| At present, although many theoretical scholars study the problem of dormant investment, they mainly focus on the dormant investors’ qualification of shareholders. While practically, most of the parties involved in the dormant investment dispute, appeal to the court due to the controversy of investment fund. In such cases, courts shouldn’t be limited to the standard of dormant investor’s qualification of shareholders, they’re also obliged to analysis the specific investment relationship, which involves not only the dormant investment relations’ identification, but also other legal relationship hiding in the facade of dormant investment. Therefore, the key of solving the dormant investment disputes is to clarify the nature of investment fund. Only when relevant courts identify the nature of investment fund correctly, can the disputes be properly resolved. Based on the dormant investment of Limited Liability Companies, the following thesis tries to put forward the identification criteria and methods of dormant investment fund according to a summary and analysis of existing cases.The following thesis can be divided into three parts:the introduction, the main body which is structured by four chapters, and the conclusion.The introduction part states the reason of taking investment fund’s identification as an angle of view, raises the research method and value through the summary of various cases and the thoughts of the dormant investment disputes in practice, and points out the innovation and deficiency of the following thesis.The first chapter describes the current situation of judicature about dormant investment disputes based on the summary of existing cases over the dormant investment collected from the website “http://www.vip.chinalaw.com”. Meanwhile, the following thesis divides dormant investment disputes into the dormant investment and the non-dormant investment according to the nature of investment fund based on the summary of the various cases.The thesis also selects three typical cases to further analyze the above-mentioned two types of disputes.The second chapter outlines the basic theory of the dormant investment. Firstly, this chapter defines the scope of this thesis according to analysis the definition of “dormant investment” and “dormant investor”, and forms a more accurate understanding of dormant investment through a discrimination of “dormant shareholder”, “null shareholder”, “performance shareholders” and “false shareholder”, so as to reach a conclusion of dormant investment’s features. Secondly, this chapter analyzes the causes and rationality of dormant investment based on the practical situation of Chinese corporate law. Finally, an investigation on different trial modes of dormant investment in two legal systems is made. Meanwhile, the Supreme People’s Court and several High Courts’ guidance on dormant investment issues are also briefly listed.The third chapter points out dormant investment’s practical problems based on relevant theoretical controversy and different courts’ judgments. Due to the vacancy of explicit provisions on some practical problems, the identification of the nature of dormant investment fund usually blurs. According to recent cases judged by relevant courts nationwide, there mainly exists several problems listed as follows:Firstly, the discrimination of investment and loan hasn’t been clearly defined. Equity investment totally differs from private lending, while sums of loans in name of investment and investments in the facade of lending exist in practice. Explicit criteria have not been provided for relevant courts to clarify investment and private lending.Secondly, the qualification of dormant investors hasn’t reached a uniform standard. Various problems come to the basis of the qualification of dormant investors when the possibility of private lending has been ruled out. Due to the complexity of dormant investment issues themselves and the vacancy of explicit lawful criteria, there mainly exists three theories on the qualification of dormant investors: the substantial factor theory, the form theory, and the compromise theory(which includes the distinction theory and anonymous proxy theory). Besides, relevant courts’ trial modes on the qualification of dormant investors also differ from each other: Some distinguish internal relationship of the company from the external, judge the former according to the parties’ true intention, while the latter based on the principle of public exposure and representation; while others clarify the company and other shareholders’ different knowledge status, according to which reaches the conclusion whether more than half of the company’s other shareholders’ consent is required.Thirdly, the nature of other investment types hasn’t been clarified. According to current laws, regulations and judicial interpretations involved, relevant courts commonly take the attitude that a debtor-creditor relationship shall be recognized when the parties fail to prove the dummy shareholder owns the shares involved on behalf of the actual investor and the latter’s status is recorded in relevant documents. However, some courts take different views: Some neither recognize the qualification of the actual investor nor acknowledge the debtor-creditor relationship; Some directly order the return of investment fund involved after denying the qualification of the actual investor without clarifying the nature of relevant investment fund. The former merely divides the dormant investment into two—— equity investment and private lending and ignores or denies other investment type when dormant investment is based on true investment consensus; The latter recognizes the existence of such dormant investment, while it hasn’t identified the nature of such investment type explicitly. How to identify the investment based on true investment consensus has always been the vacancy of current practice.Last but not least come the restitution of investment fund and its return. Here includes several difficult problems: Firstly, whether the request of the dormant investor returning the investment fund can be supported. Provided the divergence between the dormant investor and dummy shareholder on the company’s operation principle, investment decision-making, distribution of profits and responsibility of 9debts cannot be resolved through negotiation, the dormant investor tends to request the restitution of investment fund. Under such circumstance, should relevant courts support their requests? If supported, what impact will take