-- legal thinking triggered by the shareholder lawsuit case

 

            Authors: Liu Li

                                      Working unit: Heilongjiang Meng Fanxu law firm lawyers

Before Words

With the commercial activities have become increasingly active, the sense of company law dispute upward trend. In the company law amended to establish many new types of litigation, shortcuts to these new provisions opened up many problems for rights disputes disputes and damage the company's shareholders. The author analyzes existing problems in corporate litigation lawyer with actual business and the new company law provisions, mainly from the litigation subject qualification, procedure entry to perform point, and many other aspects of judgment. In order to explain profound theories in simple language, the inspiration for the practical operation.

 

Case: a medium-sized collective enterprises into limited liability company, the new company for the original collective enterprises and other enterprises to set up joint venture, on the same day in the new company to issue a business license, collective enterprises cancellation. The equity structure of the new company is determined, the collective shares accounted for 84.8% of the total share capital, the original labor service company trade union representatives exercise equity, A plants accounted for 10.6 %, B plants accounted for 4.6%. Employee collective shares did not deal with corporation qualification registration. Enterprises set up initial board members five, candidates for the board of directors is the former collective enterprises responsible person as a collective staff shares represent, common shareholders will be held to elect and the other two factory responsible person. The directors held a board of directors, elected as the first chairman, the legal representative of the enterprise. Because after the founding of the company can not guarantee that the collective interests of the stockholders, employees with a staff meeting, the representatives of the employees of the election, has held a meeting of shareholders and the board of directors, re elected board members, the change of chairman. After the replacement of the original board members not to implement the resolution, do not pay the company seal, do not transfer accounts, resulting in a new board of directors cannot perform their duties, causing a dispute.

 

This is a typical company shareholder rights disputes, the author believes that to solve the problem mainly from three aspects: first, analysis of employee collective representative identified problems or shareholder identity problem; second, the shareholders and the board of directors effect problem resolution; third, industrial and commercial registration and filing system; fourth, analysis in this case, rules of operation with the current law perspective.

A, shareholder identity

1 basic requirements, the qualification of shareholder

In accordance with the basic principles of civil law of our country, civil subject should certainly have legal independent personality, which have independent capacity for civil rights and capacity for civil conduct, the shareholder is the same. Employee collective shares itself although it is an overall all workers enjoy the right to determine the common, but the overall need to go through the legal procedures. The State Administration for Industry and Commerce in 1999 issued "on the enterprise registration management problems of executive opinion" the sixth regulation, social organizations (including trade unions), public institutions and private non enterprise units, have legal personality, can become a shareholder of a company or enterprise invested and established legal person. Obviously, only with independent legal person qualification of the main body can be shareholders, to determine the independent legal status.

2, the collective shares exercise determined

According to the above has been handled corporate registration, can become a shareholder of a company. But in this case the 84.8% equity holder fails to go through the registration procedures, not only such, terminated in accordance with the "people's Republic of China trade union law" thirteenth grass-roots trade union organizations in the enterprise, the corresponding revocation of trade union organizations. So the company 84.8% equity holders "vacancy", shall go through the formalities for equity inheritance. China's "company law" limited liability company has the highest number of restrictions shall not exceed 50 people, will not be the original collective enterprise staff all as a shareholder, employee collective shares should still as a whole. In the equity not quantified to specific share, should be the common internal relationship.

According to the principle of civil law, the common people can be determined in accordance with the contract or law, by one or more co owners representative of all of them to perform transactions, in accordance with the law or contract in the condition of not damaging the co owners interests under the management of common property. The author thinks, the newly established company unions representing workers can be used as equity holders exercise their rights, or similar cases by all worker collective members on behalf of the "sea election" elected as "named" shareholders on behalf of the exercise of ownership. But the need to point out, this kind of "absent" state belongs to the shareholders of the company autonomy category, not easy to judicial and administrative means to intervene to solve, by workers themselves.

 

Two, the shareholders' meeting or the general meeting of shareholders, board of directors and rules

1, is the first, the resolution in the post

Effectiveness depends on proper meeting held by shareholders and resolution, this "eligible shareholders" refers to the shareholders of business archives, or internal use of the roster of the shareholders to determine the shareholders. Only through legal procedures to confirm the identity of the shareholders, the rights and obligations between can be fixed, can be substantial shareholder truly. Because of this, determine the ownership rights or rights representative, is the premise to set foot in the internal corporate governance, but also the shareholders' meeting or the board of directors determined based, no civil rights what to talk about civil action, the author referred to it as "the right to act as". Therefore, it is very correct in this case a staff meeting of representative election, but who have the right to participate in the staff meeting, also is the "Absence" of 84.8% stake in the end what is common to all, need to be determined by an internal program or to be determined through judicial way. Only on this basis, the elected representatives of people to hold and exercise the option, and the representative of recorded into the registration matters is ultimately determine the identity of shareholders. Otherwise, in the ownership under uncertain circumstances to convene the shareholders will obviously have the order reversed.

