Perspective | A preliminary legal discussion on creditors' claims against shareholders who have not fulfilled their capital contribution obligations in full

In March 2020, A Limited Liability Company undertook a small-scale project at the factory area of B Limited Liability Company. The project cost was finally audited and determined to be 2 million yuan. In addition, C Company and D Company are two shareholders of B Company, with capital contributions of 1 million yuan each. The subscribed capital contribution date was September 1, 2021. C Company failed to pay the full amount of its capital contribution by the due date, with an outstanding amount of 200,000 yuan. Because B Company still owed A Company 1.2 million yuan in project funds, A Company sued B Company, C Company, and D Company to the court, requesting that each defendant bear the corresponding legal liability.

1. Legal Provisions
 

Article 13 of the Supreme People's Court's Provisions on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III) (2020 Amendment)

Paragraph 2: If a company creditor requests that a shareholder who has not fulfilled or fully fulfilled its capital contribution obligations bear supplementary compensation liability for the portion of the company's debt that cannot be repaid within the scope of the unpaid capital and interest, the people's court shall support the request; if the shareholder who has not fulfilled or fully fulfilled its capital contribution obligations has already borne the aforementioned liability, and other creditors make the same request, the people's court shall not support it.

Paragraph 3: If a shareholder failed to fulfill or fully fulfill its capital contribution obligations at the time of the company's establishment, and the plaintiff, in accordance with Paragraph 1 or 2 of this Article, requests that the company's initiators and the defendant shareholder bear joint and several liability, the people's court shall support the request;

2. Court Judgment

As a shareholder and contributor of B Company, C Company should have paid 1 million yuan in capital contribution before September 1, 2021. However, it actually paid 800,000 yuan, with an unpaid amount of 200,000 yuan. According to Paragraph 2 of the aforementioned judicial interpretation, it should bear supplementary compensation liability for the debt involved within the scope of its unpaid capital of 200,000 yuan.

As an initiator of B Company, D Company, according to Paragraph 3 of the aforementioned judicial interpretation, should bear joint and several liability with C Company for the aforementioned liability. After D Company bears the liability, it can seek recourse from C Company.

In another case involving B Company, in August 2024, M Company sued B Company to a district people's court in Shijiazhuang City due to a dispute over unpaid project funds, requesting that B Company shareholders C Company and D Company bear supplementary liability. Finally, the court rejected M Company's request for C Company and D Company to bear supplementary compensation liability based on Paragraph 2 of the aforementioned judicial interpretation.

3. Lawyer's Analysis

For shareholders whose capital contribution deadline has expired but who have not contributed or fully contributed capital, they should bear supplementary compensation liability for the portion of the company's debt that cannot be repaid within the scope of the unpaid capital and interest. The initiators and shareholders who have not fully fulfilled their capital contribution obligations bear joint and several liability. There is little dispute about this in practice. It should be noted that in litigation, it is necessary to ascertain in advance whether the debtor shareholder has already borne this part of the liability in other cases.

A Company and B Company signed a goods purchase and sale contract in 2023. Later, due to B Company's arrears of 800,000 yuan in goods payment, in December 2024, A Company sued B Company to the court, requesting immediate payment of 800,000 yuan in goods payment and overdue payment losses. At the same time, A Company requested that B Company shareholders Liu and Zhang (shareholders whose capital contribution deadline has not yet arrived) bear supplementary liability for B Company's debt within the scope of their unpaid capital and interest.

1. Legal Provisions
 

Article 6 of the Minutes of the National Conference on Civil and Commercial Trial Work of Courts (hereinafter referred to as "Nine Civil Minutes"): If a creditor requests that a shareholder whose capital contribution deadline has not yet arrived bear supplementary compensation liability for the company's debt that cannot be repaid within the scope of the unpaid capital, on the grounds that the company cannot repay its due debts, the people's court shall not support the request. However, the following situations are exceptions: (1) In cases where the company is the enforced party, the people's court has exhausted all enforcement measures and there are no assets available for enforcement, and the reasons for bankruptcy exist, but bankruptcy is not applied for; (2) After the company's debt arises, the company's shareholder (general) meeting resolution or other means extends the shareholder's capital contribution deadline.

Article 35 of the Enterprise Bankruptcy Law: After the people's court accepts a bankruptcy application, if the contributor of the debtor has not fully fulfilled its capital contribution obligations, the administrator shall request the contributor to pay the subscribed capital contribution regardless of the capital contribution deadline. Article 46 stipulates that unpaid claims are deemed due upon acceptance of the bankruptcy application. Claims with interest cease to accrue interest from the date of acceptance of the bankruptcy application. This is a provision on the acceleration of the due date of creditors' claims in bankruptcy proceedings.

Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Enterprise Bankruptcy Cases: Article 70 stipulates that unpaid claims of the debtor at the time of bankruptcy declaration are deemed due and belong to the bankruptcy property, but the unpaid interest should be deducted. This is a provision on the acceleration of the due date of the debtor's claims.

Article 54 of the New Company Law: If a company cannot repay its due debts, the company or the creditor of the due debt has the right to request that a shareholder who has already subscribed for capital but whose capital contribution deadline has not yet arrived pay the capital contribution in advance.

2. Court Judgment

The court held that: Regarding the supplementary compensation liability of the defendant shareholders Liu and Zhang within the scope of their unpaid capital and interest, according to Article 54 of the Company Law of the People's Republic of China, if a company cannot repay its due debts, the company or the creditor of the due debt has the right to request that a shareholder who has already subscribed for capital but whose capital contribution deadline has not yet arrived pay the capital contribution in advance. According to Article 2 of the Supreme People's Court's Provisions on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People's Republic of China (I), if the following situations exist simultaneously, the people's court shall determine that the debtor cannot repay its due debts: (1) The creditor-debtor relationship is legally established; (2) The debt performance deadline has expired; (3) The debtor has not fully repaid the debt.

