Equity transfer dispute is a concentrated expression of the integration of contract law and company law, two major civil and commercial fields. The disputes between the parties usually focus on whether the equity transfer is established, effective or not, and whether it can be revoked. This paper will focus on the disputes caused by the transfer of defective investment equity, in order to guide enterprises to prevent relevant risks in operation.

一、Validity of the equity transfer agreement signed by the defective contributing shareholder

Different from the new shares issued by the company, there may be defects in the old shares that the shareholders have not fulfilled or have not fully fulfilled their investment obligations. Even if these problems can be found after the investors have transferred the shares, the die has been cast and the cost of remediation is very high. In practice, several common defects of equity transfer are mainly manifested as: (1) the capital contribution is not in place. Especially under the registered capital subscription system, many founders may ignore the payment responsibility under the subscription system, set the registered capital too high, and have no ability to pay in place, and the transferee of the equity has the obligation to continue to fulfill the investment obligation after taking over the equity. (2) False investment. For example, intangible assets such as technology are invested, but the assessed value of intangible assets is significantly higher than the market value. The investor who accepts such unfunded equity is faced with the risk and responsibility of being required by the creditor to make real investment. (3) Withdrawal of capital. The original shareholder completes the capital contribution on the surface by means of cushion capital, but will withdraw the capital from the company, not only the assets of the company are nominal, but also face the risk and responsibility of being required to pay the capital contribution again by creditors. (4) The shareholder transferring the equity is a named shareholder, which is actually held on behalf of an undisclosed shareholder, and it is easy to lead to equity disputes after unauthorized transfer.

In judicial practice, when the court tries the disputes caused by the transfer of defective investment equity, it mostly holds the following views on the validity of the relevant transfer agreement: The shareholder fails to fulfill the obligation of investment and carries out the equity transfer, in this case, the identification of the shareholder should be based on the record in the company registration document. In addition, it is also necessary to determine whether the unfunded shareholder informs the transferee of the true situation of its non-investment when transferring the equity. If it intentionally concealment and fails to inform, it constitutes fraud. However, if the transferee is aware of the fact that the shareholder has not contributed capital and still signs the equity transfer agreement with him, the intention of both parties is true, and the equity transfer agreement signed by him shall still be valid.

For example, when the Supreme People's Court tried the case of the dispute over the payment for the sales contract between Shuanghe Pharmaceutical Company and Yibai Pharmaceutical Co., LTD in 2008, it was found that Hubei Pharmaceutical Company and Shuanghe Pharmaceutical Company signed a share transfer agreement: Shuanghe Pharmaceutical Company transferred 27 million state-owned shares of Hengkang Pharmaceutical Company held by Hubei Pharmaceutical Company. The name of Hengkang Pharmaceutical Company was changed to Shuanghe Pharmaceutical Company. Hubei Pharmaceutical Company guarantees that when the transfer of shares is completed, it will be transferred to the name of Hengkang Pharmaceutical Company as three pieces of land use rights invested by Hengkang Pharmaceutical Company. The share transfer agreement shall take effect when the land is transferred to the name of Hengkang Pharmaceutical Company. After the above three pieces of land set mortgage rights, failed to transfer to the name of Shuanghe Pharmaceutical company. Shuanghe Pharmaceutical Company filed a petition to terminate its share transfer agreement signed with Hubei Pharmaceutical Company. After hearing, the Supreme Court held that the purpose of the share transfer agreement signed between Shuanghe Pharmaceutical Company and Hubei Pharmaceutical Company was to obtain the equity of Hengkang Pharmaceutical Company, rather than the right to use the three pieces of land. Although the above three land use rights have not been transferred to the target company, it does not lead to the failure to achieve the purpose of the share transfer agreement. In addition, before Shuanghe Pharmaceutical Company transferred the equity of Hubei Pharmaceutical Company, the above three land use rights have not been transferred, Hengkang Pharmaceutical Company's operation has not been affected, and then rejected Shuanghe Pharmaceutical Company's lawsuit request to cancel the share transfer agreement.

Although there is a situation of defective investment in Hubei Pharmaceutical Company, the transferee shareholders are fully aware of this situation, and can not solve the liability of defective investment later, and the transferee shareholders should foresee this risk. Therefore, the presence of defective investment does not necessarily lead to the invalidation of the equity transfer agreement.

二、Liability identification of defective equity transfer

In judicial practice, except for the situation where the transferor maliciously conceals false or defective investment, if the equity transfer agreement does not clearly agree on the subsequent investment obligor, according to the principle of equity transfer, the transferee should continue to perform the investment obligation. Therefore, when signing the equity transfer agreement, both parties shall perform the obligation of good faith, explain the defects of the equity, and clearly agree in the transfer agreement. In addition, the transferee of the equity is aware of the false contribution of the equity and the defective qualification of the shareholder, and the equity is transferred in bad faith. Although the equity transfer agreement takes effect and the shareholder is qualified, it shall fulfill the legal responsibility for the false contribution. When a company makes a provision restricting the rights of its shareholders or other shareholders petition the company to restrict the rights of its shareholders, the court will generally uphold the case.

In the civil liability of defective investment by shareholders of a company, Article 31 of the Company Law clearly stipulates that after the establishment of a limited liability company, if the actual value of the non-monetary property contributed by the establishment of the company is found to be significantly lower than the amount priced in the articles of association of the company, the difference shall be made up by the shareholder who has paid the investment, and the other shareholders at the time of establishment of the company shall bear joint and several liability: It can be seen that the civil liability of false investment in the Company Law is borne by the shareholders at the time of the establishment of the company, rather than by the shareholders who acquire the equity through other means. According to the principle of self-responsibility in civil law, only the defective contributing shareholder shall bear civil liability to the company and its creditors, while the shareholder who has transferred the shares from the defective contributing shareholder shall not bear supplementary repayment liability to the company and its creditors because of the fact that he has transferred the shares from the defective contributing shareholder. In other words, regardless of whether the equity held by the defective contributing shareholder has been transferred to others, Nor does it matter how many times the equity has been circulated and transferred afterwards, the defective investment shareholder, as the initiator of the wrong behavior, should bear the responsibility for his defective investment behavior. Since the transfer of equity by the defective contribution shareholder does not affect its civil liability for defective contribution, even if the transferor commits fraud to the transferee during the transfer of equity, that is, fails to inform the transferee of the fact of defective contribution, the transferee cannot therefore claim to invoke the provisions of Contract Law on the validity of the contract to request the people's court to cancel the equity transfer contract. Moreover, from the perspective of maintaining the stability of the company's main body, it is not appropriate to identify such contracts as invalid or revoked, because after the company's shareholders transfer their equity to others, the transferee generally becomes the new shareholder of the company and participates in the company's operation and management through the exercise of equity rights. The benefits generated by the operation and management of the company should be calculated in a certain proportion to its own, and the corresponding shareholder liability should be borne for the debts incurred. At this time, if the transferee is allowed to cancel the share transfer contract, it will have an undue impact on the stability of the company.

    As a special type of contract, equity transfer contract also has disputes that are easy to produce in general contracts, such as contract validity disputes, contract performance disputes, contract cancellation disputes, contract termination disputes, etc. We will analyze it for enterprises one after another. Hillhouse Law Firm will give full play to its professional advantages and effectively help enterprises prevent relevant legal risks; We will also provide enterprises with more forms and more abundant legal service projects according to the development of the industry and the actual situation of enterprises, and guide enterprises to make scientific decisions and standardize development.