The traditional rule 2, the shareholders' meeting, the board of directors to review the original ingrained

(1) shall convene and preside over the meetings of the limit

This case occurred in the "company law" before 2005, in accordance with the law at the time, the shareholders of limited liability company will convene and preside over the limits[1]The Convenor, offer maximum relaxation in representing 1/4 or more of the voting rights of the shareholders, or more than 1/3 of the directors, or the board of supervisors. If the three representative fails to convene a meeting could not be held. But at the time of the "company law" requirements chaired the meeting personnel, in addition to the chairman for being unable to authorize other directors chaired, law does not authorize another person can host. So many case litigation to the people's court, because the shareholders' meeting, board of directors procedure illegal will determine the invalid.

(2) the shareholders meeting or board of directors to determine the effectiveness of the resolution

Once upon a time, the legal academic said that, to determine the shareholders' meeting, the resolutions of the board of directors potency should pay attention to the essence, the reduced form requirements. For the determination of invalid resolution is contrary to the provisions of the company law, "" mandatory standards, mainly refers to: first, by resolution ratio in violation of mandatory voting standard limit[2]; second, elected directors, supervisors and other senior executives as the company law does not allow qualified personnel; third, lead to equity unequal or cancel the qualification of shareholder resolutions of shareholders; fourth, no signature substance. For the cancellation of resolution is mainly based on whether or not to fulfill the obligations of notification, if there are places or time is obviously hard to reach or attend meetings, or undue restrictions on speech substantive conditions. However, for failing to comply with the legal requirements by special personnel (chairman or other director) convened or presided over, does not necessarily lead to the resolution invalid or revoked. But in the legal background at that time, many of the terms in the company law is not easy to distinguish the difference between compulsory or optional norms based on the resolution, confirming the validity of a wide variety, the case also escape the same fate.

(3) the new company law therefore brought the dawn

The Revised Corporation Law in 2005 "" to give height to take seriously, the provisions of article forty-first the board of directors or executive director fails to convene, by the board of supervisors or board of supervisors shall convene and preside over the board of supervisors or board of supervisors; not to convene and preside over the meeting, representing 1/10 or more of the voting rights of the shareholders shall be convened and presided. This regulation is the protection of the interests of small shareholders, the board also radical remiss in obligation behavior. If the dispute appears at this time, apparently to convene and preside over there is no legal obstacles, as long as the directors, supervisors try fair means before resorting to force, set aside an appropriate period, try to offer the obligation to convene the meeting, shareholders in the "appropriate time"[3]Is not called, the shareholders' meeting and the articles of association of the company in accordance with the law in accordance with the rules of procedure to replace the non held by representatives of the employees of the directors, supervisors candidates, then, the meeting of the board of directors to replace the chairman. Then, to convene the shareholders meeting to amend the articles of association. Obviously in the new company law, by convening a meeting of the shareholders will be a be an easy job to do.

Three, changes in industrial and commercial registration and registration system significance

The contents and requirements of registration of change 1, company

(1) the alteration registration content

The company is registered with the registration of establishment and registration division. The establishment of the company is to be[4]Company name, domicile, legal representative, registered capital, paid in capital,Type of company, business scope, term of operation and the shareholders of a limited liability company or Limited by Share Ltd sponsor's name, and amount of capital contribution subscribed and paid up capital, time, investment way, this series of registration matters. Following the establishment of the company, occurred above item, must promptly to the administrative department for Industry and Commerce registration. The establishment and changes of company registration items, from organization (conference sponsors, the shareholders' meeting, board of directors or the board of supervisors) the decision, after forming the resolution to the articles of association of the revision or amendment to the articles of association as the registration document to apply for change of registration, change of registration, the administrative department for Industry and commerce is presented in or the new business license to the public.

