The Study On The Equity Transfer Of Defective Capital Contribution

It is the shareholder’s most basic responsibility for the company to contribute capital to help with the establishment of the company’s independent property. Although the capital contribution obligations of the shareholders have been clearly stated by the Company Law and relative laws and regulations in our nation, defective capital contribution is common in really life. The defective capital contribution of shareholders directly leads to defective equity. However, based on the principles of commercial appearance, the shareholder who contributes defective capital still has the legal qualification of being a shareholder and can transfer the equity. The general transfer form is the transfer contract of the equity of defective capital contribution. However, the defective capital contribution necessarily results in the defective equity, so the equity of the shareholder of defective capital contribution will be limited. The transfer of the defective ownership brings about different legal effects to the transferor, the transferee, the company, other shareholders in the company and other third parties. By doing this, the transferor withdraws from the company and gets the money from the transferee. The transferee gets the equity and become a shareholder of the company. The company has to go through the procedures like registration for the transferee. Other shareholders should not interfere in the rights and obligations of the transferee in the company. And other third parties can get to understand the new shareholder according to public documents like industry and commerce registration. During the transfer, there are obligations and responsibilities between the transferor and transferee based on the contract. Meanwhile, they have some obligations for their company and the company’s other shareholders and creditors. The transferor has the obligation to clear the shortfall. He has the obligation inform the company’s shareholders who obey the agreement and is responsible for his breaking the contract. He also has the obligation to thoroughly compensate the creditors of the company. After the transferee becomes a shareholder of the company, he has the consequent obligation to contribute compensative capital for the company. He has the obligation of being honest with the company’s shareholders and be responsible if he breaks the contract. He also has the consequent obligation to compensate the creditors of the company. If the obligations and responsibilities are not fulfilled, he has to take the consequences. After the transfer, the right relief to each party is very important. With regards to the rights of the company, a representative can be sent to ask for compensation, and the right of cancellation of shareholder qualification can be used to cancel the shareholder qualification of the one who has contributed the defective capital. In the litigation where the shareholders who obey the agreement ask for compensation, the range of right relief of other shareholders who obey the agreement of the company is stated in detail. Creditors can guarantee the realization of their rights by raising subrogation litigation. The transferee can protect his rights and profits by using the right of defense and the right of recourse. The obligations and responsibilities of the transferor and transferee in the transfer are made clear, and there are detailed ways of right relief for other parties. I hope this can help with regulating the transfer of defective equity at some degree.