On Shareholder's Capital Contribution To Limited Liability Company And Related Civil Liabilities

As a legal framework for conducting modern business and an efficient investment vehicle for pooling of capital, corporation has been generally adopted worldwide as a primary and popular business entity because of its noticeable attributes such as distinct ownership interests, clear and definite responsibilities and rights, limited liabilities, and scientific management structure. However, unlawful capital contribution occurred in the formation of a corporation, especially, a limited liability company, has emerged as a serious conundrum in China in recent years, which, undoubtedly, will lead to severe disruption of China's socialist market economy order and cause substantial damage to national economic development and social stability unless is curbed through cost-effective legal means. Although the relevant provisions of China's corporate law have specified shareholder's or promoter's investment contribution methods and the corresponding legal liabilities imposed thereafter upon failure to comply with, such provisions, viewed as a whole, are too doctrinaire and simple to be used as criteria to judge the complex unlawful capital contribution actions conducted by the shareholders in real business activities or as a basis to establish the civil liability system applied for such situations. Therefore, it is worthwhile to discuss how to construct a civil liability system to restrain shareholder's unlawful capital contribution actions. Based on review of the academic research results produced in major developed countries and regions on the topic of shareholder's capital contribution and legal liabilities, this dissertation aims at analyzing some problems existed in real practices and seeking possible solutions for them. As to problems arising from capital contributions, various kinds of lawful capital contribution methods are illustrated and commented, various kinds of unlawful, including unlawful in fact and unlawful in form, capital contribution methods are considered and criticized, and further discussions are made on the respects of shareholder's unlawful actions conducted in the process of contributing capital, transferring capital, and increasing capital with a view to cover every possible phenomenon happened in real life. As to shareholder's capital contribution liabilities, various academic rules governing the division of liabilities are examined and the application of these rules to shareholder's various unlawful actions existed in different phases are fully explored. As a final question, the plaintiff's standing issue in claiming for any damages in a lawsuit arising from shareholder's unlawful capital contribution actions also is discussed.As a tentative step in legal research on shareholder's unlawful capital contribution actions and liabilities, this dissertation shows the author's strong wishes to arouse extensive research interest from legal fellows in this thorny topic.