 

(2) the alteration registration procedures

 

Industrial and commercial registration from the business owners to apply, should have laws or administrative regulations, the application materials required in the. In accordance with the "PRC Company Registration Regulations" (2005 Revision) twenty-seventh shall file registration shall be signed by the legal representative to submit an application for registration of change, in accordance with the resolutions and the State Administration for Industry and commerce company is required to provide. The administrative department for Industry and commerce to the legal requirements of the material as the basis, the formal requirements review. The author thinks that the administrative organs of industry and Commerce of the examination content:

First, the resolution of the shareholders' meeting or the general meeting of shareholders of the participants are consistent with the business archives registered shareholders. Decided by the shareholders' meeting or the general meeting of shareholders of the amendment to the articles of association by procedures are legitimate use this substance;

Second, the meeting of the board of directors and the industrial and commercial registration files to whether the directors unanimously, in addition to the rules of procedure of the determination of the legality of mandatory other substance;

Third, according to the "Regulations" the administration of company registration requirements of the required materials are complete;

Fourth, regarding the legal, administrative regulations clearly stipulates: the resolutions through procedures are mandatory provisions[5]The resolution adopted by the participants, or through standard, proportional to meet legal requirements. Special terms for the articles of association of the company, also should accord with the regulations of special rules.

In addition to the form of review above, the substantive review, including whether the true intention, the legality of the source are not in the scope of review.

 

2, shareholder meeting and board of directors effective resolution in decision making, non to industrial and commercial registration is approved elements

 (1) the shareholders' meeting, board of directors as the company organization, is the embodiment of corporate governance

The company internal management decision, investment plan, the replacement of the election of directors or supervisors, increase or reduction of registered capital, corporate merger and acquisition or dissolution and liquidation, the revision of the articles of association of a series of acts is the internal organization of the authority, the authority is opposite with the same company and determine the basis of company management or representative person. The internal governance content organization of good and bad, and a failure to each shareholder interests. Among them, business decision to shareholders "harvest", determine the candidates for the board of directors or the chairman to decide whether to represent the interests of shareholders, whether or not to infringe the rights and interests of shareholders, critical. The important is the direct effect on the internal shareholder rights and interests, this is the main commercial in the establishment, the ultimate goal of all the shareholders in the pursuit of profit maximization goal, i.e.. Therefore, the shareholders' meeting, the resolutions of the board of directors in most cases to the shareholder benefit maximization goal, this of course does not involve external problems. So by the shareholders meeting or board of directors, the nature and characteristics of the shareholders meeting or board of directors, make decisions without registration shall enter into force.

 

(2) the alteration registration effect to the third person

The author also note, maximizing the interests of shareholders is infringed by the third person or the interests of the creditors, whether because the company representative change caused by improper agency relationship, which both the shareholders or creditors, third people are most concerned about the consequences. According to the "contract law" article forty-ninth of the apparent agency contract potency determination, if the company is legal representative has reason to believe that the deposed remain for the company representative and the conclusion of the contract, the agent behavior is effective. In addition, the company law matters handled industrial and commercial registration is the legal representative of the change, need to apply for registration of change within 30 days after the resolution to make changes in the. But the change of registration of this item is still belongs to the "declarative" behavior, is generated by the publicity effect, rather than a right effect. The legal representative not because not registered and deny the effect of a resolution of the shareholders meeting or board of directors of the. So for the third party acting in good faith, shall determine the validity of a contract based on the principles of contract law, but the ultra vires of its liability losses to the company or the shareholders. This is the real problem in the future in the formulation of the articles of association of the company should be taken into consideration, the liability to pay compensation to detailed provisions, to check erroneous ideas at the outset.

 

(3) on the new "company law" understanding

This point has been passed embody the spirit and principle of the new "company law" article twenty-second. Invalid content decisions to make the provisions of article twenty-second organization of the company in violation of laws, administrative rules and regulations; convening, voting procedures in violation of laws, administrative regulations or the articles of association of the company or the resolution is in violation of the articles of association of the company, the shareholders may within 60 days from the date of the resolution is made, request the people's court to revoke; have to handle the registration of change, after the people's court to declare the resolution invalid or revoked, the company shall apply to the Administration for Industry and commerce to revoke the registration of change. Such a provision so I gladly, the general lack of understanding of this provision shall be deemed for the effectiveness of the resolution made since the force must.

