitted evidence of payment of preservation fees and litigation preservation insurance premiums, which should be supported, and Suzhou Lan Company should bear the preservation fee of RMB 4,390 and the litigation preservation insurance premium of RMB 5,938.79 according to the proportion of winning and losing the lawsuit. Regarding the third focus of the dispute, Wan demanded that Bozhou Lan and Kong and Suzhou Lan bear joint liability for compensation. When Kong and Huang signed the equity transfer agreement and supplementary agreement, they were the legal representatives of Suzhou Lan and Bozhou Lan. As the target company, Bozhou Lan did not hold a general meeting of shareholders at that time, nor did it solicit the opinions of other shareholders, which did not comply with Article 16 of the Company Law of the People's Republic of China, and Bozhou Lan Company should not bear joint repayment liability for this. Therefore, this court does not support Wan's grounds of appeal.
To sum up, Wan's appeal request is partially established, and Suzhou Lan's appeal request cannot be established. In accordance with Articles 94, 97, 108 and 114 of the People's Republic of China Contract Law, Articles 147 and Article 177, Paragraph 1, Item 2 of the People's Republic of China Civil Procedure Law, and Article 90 of the Interpretation of the Supreme People's Court on the Application of the People's Republic of China Civil Procedure Law, the judgment is as follows:
1. Items 1, 2, and 3 of the (2023) Xin 2701 Min Chu No. 2211 Civil Judgment of the Bole Municipal People's Court of Xinjiang Uygur Autonomous Region are upheld (i.e., 1. The Equity Transfer Agreement signed on September 26, 2019 between the appellant Wan, the appellant Suzhou Lan Environmental Protection Technology Co., Ltd., and the appellee Huang is dissolved; 2. The appellant, Suzhou Lan Environmental Protection Technology Co., Ltd., returned the equity transfer money of RMB 6,000,000 to the appellant Wan within 10 days after this judgment came into effect; 3. The appellant, Suzhou Lan Environmental Protection Technology Co., Ltd., shall pay liquidated damages of RMB 600,000 to the appellant Wan within 10 days after this judgment takes effect);
2. Revoke item 4 of the (2023) Xin 2701 Min Chu No. 2211 Civil Judgment of the Bole Municipal People's Court of Xinjiang Uygur Autonomous Region (i.e., 4. Reject Appellant Wan's other litigation claims. ）
3. The appellant, Suzhou Lan Environmental Protection Technology Co., Ltd., paid the appellant Wan a preservation fee of RMB 4,390 and a litigation preservation insurance premium of RMB 5,938.79 within 10 days after this judgment took effect.
4. Appellant Wan's other litigation claims in the first instance are rejected.
If the obligation to pay money is not fulfilled within the period specified in this judgment, the interest on the debt for the period of delay in performance shall be doubled in accordance with the provisions of Article 264 of the Civil Procedure Law of the People's Republic of China.
The first-instance case acceptance fee was 64,413 yuan, of which 7,852 yuan was borne by the appellant Wan and 56,561 yuan was borne by the appellant Suzhou Lan Environmental Protection Technology Co., Ltd.; The appellant Wan paid a second-instance case acceptance fee of RMB 58,082.35 in advance, of which the appellant Wan was to bear RMB 57,991.65 and the appellant Suzhou Lan Environmental Protection Technology Co., Ltd. to bear RMB 90.7, and the appellant Suzhou Lan Environmental Protection Technology Co., Ltd. paid a second-instance case acceptance fee of RMB 58,000 in advance, which was borne by the appellant Suzhou Lan Environmental Protection Technology Co., Ltd.
This judgment is final.
Presiding Judge: Liu Guiyong
Judge Gulazati · Abrajan
Judge Zhguli · Eisenbek
July 12, 2024
Clerk: Fu Wenli
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