| In 2013,the reform and modification of corporation law regarding capital system has completely implemented the capital subscription system.That is to say,the shareholders can autonomously determine and contract the amount and the period of capital contribution.This change has brought new challenges to the protection of creditors’ interests.The main issue lies in whether the creditor(s)can require shareholder(s)to fund in advance or can accelerate the contribution liability when the corporation fails to pay off its debt as due and prior to the maturity date of contribution of subscribed capital.This has aroused tremendous debates in judicial practice and academic discussion.It is a fundamental duty for the shareholders to make capital contribution,which would further constitute the corporation’s capital.Capital contribution,whose value and function is of tremendous importance to the capital system,has been the core to the corporate finance.The reform on subscribed system has revised the time period of shareholder’s performing the capital contribution obligations.Besides,a shareholder shall be liable for the company to the extent of the capital contributions it has subscribed to.It is not restricted that the capital should be paid off within a specific period of time required by the corporation law.The shift has neither discharged the shareholder’s contribution obligation per se nor conflicted with the basic principles ofcapital system and the related capital contribution obligations or liabilities of shareholders.It is not only a contractual obligation but also a statutory obligation for the shareholders to make payment for the capital contribution.Therefore,it would be not inclusive to define shareholder’s contribution obligation if particular stress is only laid on either feature.In this sense,it would be conducive to the process of setting up the corporation and early state of company development if the shareholder is entitled to determine some contribution clauses.This is why the legislation in 2013 was originally designed to fully respect shareholder’s autonomy because allowing the shareholder to determine some aspects of capital contribution could play an irreplaceable role in reducing the corporation costs,lowering the market access and prospering the market.However,respect and encouragement for shareholder’s determination on contribution obligations doesn’t mean abolishing and abandoning shareholder’s statutory funding obligations.If the mandatory funding obligations are completely replaced by shareholder’s right to decide,market information asymmetry would be absolutely generated.Transaction costs and risks would be increased as well.In the perspective of corporation’s creditors,their legitimate rights and interests can’t be protected.Therefore,while the corporation is conducting business after founding,the mandatory contribution obligation should be strengthened rather than weakened.Accelerated maturity of payment of shareholder’s capital contribution by definition means that when the corporation is insolvency,the shareholder whose capital contribution is not due shall pay off the capital agreed and subscribed,thus losing the period benefits.The idea is how to balance the interests between shareholder’s and creditor’s.Under the capital subscription system,corporation law has given shareholder the autonomy to make capital contribution and has loosened the ex-ante regulation and supervision on corporation capital.Meanwhile,interim and ex post supervision should also be emphasized in order to prevent corporation from underfunding.In this way,the creditor’s interests could be guaranteed.However,corporation law modified in 2013 has just simply deleted the provisions requiring paid-in capital within statutory period and hasn’t provided any supervision for the shareholder’s subscribed capital.It is the enforcement of acceleration capitalcontribution that has emphasized the mandatory requirement of shareholder’s contribution obligation and has balanced the interests of corporation’s creditor.On the basis of balance the interests between shareholder’s and creditor’s,especially in terms of the protection of creditor’s,despite many remedy approaches are available when the corporation is not able to pay off its due debts,the acceleration of shareholder’s capital contribution obligation and liabilities plays a pivotal role under the circumstance of non-bankruptcy because the other approaches possess obvious defects and limitations if they are applied to protect creditors.The current judicial practice can’t fully solve the predicament and issues regarding creditor’s protection in the capital subscription system.There is now no clear legal basis and grounds for the shareholder to pay the capital contribution in advance of the maturity date.Therefore,it is necessary to integrate and interpret the existing legal resources to protect creditors and realize accelerating shareholder’s capital contribution prior to the payment maturity.When it comes to whether shareholder’s payment of capital contribution can be accelerated,the academia like practical circle has many debates as well.The main issue concentrates the Paragraph 2 of Article 13 of “Provisions of the Supreme People’s Court on Several Issues concerning the Application of the Company Law of the People’s Republic of China(III)”(also known as Judicial Interpretation of the Company Law(III)).Different theories have been proposed in terms of understanding and applying the previous rules in judicial interpretation(III),mainly resulting in“Affirmative Theory”,“Negative Theory” or Eclecticism of the above.The idea of“Affirmative Theory” states that when the corporation fails to pay off the due debts,the shareholder should accelerate the full payment of the capital contribution prior to the maturity date and the fulfillment of capital contribution obligation should not be prerequisite to bankruptcy.The opinion of “Negative Theory” explains that under the situation that the company is not bankrupt,the creditors can only seek for the defaulting shareholder who according to the agreement should have paid the capital at maturity so that the corporation can undertake the corresponding debts.The shareholders with undue capital contribution shouldn’t been deprived of theexpectation interest originating from the contribution period.Therefore,the payment of capital contribution shouldn’t be accelerated.The view of “Comprised Theory”expresses that under the normal circumstances should not the accelerated maturity be carried out,except for some certain special situations.According to the abovementioned theories,the“Affirmative Theory” stands out with more justification.Learning from the related doctrines about accelerated maturity of payment of shareholder’s capital contribution in American law,China should adopt the statutory debt theory which not only is simpler and more applicable but also won’t exert much effect on the current “corporation law”and related judicial interpretation.Based on the contractual and mandatory features of capital contribution obligation,China should bring the helpful legislation experience abroad within the framework of Chinese corporation