On Preventing Measures Concerning The Risks Of Unregistered Investors In Corporation

This article revolves around the declaratory action of Zhang Jianzhong versusYang Zhaochun on shareholding, analyzes the preventive measures concerning therisks taken by unregistered investors, and is divided into four sections：The first section discusses whether unregistered investors are shareholders of thecompany which shall be determined by the bylaws and articles of association of thecompany. Unregistered investors are those whose names are not registered in thebylaws and articles of association and thus have no qualifications as shareholders. Inthis case the plaintiff was not a shareholder in Nanjing Lvzhou Equipment InstallationEngineering Co., Ltd. before his shareholding transfer with the defendant.The second section relates to the problems of shareholding transfer claimed byunregistered investors. Though unregistered investors are not shareholders bycorporation laws, they still enjoy certain rights in reference to contract laws.According to the agreements signed with registered investors, they have the right toclaim from registered investors for shareholding transfer, income from investment,and related damages. Therefore in this case the defendant failed to deny the claim forregistering shareholding transfer by the plaintiff.The third section reveals possible risks faced by unregistered investors whenclaiming for shareholding transfer. The risks faced by the plaintiff in this case whendealing with shareholding transfer include limitations of the transfer of rightsexercised by unregistered investors because that registered shareholders dispose oftheir shareholding in bad faith and that other shareholders in the company exercisetheir rights of preemption.The fourth section proposes suggestions for unregistered investors on avoidingrisks. When investing anonymously, unregistered investors can make use of methodssuch as shareholding trust, signing the undisclosed investment agreement withprudence, safekeeping related evidence and etc to effectively minimize risks in undisclosed investments.