Legal risk warning for enterprises during epidemic prevention and control period - operational risks of the company
The COVID-19 in Shanghai is urgent, large-scale and widespread. With the upgrading and continuation of prevention and control measures, the risk of internal or external conflicts and disputes caused by enterprises is also accumulating. In order to help Corporate identity identify and prevent epidemic related legal risks, Guoling Law Firm will successively push the "Tips on Enterprise Legal Risks during Epidemic Prevention and Control" to enterprises for reference in business decision-making and to promote healthy and orderly development of enterprises. This article focuses on providing legal risk warnings for the company's operations during the epidemic prevention and control period.
一、Due to the impact of the COVID-19, a limited liability company may hold a shareholders' meeting, the board of directors and the board of supervisors in other forms after fulfilling the obligation of notification, provided that it does not violate the provisions of the articles of association.
The Company Law of the Company Law of the People's Republic of China clearly requires the notification procedures and methods for convening the general meeting of shareholders, the board of directors, and the board of supervisors. If the general meeting of shareholders, the board of directors, and the board of supervisors must be convened due to the needs of the company's development, but the epidemic situation makes it impossible to hold the general meeting of shareholders, the board of directors, and the board of supervisors in the form of on-site meetings, the company can adopt online meetings Convene a shareholders' meeting, board of directors, and supervisory board meeting in the form of a telephone conference, and clarify in writing that each shareholder has no objections to the convening form of the meeting. The meeting should record videos or audio recordings, and make meeting minutes and resolutions for the attending shareholders, directors, and supervisors to supplement and sign the agreement in a short period of time, or complete the signing of the agreement through signature transmission. The notary department can also apply for notarization of the entire process of the meeting.
二、Due to the impact of the COVID-19, the company's senior executives cannot perform their duties in the company, but they should still perform their duties in a variety of ways; The company can also conduct business externally through separate authorization.
The company's senior executives are the core force of enterprise operation. Due to the impact of the COVID-19, the company's senior executives are unable to perform their duties in the unit due to home isolation, prevention and control requirements and other reasons. They should actively perform their corresponding duties according to the duty of care and care required by the duty of diligence, through online office, telephone and other ways to safeguard the company's best interests and reduce the company's losses caused by the epidemic. If they are lazy in performing their duties, May violate the duty of diligence; The company may also, based on specific circumstances, entrust other directors, supervisors, or shareholders in writing to fulfill their respective responsibilities and conduct business externally. The power of attorney shall specify the specific scope and effective time of authorization. Other management personnel of the company may be temporarily appointed by the board of directors to perform their duties in accordance with the articles of association.
三、Due to the impact of the COVID-19, the shareholders' meeting of a listed company may be postponed or cancelled after fulfilling the obligation of notification.
According to Article 19 of the Rules for Shareholders' Meetings of Listed Companies, after the notice of the shareholders' meeting is issued, without justifiable reasons, the shareholders' meeting shall not be postponed or cancelled, and the proposals listed in the notice of the shareholders' meeting shall not be cancelled. Once there is an extension or cancellation, the convener shall make a public announcement and explain the reasons at least 2 working days before the originally scheduled convening date. A listed company that is unable to hold a shareholders' meeting in accordance with the issued notice due to the COVID-19 can postpone or cancel the proposed shareholders' meeting in accordance with the relevant provisions of the Rules for the Shareholders' Meeting of Listed Companies and the Stock Listing Rules of the Exchange. The listed company shall issue a public announcement at least 2 working days before the originally scheduled convening date, and explain the reasons for the extension or cancellation.
四、Affected by the COVID-19, some small and medium-sized private enterprises may choose to withdraw voluntarily or passively due to insolvency due to changes in the market environment and other reasons. The withdrawal of enterprises should be liquidated according to law.
The liquidation team has the obligation to properly handle the company's creditor's rights and debts, and ensure that the company exits the market in an orderly manner. If the shareholders of a limited liability company, directors and controlling shareholders of a joint stock limited company, as well as the actual controllers of the company, fail to establish a liquidation team within the statutory period to start liquidation, resulting in the depreciation, loss, damage or loss of the company's assets, they shall be liable for compensation for the company's debts within the scope of the losses caused.
