Restrictions On The Right Of Shareholders With Defective Capital Contribution

Capital contribution has always been one of the focuses in scholars who disputea lot. Most of the articles in The Third Explanation on Company Law have regulatedfor the funding problems, however, it is too general that the part in which limit theright of defective capital contributors.The consideration of shareholders’ right is the obligations to capital. Only theone who has the qualification of shareholders which based on the original agreementhas to bear the obligation to capital. Therefore, this article clarifies the relationshipamong the qualification of shareholders, shareholders, capital and the right ofshareholders on the basis of the theory of shareholders’ right. This article alsodiscussed whether defective capital contributors can be shareholders or not and makeit clear that the right of defective capital contributors should be restricted.Furthermore, the standard and methods of restriction has been promoted in this article.In addition to the introduction, conclusion and postscript, the body part is dividedinto four chapters which are as follows:Chapter I analyzed the general theory of defective funds. It started from theknowledge of four basic concepts: shareholders, capital, qualification of shareholdersand right of shareholders, typed the connotation and extension of defective capitalcontribution and divided defective capital contribution into non-compliance and notproper compliance.Chapter II systematically discussed the confirmation of qualification ofshareholders on defective capital contribution. It is clearly recognized thatqualification of shareholders has little connection with capital. Chapter III mainly invested the influence of shareholders’ right by defectivecapital contribution. The legitimacy of restrictions on the right of defective capitalshareholders is based on the principle of equality, rights and obligations and thebalance of interests. It promoted the standard of restriction should be the principle ofproportionality. This part especially invested the transformation of defective right,made a conclusion that this right can be transferred, and the transformation should berestricted. However, the one who knows the defective on right should perform theadditional responsibility of investors.Chapter IV explored the feasibility of the restriction on the defective right. Theconclusion is we should use a law, the Articles of Association or shareholdersresolution to restrict. It also put forward two abroad suggestions which calleddelisting system and guarantee system to protect the shareholders’ interests.Furthermore, we still should make further improvement on the restriction of the rightof defective capital contributors in China.