Comment On The Case Of Shareholding Entrustment About Bao Pei Company V. Yu Run Company

Stock Holding is a hot issue in recent years.This business model has played a certain role in mobilizing investment enthusiasm and promoting economic development,but it also caused many disputes.The case of Baopei Company v.Yurun Company's Equity Ownership Substitution is a dispute about the validity of the Equity Substitution Agreement and the qualification of shareholders between the actual contributor and nominal shareholders.The main disputes in this case focus on the nature and validity of the equity ownership agreement and the identification of shareholders' qualifications.Firstly,compared with the existing theories of agency relationship and trust relationship,the attorney relationship theory should be more in line with the equity ownership relationship.First,the attorney relationship is different from the external characteristics of the agent.It is a kind of internal relationship,which restricts only the parties to the contract.while the agent emphasizes that the transaction effectiveness between the agent and the third party belongs to the principal.According to this attribute,the actual investor will be able to break through the ownership relationship and claim rights to the third party company,which is contrary to the relevant provisions of the company law.Secondly,agency is a kind of unilateral legal act,which can be established without the commitment of the agent,while the entrustment is bilateral civil legal act,which requires the commitment of the trustee to be established.From this point of view,the entrustment relationship is more in line with the establishment of the ownership relationship.Moreover,the principal relationship is different from the trust relationship.It has no subject restrictions and requirements,so it can explain the vast majority of equity ownership types in practice.According to the independence of trust property,neither the creditor of the settler nor the creditor of the trustee can claim the right of trust property in principle,which is not in conformity with the protection of bona fide third party which based on commercial Externalism in company law.However the attorney relationship has no such restriction.To sum up,it would be more reasonable to explain the ownership relationship by the principal relationship.Next,refer to the dispute about the validity of the agreement of holding insurance company shares in this case,the department rules can not be used as a basis for judging the invalidity of the contract by reason of the relevant judicial interpretation clearly stipulates that the department rules are notincluded in the mandatory provisions stipulated in Article 52 of the Contract Law.On the other hand,it must be prudent to apply item 4 "Damage to the public interest" to determine the invalidity of contracts on the grounds of disrupting market order,otherwise it will restrict the development of market economy.As the share agreed in the Equity Ownership Agreement in the case does not exceed the share limited by the insurance law,it should be within the scope of free transfer area and should be considered as not affecting the market order.However,due to the tendency of stringent regulation of the financial industry in recent years,such proxy agreements are likely to be invalid,so we need to be cautious.Finally,based on the nature that the ownership relationship is a attorney relationship,the actual investors have no right to break through the contract and claim equity from the third party company.What's more,through summarizing relevant cases,it is found that in practice,the court has basically formed the shareholder qualification determination formula of "effective ownership relationship + actual investment + majority consent of other shareholders =shareholder qualification".In this case,Baopei Company has not possess the qualifications of these requirements yet,so it can not request the change of industrial and commercial registration.The protection of the rights of Baopei Company shall be based on the Stock Ownership Agreement signed by both parties and the relevant provisions of the Contract Law to seek the protection of liability for breach of contract from Yurun Company.