3, the main responsibility of the change of company registration

(1) the company registration application subject

Company registration and company registration is completely two different concepts, company registration is the initial registration of company, is the foundation to establish the legal company or company with legal personality status. Only the legal personality of a company is established in the legal framework, to organizations and institutions inside the real establishment, are before the prototype. Similarly, only the company law personality in law was established, to the articles of the company from the agreement to establish truly become the norms of behavior constraints the development of the company and the internal organization rules. This is also the company articles of incorporation or establish a protocol to the agreement, the corporate legal responsibility because of objective reasons can not be established to the shareholders of. Similarly, the company is not set up also led to the shareholders or initiators consisting of a shareholders meeting or board of directors will lose its independent status, "without the skin, hair stand". Because of this, the author thinks that the shareholders meeting or board of directors independence should be established since the company's founding. However, in the "Regulations" the registration and administration of companies exist in two distinct rules for the limited liability company and limited company. The regulations stipulated in article twenty-first, incorporation application requirements, take "the board of directors shall be prescribed by the company registration authority for registration of establishment", the rule twentieth requires the establishment of a company by the applicant, as "the representative designated by all the shareholders or the agent entrusted by all the registration authority to apply for registration to the company, a wholly state-owned enterprise" by the state-owned assets supervision department, the property unit to apply for registration of establishment. The author thinks, shares of the company are required by the board of directors to the company registration authority for registration of establishment, is decided by the company standard and the number of shareholders of the powers of the board of directors, shareholders and non shareholders still comes from, for the establishment of behavior regulations "should belong to the special authorization by the board of directors"[6]. So, this difference in body of application, only to the form and convenient method, can not be changed by the shareholders as the essence of company is the application of the subject, the shareholders or initiators of personal behavior, not the company act.

(2) Company alteration registration application

Registration and registration of different change of company, registration of alteration is made on the basis of company registration matters on the changes, and the company began operations, the main company has been established, registration of change with the company is company action, rather than shareholder behavior. However, the company registration matters have important significance on shareholders, company registration of change the decision from the shareholders, as determined by the internal autonomy mechanism (embodied in the shareholders meeting or board of directors), which is a product of corporation personality thinking. Therefore, the shareholders' meeting, board meeting minutes or resolutions and modify articles are formed by the shareholders, the specific content reflects the change of registered items shall be in accordance with the company's requirements, in the name of the company by the legal representative of the change.

 

 

Four, using the current legal perspective to determine the case procedures

1, the legal representative of the company registration

(1) the legal representative system

Corporation has the property of artificial personality in the legal subject, legal person itself unable to express the will power, its behavior is realized by a natural person. So countries company laws established representative system is different, the legal representative system. Since the establishment of the legal representative system, the legal representative of a company must have only one, only the legal representatives shall have the right to exercise the authority, on behalf of the legal representative of the company have finally decided to contract on behalf of the enterprise rights, legal representative authority into all the management activities of enterprises and the legal representative on behalf of the company to exercise their right to appeal. This series with the authority of the legal representative of the status and role of the highest importance. The provisions of our existing company law, namely, as the legal representative of the company, to determine the legality, the uniqueness of the legal representative. In addition to the chairman and shall not serve as the legal representative. The current company law abolished the statutory legal representative, "company law" thirteenth stipulates the legal representative of the company in accordance with the provisions of the articles of association of the company, the chairman, executive director or manager, and shall be registered according to law. The legal representative of the company changes, it shall apply for modification of registration. Obviously, the legal representative of the authority was weakened, registration of alteration of the legal representative is only a "declarative" filing system, the legal representative of the authority from the constitution, which is autonomous from the shareholders of the company.

(2) registration of modification of the legal representative

As mentioned earlier, company registration need to be signed by the legal representative for the application for registration of change. Then, the change of the legal representative of the case, the legal representative if you fail to comply with company shareholder resolution will be, not with how to deal with cases of change? This case involves the. The author thinks that the application signed by the legal representative, shall be regarded as the new, old two legal representative may, due to effect of the shareholders meeting or board of directors self decision making, is the "declarative" (or "public") in nature, so the chairman will be changed in the resolution, the company should performance, performance reflects the company registration in the company of industry and commerce; the board of directors should fulfill, directors perform their embodied in the directors to the content of the resolution. In this case, as the business registration authority that should allow the new legal representative to sign the registration materials. But the issue in 2000 "industrial and commercial enterprises (2000) No. sixty-ninth words" reply, registered by the legal representative of the new elected people signed the document to change the legal representative. This answer is affirmative resolution made, effective response in practice is also made. Because of this, if the legal representative is not fulfill the resolution, can directly change the registration, without the action for legal representative implementation of the resolution.

