The Study On The Transfer Of Defective Capital Contribution In A Limited Libability Company

In judicial practice, there are many forms of the defective capital contribution, for example, deficiency of capital contribution, false about capital contribution and withdrawal of capital contribution, and that leads to increase of the defective capital contribution shares. After the Defective capital contribution shares transferred, these are very important problems that how to the effect of the contract and how to take the responsibility. These are hard to be solved in the practice. Which was issued by The Supreme People’s Court in February2011, the third interpretation of the Corporation Law stipulated the rules which intent to solve these issues. But it is not enough. How is the validity of the defective capital contribution transfer contact? Whether or not the transferee has to bear the liabilities which transferor should take because of breach of contract liability about the capital contribution? The Corporation Law didn’t involve these problems, but it simply stipulated a little rules. This is also worthy of further discussion, In this paper, the author combines with all kinds of the scholar’s point of view, the legal advices and the judicial precedents, discuss the problems about the transfer of the defective capital contribution.In addition to the introduction and conclusion, it includes four main parts in this paper:The first part is discussion on the definition of the defective capital contribution. The capital contributions of the shareholders are not in accordance with the laws and articles of the company, arid the shareholders didn’t fulfill their obligations, but they only enjoy some rights which are conditionality. The defective capital contribution also is transferable and can be recuperated, and the rights are conditionality. The common types of the defective capital contribution include deficiency of capital contribution, false about capital contribution and withdrawal of capital contribution.The second part is about the validity of the defective capital contribution transfer contract. This part first introduces and analyzes the different viewpoints from’academic circle and judicial practices. Learning experience in judicial practice, the author advocates that, if the transferor cheats, the transferee did not know or should not have known the defect of the stock right, the transferee can claim revocation right to protect his interests. But the judge should have a cautious attitude to it. The judge can revoke the contract when the transferor refused restoration or the transferor is unable to compensate for flaws. Furthermore, the judge must strictly estimate whether the transferee is goodwill and whether the transferee has cheated.In the third part, we discuss the distribution of liability between the transferor and transferee from the transfer. After the defective capital contribution has been transferred, the transferor all the same should take the responsibility for the company, the creditor and the other shareholders. When the transferee has known or should have known the defect of the stock right, he should take the responsibility for the company, but there is an exception to the transferee when he can’t know the defect. The transferee should take the responsibility for the creditor of the company without reference to whether the transferee is well-intentioned or not. When the transferee has known the defect of the stock, he should take the responsibility for the other shareholders of the company.In the Part IV, we discuss the relief ways of goodwill transferee of the defective shares. The transferee can claim the right of the revocation and the right of recourse, besides, he can liability for breach of contracts. It should be equivalent to the amount of compensation for the losses caused by default. If the parties of the contract have made agreement on default payment and deposit, the transferee can choose one of them to make up for his losses.