A Study On Some Civil Legal Consequences Caused By Defective Contribution Of Shareholders

Limited liability is the basic consideration in intuitional design of Ltd. Company, ie. Shareholder of company shall assume limited liability for the debts of company; it is also the most fundamental characteristic of this institution. The prerequisite of limited liability assumed by shareholder of Ltd. is the actual complete contribution of capital under laws and in conform to bylaws and Articles. In reality, however, various forms of fake contribution and withdrawal of contribution are not rare happenings. In cases of defective contribution, shall shareholders still remain obliged to the debts of company or does such occurrence have any effects on the status of legal personality of corporation, on the status of shareholder and on the rights held by shareholders? How to balance the conflicting interests between company, its shareholders and its creditors? This thesis consists of six parts. Methods of comparison, analysis and induction are adopted in this study for reaching a specific analysis on the possible civil legal consequences caused by defective contribution of shareholders. First part is introductory remarks, which briefly introduce the genesis of Litd.Com and its current developments in real world. Limited liability regime is a design based on aim at meeting realistic perspective of investors; it is a institutional invention, which has been proved to be a most suitable organizational form for SME by practical experiences. Delineation and definition of defective contribution three major issues are dealt with primarily in part two: first issue is the nature of contribution, obligation of contribution is a consensual obligation and meanwhile it concurrently is a statutory duty; the definition and conception of defective contribution and its representation in reality is the second issue to be discussed, which primarily presents itself in the forms of incomplete or inappropriate contribution; borrowing money, right of obligation, equity, labor and service right of use . Part three is on influence and effects of shareholders'defective contribution on the separate legal personality of corporation. Legal personality as a regime of corporation contains a duel value ends system in which both the aim at stimulating investors'desire to take initiative steps in investment and the aim at balancing the interests between capital contributors, creditors of company and the mass people are set out. The former characterized by efficiency as its fundamental social-economic value objects and the latter focuses on social-ethic value objects. Definitely where the defective contribution reaches some certain unbearable level which marks as a significant insufficiency of company capital, a doctrine of denial of legal personality of corporation will be called upon. Part four are the discussions on effects of shareholders'defective contribution on their status. Generally speaking, fake contribution has no effects on the status as a shareholder but will inescapably have effects on the rights of shareholder. Analysis on some specific sorts of shareholding which includes imposter shareholding, nominal shareholding, implicit shareholding, core equity shareholding is also carried on in this sector. The recognition of titles of transferor and transferee of shares is also discussed. Part five deals with the civil liability assumed by shareholder who commits defective contribution. The shareholder who fails to fulfill the requirements shall be liable for breach of contract to other shareholders of this company. They shall be responsible for breach of contract to company and make good of the loss caused by the violation of maintenance of capital and also be accountable and make good of other damages. As to creditors of company, the culpable shareholders shall bear aresponsibility to discharge the very debts as well. Two points as suggestions on perfecting the current civil liability regime of defective contribution are given as a conclusion of this part. Part Six is focused on the nature and scope of civil liability of institute which is prescribed to check and confirm the availability of actual capital contribution. The order of discharge under civil liability regime is also discussed here. Those institutes shall assume their liability in the way of taking tortious liability within the ambit of the false representation in their own assets examination reports or in the certificates given after checking on the financial status of company's debts and of the false certificate on funding. The general order and sequence of making up for the damages in the way of discharging is: debtors, contributor/shareholder, any third party who issues false certificate and materials, and finally come institutes that have been negligent in examining assets in question.