In this case, defendant B Company meets the conditions of a debtor being unable to repay its due debts. Therefore, even though the company's shareholders have not yet reached their capital contribution deadline, the creditor still has the right to request the shareholders to pay their capital contributions in advance. According to Article 13, Paragraph 2 of the Supreme People's Court's "Several Provisions on the Application of the Company Law of the People's Republic of China (III)", if a company creditor requests shareholders who have not fulfilled or fully fulfilled their capital contribution obligations to bear supplementary compensation liability for the portion of the company's debt that cannot be repaid within the scope of unpaid capital and interest, the people's court should support it.

3. Lawyer's Analysis

Article 6 of the "Minutes of the Ninth Civil Law Conference" takes a principled prohibitive attitude towards the acceleration of maturity. Only in two exceptional circumstances—when the company already has grounds for bankruptcy but does not apply for bankruptcy, and when the capital contribution deadline is maliciously extended—can the maturity be accelerated. However, in judicial practice, it is extremely difficult for creditors to prove the applicability of shareholder acceleration of maturity, and this problem has not been solved as a result. Article 54 of the new Company Law establishes an independent rule for the acceleration of shareholder capital contributions in non-bankruptcy situations, breaking through the restrictions of Article 6 of the "Minutes of the Ninth Civil Law Conference" and resulting in a judgment that shareholders whose capital contribution deadline has not yet arrived bear supplementary compensation liability.

This judgment result has solved the long-standing gap in this field in judicial practice. It not only protects the legitimate rights and interests of creditors but also serves as a warning to shareholders who have not fulfilled or fully fulfilled their capital contribution obligations, demonstrating judicial fairness and efficiency.

In March 2020, A Limited Liability Company undertook a small-scale project at the factory area of B Limited Liability Company. The project cost was finally audited and determined to be 2 million yuan. In addition, C Company, D Company, and E Company are shareholders of B Company, with capital contributions of 1 million yuan, 1 million yuan, and 500,000 yuan respectively. The acknowledged capital contribution date is September 1, 2025. Among them, E Company actually acquired 33% of the equity from D Company. E Company failed to pay the full capital contribution amount of 200,000 yuan when due. Because B Company still owes A Company 500,000 yuan in project funds, A Company sued B Company, D Company, and E Company to the court, requesting that each defendant bear the corresponding legal liability according to law.

1. Legal Provisions
 

Article 88 of the New Company Law: If a shareholder transfers equity for which capital contribution has been acknowledged but the contribution deadline has not yet arrived, the transferee shall bear the obligation to pay such capital contribution; if the transferee fails to pay the capital contribution in full and on time, the transferor shall bear supplementary liability for the transferee's failure to pay on time. Shareholders who fail to pay capital contributions by the date specified in the company's articles of association or whose non-monetary property as capital contribution has an actual value significantly lower than the acknowledged capital contribution amount, when transferring their equity, shall bear joint and several liability within the scope of insufficient capital contribution; if the transferee is unaware and should not be aware of the above circumstances, the transferor shall bear the liability.

On December 24, 2024, the Supreme People's Court issued a "Reply on the Non-Retroactive Application of Article 88, Paragraph 1 of the Company Law of the People's Republic of China," clarifying that: "Article 88, Paragraph 1 of the Company Law of the People's Republic of China, which came into effect on July 1, 2024, only applies to equity transfer transactions that occurred after July 1, 2024. For disputes over capital contribution liability arising from the transfer of equity by shareholders before July 1, 2024, where the contribution deadline has not yet arrived, the people's courts should handle them fairly and justly in accordance with the relevant provisions of the original Company Law and other relevant laws."

2. Court Judgment

In this case, when the shareholder transferred the equity before the capital contribution deadline, the company was operating normally. Although it had debts, there was no evidence to prove that the company was unable to repay its due debts at the time of the equity transfer (the ascertained actual capital contribution amount of 2.3 million yuan was far higher than the external debt of more than 500,000 yuan), and the transferee did not show a clear lack of capital contribution capacity. This equity transfer was a normal commercial transaction. Therefore, the court did not find that D shareholder had malicious intent to evade capital contribution obligations when transferring equity before the capital contribution deadline, and therefore did not order it to bear liability.

3. Lawyer's Analysis

For cases of capital contribution liability disputes arising from the transfer of equity by shareholders before the capital contribution deadline before the implementation of the new Company Law on July 1, 2024, the original Company Law and other relevant laws should be used to determine whether the transferring shareholder should bear liability. On December 24, 2024, the Supreme People's Court issued a reply to the "Request for Instructions on Whether Article 88, Paragraph 1 of the Company Law is Retroactive," confirming that this article of the new Company Law "only applies to equity transfer transactions that occurred after July 1, 2024."

Therefore, Article 88, Paragraph 1 of the new Company Law is no longer retroactive, but this does not mean that shareholders who transferred equity before the capital contribution deadline before July 1, 2024, do not need to bear capital contribution liability. Instead, it should be "handled in accordance with the original Company Law and judicial interpretations and other relevant provisions."

On December 27, 2024, the People's Court Case Database added four cases involving the transfer of equity by shareholders before the capital contribution deadline before the implementation of the new Company Law, providing guidance on how to "handle them fairly and justly." The overall judgment gist of these four cases is that for the issue of equity transfer before the capital contribution deadline before the implementation of the new Company Law, a distinction should be made between whether the transferring shareholder acted maliciously. It establishes a rule that malicious equity transfer should bear capital contribution liability, while non-malicious equity transfer, without evading capital contribution obligations, should not bear liability.