According to Article 183 of the Company Law of the Company Law of the People's Republic of China, if the company is dissolved due to the provisions of Items (1), (2), (4) and (5) of Article 180 of this Law, a liquidation group shall be formed to start liquidation within 15 days after the occurrence of the cause of dissolution. The liquidation team of a limited liability company is composed of shareholders, while the liquidation team of a joint stock limited company is composed of directors or personnel determined by the shareholders' meeting. If a liquidation team is not established within the prescribed time limit for liquidation, creditors may apply to the people's court to designate relevant personnel to form a liquidation team for liquidation. The people's court shall accept the application and promptly organize a liquidation team to carry out liquidation. According to Article 184 of the Law, the liquidation team shall exercise the following powers during the liquidation period: (1) to clean up the company's assets, prepare a balance sheet and a list of assets separately; （2） Notify and announce creditors; （3） Handle outstanding business related to liquidation of the company; （4） Pay off outstanding taxes and taxes generated during the liquidation process; （5） Clean up creditor's rights and debts; （6） Dispose of the remaining assets of the company after paying off its debts; （7） Represent the company in civil litigation activities. Therefore, for enterprises that have withdrawn from the market, liquidation work should be carried out in accordance with the provisions of the Company Law, the rights and obligations relationship should be properly terminated, and the legitimate interests of creditors, shareholders, and investors should be safeguarded.
五、For enterprises with good main business and normal cash flow before the outbreak of the epidemic, but unable to repay their due debts due to short-term financial difficulties caused by the impact of the epidemic, if creditors apply for bankruptcy, they generally will not receive support.
According to Article 2 of the Enterprise Bankruptcy Law of the Bankruptcy in China, if an enterprise as a legal person is unable to pay off its debts as they fall due, and its assets are insufficient to pay off all its debts or are obviously lacking in solvency, its debts shall be liquidated in accordance with the provisions of this Law. According to Article 3 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the Bankruptcy in China (I), if the debtor's balance sheet, audit report, asset evaluation report, etc. show that all its assets are not enough to pay off all its liabilities, the people's court shall determine that the debtor's assets are not enough to pay off all its debts, Except where there is sufficient evidence to the contrary to prove that the debtor's assets can repay all liabilities. Article 4: If the debtor's book assets are greater than its liabilities, but there are any of the following circumstances, the people's court shall determine that it clearly lacks the ability to repay: (1) due to serious shortage of funds or inability to realize assets, it is unable to repay the debt; （2） The whereabouts of the legal representative are unknown and there are no other personnel responsible for managing the property, making it impossible to repay debts; （3） Unable to repay debts due to compulsory execution by the people's court; （4） Long term losses and difficulties in turning around operating losses, unable to repay debts; （5） Other circumstances that result in the debtor losing its ability to repay. For enterprises with good business and normal financial flow before the outbreak of the epidemic, but only experiencing short-term financial difficulties due to the impact of the epidemic, if creditors apply for bankruptcy, the people's court should strictly and prudently grasp the determination of the cause of bankruptcy, and generally do not accept creditors' bankruptcy settlement applications for such enterprises. Enterprises should also actively communicate and coordinate with creditors, take multiple measures to resume production as soon as possible, or negotiate with creditors to reach a debt settlement plan, and boost confidence and overcome difficulties through various means.
六、During the prevention and control of the COVID-19, creditors of bankrupt enterprises should still actively declare their claims to the bankruptcy administrator within the specified time.
During the prevention and control of the COVID-19, although the on-site claim declaration work could not be carried out, the creditors of the bankrupt enterprise could not refuse to declare their claims because of this, and they could declare their claims to the administrator through e-mail, WeChat and other electronic information. If due to the epidemic situation, it is not possible to collect the necessary evidence materials for declaring creditor's rights temporarily, an application for an extension of submission can be made to the administrator through phone, email, WeChat, and other means.
七、During the prevention and control of COVID-19 epidemic, an online creditors' meeting can be held, and bankruptcy creditors should actively participate in the meeting.
During the epidemic prevention and control period, it is not appropriate to hold a creditors' meeting on site. Instead, a creditors' meeting can be held off-site. For on-site creditor meetings that have already been announced and are about to be held, with the consent of the administrator and the people's court, the on-site creditor meetings during the epidemic prevention and control period can be suspended. Online creditor meetings can also be convened using information technology, or the creditor meeting can be postponed after completing the announcement and creditor notification work.
The outbreak of the epidemic has brought significant uncertainty to the business development of enterprises. Guoling Law Firm will fully leverage its professional advantages to effectively help enterprises prevent legal risks arising from this epidemic; We will also provide more forms and richer legal service projects for enterprises based on the current needs of epidemic prevention and control work and the actual situation of the enterprise, to help them overcome the difficulties of the epidemic.
