Legal Issues Of The Defective Share Transfer

Fulfill the obligation of capital contribution is the basic legal obligations of the shareholders, However,with today’s rapid of the social and economic development, more and more funders in order to achieve their own maximize interests, do not meet the legal requirements or the provisions with the Articles of Association of the Company. The behavior of defective capital contribution leads to a large number of defective shares, so the transfer of defective shares will refers to the effect of the contract and the liability of the defective contribution. Although the "Company Law" and the new introduction of the Companies Act judicial interpretation of the corporation law stipulate the rules which intent to solve these issues, and the theory and judicial practice are also some studies this problem, but it is not enough. Encounter such problems in the trial court activities, is still have many conflicts, such as the basis of its referees, referee standards and judge the results sometimes very different. In this article, by the in-depth study of the Company Law, Contract Law and related judicial interpretations, and comparative analysis of foreign-related legislation, combined with the doctrine of the domestic and foreign scholars and Civil and Commercial Law principle, the writer will give a comprehensive and in-depth discussion of the defective capital equity transfer related legal issues, which only from a limited liability company’s perspective.The article is divided into the following four parts:The first chapter is definition of the defective shares. This section briefly describes the concept of the defective shares of the defective contribution as well as the basic types of it. The author based on the theorists of different scholars, agree that the defective shares consists of two basic types that do not fulfill the funding obligations and improper performance of the funding obligations.The second chapter is about the transferability of the defective shares analysis. This part is mainly elaborated the issues about the funded of the flaws shareholder qualification and the right of flaws of capital shareholders to exercise. Which can be drawn through the analysis of these two issues is that the flaws of capital to shareholders still have certain shareholders qualifications, and the defective shareholders can freely exercise the right to transfer the defective shares, because the defective shares still has Transferability.The third chapter is about the effect of defective share transfer contracts. This is first important part of the article, which mainly introduces and analyzes several theories from the theory and judicial practice about the effect of defective share transfer contracts, including absolutely invalid said, absolutely effective said, compromise said and distinguished between said. Through a comprehensive analysis of the theories, about the effect of defective share transfer contracts, the distinction between said can be said to be more reasonable.The fourth chapter i s concerned about the liability after the defective shares transfer. It is another important part of the article. The author combines doctrine analysis of the relevant legislation at home and abroad as well as domestic and foreign scholars, and mainly elaborated the liability after the defective shares transfer, including the responsibility of the principal, the main form of responsibility as well as the range of responsibility, which is the important and difficult issues of judicial practice.