 

2, the amendment of the articles of Association

(1) the nature of the Constitution

Articles of association are the company's most important rule in theory, is the company launched a specific normative long-term arrangements for the establishment of the company, investor organization and activities of important affairs, company to make, this arrangement reflects the great autonomy. The properties of decision formulation and revision of the constitution is not the company's behavior, individual behavior of shareholders. Limited liability company "set" is the "shareholders", the constitution of Limited by Share Ltd "formulation" is the company promoter ""[7]. To make a long story short, no matter what type of company, which by the articles of association of the voting procedure, the content of articles of association and articles of association have the right to make decisions is still the company's shareholders[8]. Although the content of the articles with constraint, the directors of the company act or supervisors behavior constraints, these constraints directly benefit per capita is a shareholder, is the ultimate goal pursued by the company shareholders to establish, the continuation of the basis of this goal is the commercial subject to. Because of this, the articles of association of the company changes or amendments to the companies to set up or change of company registration is still a shareholder decision-making (from the resolution of the shareholders' meeting of the company), amendment to the articles of association or the constitution revision only shareholders signature can, need not be signed by the chairman of the board, also do not need with the official seal of the enterprise. 

(2) constitution come into force, registration and filing

First, the effect of

When the company set up the constitution is to adjust the relationship between the establishment of the company's investors protocol, similar to the agreement, in accordance with the principles of contract law does not stipulate the registration in force, should be in the articles of association signed the establishment and effectiveness. But in the articles of association of the establishment of the company organization adjustment is not content shall enter into force when the company established. The effect of time change the articles of association of the company after the establishment, modification constitution system based on the authority of the shareholders' meeting, as mentioned the resolutions of the board of shareholders is made after the entry into force, then the effect of the amendment to the articles of association shall enter into force when the resolution is made.

Second, the articles of association of the registration

The articles of association of the company changes, according to "regulations governing the registration of companies" twenty-seventh paragraph second, where the change of registered items involved modifying the articles of association of the company, it shall also submit the signed by the legal representative of the company after the modification of the articles of association or amendment.

 

3, the legal representative or the board of directors shall not be the corresponding solutions of the handover

(1) the dilemma

In this case, the legal representative of deprivation of rights after the negative sentiment refuse to handle industrial and commercial registration, not for the handover, holding company seal, business license refused to hand over, has caused great difficulties to the enterprise management, enterprise management come to a deadlock, shareholders are helpless.

(2) legal representative rights although not by seal to maintain, but at the same time the company seal and a series of "property", this problem is not solved for the company, the shareholders are hidden

As mentioned above, the legal representative appointed method determining the source from the articles of association of the company. If enterprises provided for in the articles of association in accordance with the company law requirements, "formed by the organization of the resolution (or legal documents) election", then the change of the legal representative shall have effect from the shareholders' meeting or the resolutions of the board of directors shall. Although the legal representative holding seal rights certificate, do not cooperate with the industrial and commercial registration, also cannot suspend its rights in the company. But after all, its still holds company property "". The "property" is determined because of the double attribute with the value of tangible property and intangible property value[9], and the "property" of the continued possession may cause damage, a direct impact on the pursuit of the interests of company shareholders, should timely return of company.

(3) the specific operation

The legal representative or the directors do not handle the transfer of the company can not alteration registration, management can not be carried out or produce third retrospective effect problem, the author suggests several methods for:

The first,            Conclusion based on the above, do not need to change the registration of company (in the change of the legal representative of the case) the former legal representative signature recognition, and need not stamped with the seal of the enterprise[10]Industrial and commercial registration, can change at any time, until the completion of all procedures for alteration of business license, current legal no obstacle, the future should not set up obstacles. However, this procedure should require the company to conduct the necessary scale range, seal, business license revoked invalid announcement. The industrial and commercial registration matters publicity force, combined with the announcement effect constitute a complete sense of the industrial and commercial registration, to avoid the apparent agency.

Second,            The principle of civil law and private property will not be invaded based, the company as a plaintiff, to "corporate interests" as the cause of action litigation request the return of possession of the property, or the establishment of shareholder derivative litigation, to stop the infringement.

 

   In summary, the quasi legal personality of the company, is jointly established by shareholders, shareholders of company internal self-government mechanism, internal self-government mechanism is thought central the personality, independent legal personality behavior comes from internal institutions of self-government, autonomous institutions once a decision is made, the company should complete the implementation does not violate the premise mandatory provisions of the law. The complete implementation of the company's organizational structure, organizational members and the administrative departments should respect the legal personality meaning, comprehensive, timely and complete performance of shareholders' autonomy resolution.

 

[post]

 

The paper seems to have come here, but the case still has not been solved in the ultimate essence, corporation law replacement period this case verdict issued, establish employee collective shares by their common rights, but other claims are not supported. In reality, "a total of shareholder" long distance still travel. But today "company law" to modify, the author from the true sense of understanding of the principles and spirit of company law. The author had no exaggeration to say, shareholders rights of the company, or accurate called "company, shareholders mixed action" indeed give the author brings a broad study space, produce profound influence and inspiration to the author.