Analysis On The Shares Transfer Case Of Xiangtong Company V. Haoyue Company And Its Shareholders

When China's Company Law was amended in 2013,the system of subscribing registered capital was established,the minimum amount of registered capital,the time limit for the payment of capital contribution and the amount of initial capital contribution were no longer restricted.This reform has highlighted the more liberalized capital system and greatly stimulated the enthusiasm of investors.Since then,China has set off a trend of company registration and capital increase.Regrettably,China has not promptly promoted the coordinated reform of the creditor's interest protection system under the subscription capital system,resulting in the problem of infringement on creditors' interests is becoming increasingly prominent under the subscription capital system.The Shares Transfer Case of Xiangtong Company V.Haoyue Company and its shareholders is a typical case concerning whether shareholders' contribution liability can be applied to accelerated expiration since the reform of the registered capital subscripti on system,which reflects the particularity of shareholders' contribution liability under the subscription system.There are three main controversial focuses in this case:(1)The validity of Haoyue Company's capital reduction;(2)the validity of Xu Qings ong's and Jie Changjian's equity transfer;(3)how Xu Qingsong and Lin Dongxue should bear the responsibility.Based on the existing theory,legal provisions and judicial decisions of the same type,the following conclusions are drawn:(1)Haoyue Company's capital reduction resolution is not established,and the behavior of capital reduction lacks legal and effective legal basis.Therefore,its capital reduction should be invalid and its registered capital should be restored to its original state.Without considering the failure of the capital reduction resolution,Haoyue Company fails to perform the procedure of notifying creditors,therefore,its capital reduction action should not be effective for Xiangtong Company.(2)Because of the invalidity of Haoyue Company's capital reduction,Xu Qingsong and Jie Changjian did not reach the agreement to transfer 70% of Haoyue Company's equity(corresponding investment amount is 700 million),and no equity transfer agreement has been established between them.Because our Property Law does not adopt the concept of juristic act of real right and the theory that juristic act of real right is independent and causeless,it is a registration error to register the Jie Changjian as a shareholder of Haoyue Company because ther e is no legal and effective creditor's right act,which should be cancelled.(3)It is legitimate for shareholders to expedite the expiration of their capital contribution liability under non-bankruptcy circumstances.Explaining the application of Article 3 of the Company Law,we should confirm that Xu Qingsong and Lin Dongxue's capital contribution liability is expedited to expire.Finally,the case triggers reflection and suggestions on improving the creditor protection mechanism.We should improve the company's capital reduction mechanism,shareholder's capital contribution responsibility mechanism,and the company's credit information publicity mechanism.