Stock Rights Transfer Of Defective Capital Contribution And Assumption Of Its Civil Liability

Considering several subjective and objective reasons, in judicial practice, defective capital contribution is still quite common behavior. However, there are no comprehensive provisions of transfer of defective stock rights arising from defective capital contribution regulated by the existing company legislation. Although relevant issues of defective capital contribution have been ordered by judicial interpretation of Company Law which brought into effect nearly, there are no further detailed regulations of relevant responsibility of defective capital contribution and which has several defects on it; besides, the theory of the Company Law is lack of systematic discussion of the question. Based on the general sense of Limited Liability Company, this paper tries to discuss the question of contract and transfer of defective stock right arising from defective capital contribution of shareholders in order to provide some solution and ideas for practical disputes. Besides induction, this paper is divided into four parts. First, the issue is brought up. This part mainly draws two issues, the validity of transfer contract of defective stock rights and how to assume the liability after the transfer. Second, the main causes and types of defective stock rights. This part expatiates on several reasons which leases to defective stock and draws the conclusion that the shareholder of defective stock also enjoys the qualifications of shareholder rights; as a result, he could transfer his stock rights freely. Third, the validity of transfer contract of defective shareholder rights. First of all, the author analyzes several main theories, i.e. Validity, Invalidity, Difference and Revocation etc. Consequently, the basis for judging the validity of the transfer contract is still the Contract Law, whereas the transferee who did not know or should not have known the defect of the stock rights is not doomed to cause invalidity of the transfer contract. To analyze concretely with regard to concrete problems of transfer contract is necessary. Fourth, how to take responsibility for the transfer of defective stock rights. This part mainly discuss whom should the burden be bored to, who should undertake the burden, and how the burden should be bored. The author respectively analyzes the general rules that the liability to shareholders performing capital contribution completely, to the company and to the creditors. Fifth, legislative suggestions.