law so that the corporation’s creditors are entitled to require shareholders to expediate the capital payment before the due date when the corporation debts can’t be paid off.In “Provisions of the Supreme People’s Court on Several Issues concerning the Application of the Company Law of the People’s Republic of China(III)”,Paragraph2 of Article 13 has provided the supplementary compensation liability if the shareholder fails to fulfill the obligation of capital contribution.When the debts of the corporation cannot be cleared,the creditor of the corporation can claim that the shareholder shall assume supplementary compensation liability for the debts of the company to the extent of the subscribed capital.In this sense,shareholder’s obligation of capital contribution is a kind of supplementary compensation liability,which means when the corporation asset is insufficient to pay off the corporation debts,the relevant shareholders shall assume supplementary compensation liability for the debts of the company that cannot be cleared.There’s sequence for shareholder’s supplementary compensation liability,That is to say,corporation should be of first priority to independently assume debts,and then go through the mandatory enforcement procedure.Only if the corporation can’t pay off the debts,shareholders can take the supplementary compensation liability.Here,shareholder’s liability is limited to the extent of the capital subscribed but not contributed.Based on the limited liabilitywhich a shareholder shall be liable for,this liability protects creditor’s interest.Therefore,it should be a new form of liability.In application of accelerated maturity of payment of shareholder’s capital contribution,the following issues should be focused on.Firstly.The requisite elements of creditor‘s requiring shareholder to accelerate the maturity of payment of shareholder’s capital contribution.In accordance to Paragraph 2 of Article 13 in Judicial Interpretation of the Company Law(III),if the corporation’s creditor claims that the shareholder who has failed to fulfill the obligation of capital contribution shall assume supplementary compensation liability,the following conditions should be satisfied.(Ⅰ)the debts of the corporation are due and cannot be cleared.“The corporation debt which can’t be paid off” is the premise of creditor’s claim that shareholder should make payment for the capital contribution prior to the maturity and take supplementary compensation liability for the corporation debts.Unless the corporation is enforced in the proceeding to pay the debt but still unable can the corporation be decided its “inability to clear the debts”.This idea has proposed that creditor can claim the shareholder to assume supplementary compensation liability only after enforcement proceeding by the judiciary and the company debt still cannot be cleared.(Ⅱ)shareholder has failed to fulfill the obligation of capital contribution.This refers to the objective fact rather than shareholder’s state of mind(mainly subjective default)of failure to contribute the capital.However,it is quite difficult to prove shareholder’s failure.The burden of proof should be reversed,which means the shareholder being sued for not fulfilling the payment of capital contribution should prove that s/he has already made the full payment,otherwise s/he should bear the adverse consequences.Secondly.The responsibility scope of shareholders’ accelerated maturity of capital contribution payment.If the shareholder,whose capital contribution obligation is not due,doesn’t violate the corporation articles of incorporation and doesn’t intend to fail to pay the capital,in accordance with the acceleration regulations,s/he shall only make payment or make full payment of the undue principal of contribution rather than the interests and other amount from the default liabilities.Corporation’s creditor can only claim to the extent of principal thathasn’t been paid off yet.This doesn’t include the interests and other amount from the default liabilities.Thirdly.The effect of shareholders’ accelerated maturity of capital contribution payment.In the case concerning acceleration,if the corporation creditor wins the lawsuit,the shareholder whose payment has not matured should in advance make capital contribution to clear the corporation debt to creditor.After shareholder has carried out such obligation,the respective debtor-creditor relationship between shareholder and company and between creditor and company should be terminated.Fourthly.The jurisdiction of shareholders’ accelerated maturity of capital contribution payment.Paragraph 2 of Article 13 in Judicial Interpretation of the Company Law(III)refers to corporation disputes.According to Chinese civil procedure law and its related articles in Judicial Interpretation,China has implemented special territorial jurisdiction for corporation dispute.This means the court has jurisdiction where the corporation resides no matter where the defendant resides.Fifthly.The defendant of shareholders’ accelerated maturity of capital contribution payment.Normally,creditor shall only sue the corporation first based on the debtor-creditor relationship.Then creditor can sue shareholder after the enforcement procedure if the corporation is still unable to pay off the debt.However,in order to efficiently and effectively solve the dispute,when the corporation has no objection to the debt and states its inability to pay off the debt,the court could inquire the shareholder whose payment of capital contribution is not sufficient whether s/he is willing to take the supplementary compensation liability and if the shareholder agrees,the court shall have s/he join as the third party and give judgement of taking the related supplementary compensation liability.If the shareholder doesn’t agree,the court shall inform the creditor to bring another separate suit after the enforcement procedure of the corporation.To conclude,it is of necessity to recognize,adopt and improve the accelerated maturity of payment of shareholder’s capital contribution under non-bankruptcy.When the corporation is unable to pay off the debt after being sued by the corporation’s creditor and enforcement procedure,the creditor has the right to sue and claim that the shareholder should take the supplementary compensation liability.Meanwhile,it is no longer being considered that what shareholder’s subjective stateof mind is when s/he subscribed the capital and whether the contractual payment is due.Here,the shareholder takes the supplementary compensation liability which is limited to the extent of subscribed capital.If the maturity of payment of shareholder’s capital contribution has been accelerated,this still preserves shareholder’s limited liability and corporation’s independent legal entity status.The only thing to compromise is to deprive shareholder of the benefits originating from the right to contract the contribution period so that the corporation doesn’t have to liquidate and result in bankruptcy.This is efficient and balancing because it gives consideration to all the interests of creditor,corporation and shareholder. |
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