place for the company, other shareholders and other commercial subjects besides the company? Secondly, who should be responsible for the restitution of the investment fund? There exist two different situation of dormant investment: the agreement forms between the dormant investor and the dummy shareholder, or between the dormant investor and the company involved. Trial mode differs with the above-mentioned two situations. Thirdly, how should the investment fund be returned? The most prominent feature of investment relationship is that the investors shall have to assume relevant risks when they enjoy the benefits regardless of whether they participate in the company’s management. In practice, some parties involved reach an agreement on the restitution of future interests. Once relevant disputes occur under such circumstances, whether and how the investment can be returned presents uncertainty and diversity.The fourth chapter proposes corresponding solutions of the practical problems pointed out in the third chapter, and tries to construct the judicial criteria of the dormant investment cases in our country.The first section of this chapter clarifies the judging standards of investments and loans. In judicial practice, the situation when the investor and project company cover up their debtor-creditor relationship through the fa?ade of investment, or make investment in the name of loans occurs occasionally. The distinction between debtor-creditor relationship and equity investment relationship lies in reviewing the investor’s rights and obligations in the agreement. The essential feature of debtor-creditor relationship is the assurance of returning the loans punctually. The creditor ultimately aims at the debtor’s returning of principle and interests or other benefits regardless of its fa?ade. The equity investment relationship also has its inherent characteristics: The investors shall have to assume relevant risks when they enjoy the benefits regardless of whether they participate in company’s management. Therefore, relevant courts should focus on the review of whether the investor is exempted from any risks and responsibility in the agreement, and whether there exists a minimum-guarantee clause presenting the characteristic of debtor-creditor relationship such as explicit returning date, which contributes to the identification of the actual legal relationship between the investor and company involved.The second section focuses on the judging standards on the qualification of dormant investors. According to an analysis of relevant laws, regulations and the guidance of the Supreme People’s Court, the basic attitude of current legislation on the qualification of dormant investors is as follows: taking representation doctrine as the principal thing and intentionalism as supplement, meanwhile giving priority to protecting bona fides third parties. Therefore, the following thesis identifies the qualification of dormant investors respectively according to different situations: Firstly, provided there exists a bona fides third party involved in the company’s external relationship, the representation principle should be abode by, the bona fides third parties’ interests should be protected preferentially, thus the identification of dormant investor’s qualification should be based on the company’s business registration materials. Secondly, faced with the internal legal relationship between the investor and company involved, the investor can be confronted with the dummy shareholder on the basis of substantial evidence such as the agreement. Thirdly, provided the company has already known the existence of the dormant investor and recognized his/her conduct to exercise relevant rights as its shareholder, the qualification of the dormant investor should be identified without any violation of compulsory provisions. Lastly, provided the “company” hasn’t acquired corporate capacity due to specific reasons, the identification of the dormant investor’s qualification doesn’t exist.The third section mainly clarifies the nature of other investment types. There exists such situation that the investor injects certain capital to a company and signs relevant agreement merely based on a true investment consensus in order to obtain a fixed return, without any intention to lend money or become a shareholder. Due to the vacancy of the theoretical or practical identification of such investment, the following thesis calls it “pure investment” tentatively: The investor signs an agreement with a minimum-guarantee clause in order to obtain a fixed return, meanwhile, he/her should assume corresponding investment risks according to the company’s operation status. What should be emphasized is that provided the investor signs an agreement with the dummy shareholder but cannot obtain the qualification as a shareholder for some reason, he should be aware the qualification as a shareholder depends on the registration of stock ledger or registry, otherwise not, there exists a commission contract relationship between him/her and the dummy shareholder.The fourth section identifies the restitution criteria of investment fund and its return. As of a normal assumption of investment risks, dormant investors shall not request the returning of relevant fund, provided the ownership of the invested properties and equities has been transferred to the company, which means they have been included in the company’s registered capital. However, provided the investment fund is free from the registered capital, the company involved cannot own it legally, the investment fund and its return shall be restituted to the investor according to relevant agreement. Meanwhile, the company’s practical operation status should be taken into consideration: Provided the company falls into financial dilemma or is faced with bankruptcy, the dormant investor shall not request the restitution of his/her investment fund or its return, instead, the dormant investor shall enter into bankruptcy proceedings with other creditors of the company, and get repaid according to their respective proportion.The epilogue points out the trial procedure on the dormant investment disputes on the basis of a summary of the preamble: clarify investments and loans correctly with the analysis of the investment fund’s nature; then identify the qualification of the dormant investor as the company’s shareholder; determine the returning methods of investment fund according to different situations at last. |
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