Study On Legal Issues Of Shareholder's Defective Capital Contribution

Companies are the most important participants in market activities; however, the basis of existence of a company is capital contribution of shareholders. A company's capital, which composed of shareholder's capital contribution, is not only the foundation for company's establishment and operation, but also responsible for company's external liabilities. In practice, however, the shareholder's defective capital contribution is very common, which seriously undermined the market order and credit. The revised Company Law prescribes legal liabilities of shareholder's defective contribution, but the provisions are yet simple and lack of operability. Besides, with regard to the qualification and the right of a defective shareholder, the transfer of defective equity, the Company Law doesn't make explicit. Therefore, the author believes that this issue needs systematical research and rational argument, so as to improve the company legislation. This paper begins with a case, and the case also goes through the whole paper. Closely around the theme of shareholder's defective capital contribution, the paper introduced the performance and the causes of defective capital contribution, and highly focused on analysis and argument of qualification of a defective shareholder, defective option exercise and liability. The article uses the methods of conceptual analysis and comparison research, views and arguments intertwined; there are both theoretical analysis and system construction, both the study of foreign legislation and feasibility analysis of the local. The goal of the paper is to build a reasonable institutional system of shareholder's defective capital contribution.This paper consists of five parts with about 40000 words.Part one is introduction of the problem; through presentation of a case which the author dealt with in People's Court of Chongqing Shapingba District during internship experience, the paper introduces the subject discussed—shareholder's defective capital contribution, and describes the status of defective capital contribution, the theory and practical study value, the status of regulations and so on.Part two outlines the basic problem of defective capital contribution, including the significance of funding, the manifestation of defective capital contribution and the reasons for defective capital contribution. Fraudulent investment, flight of funding and false funding is the most common form of defective capital contribution in practice. The phenomenon of defective capital contribution, not only lies on intrinsic pursuit of benefits, but also driven by the external adverse factors, not only attributes to the system, but the enforcement of law is also to blame.Part three discusses the legal status of defective shareholders. First, list the standards for the qualification of shareholders in practice, including articles of association, register of shareholders, funding proof, business registration and actual funding. Then, point out that defective shareholders have qualifications and analyze the specific reasons. Meanwhile, pay attention to distinguish shareholders'qualifications in the case of normal defect contribution and serious defect contribution.Part four investigates the rights of defective shareholders. The rights of shareholders include the right of return on assets, decision-making right and relief right three categories which can be divided into several small kinds. Defective capital contribution didn't influence acquisition of equity but influence the exercise. Defective shareholders can exercise procedural rights which obtained due to qualification, but the earning right and decision-making right will be confined.Part five argues liabilities of relevant subjects in case of defective capital contribution, including the shareholder's liability and the intermediary's liability. The analysis of the shareholder's liability involves the liability of serious defective capital contribution, the liability of normal defective capital contribution, disregard of corporate personality and the liability transfer of defective shares.