Critically interpreting the case of the communique, and appraising the legal application or analogy

Chen Zhaoli

 

[Abstract] China's law does not expressly stipulate what legal liability will be incurred by the company for improper capital reduction. The Supreme People's Court Gazette case "Shanghai Delixi Group Co., Ltd. v. Jiangsu Boen WorldCom High-Tech Co., Ltd., Feng Jun, Shanghai Boen WorldCom Optoelectronics Co., Ltd." has concluded that the company improperly reduced capital and shareholders withdrew capital. There is no difference in essence, and the legal rules for improper capital reduction of the company have been initially established, which is quite useful for reference. However, the case of the communique has many controversies in joint litigation, legal application, legal argumentation, etc., and it is worthy of further discussion and reflection.

[Keywords] Bulletin case; improper capital reduction; withdrawal of capital; law application; analogy application; supplementary liability

 

First, the question is raised

Article 177 of the Company Law of the People's Republic of China (hereinafter referred to as the Company Law) stipulates that “When a company needs to reduce its registered capital, it must prepare a balance sheet and a list of assets. The company shall, from the date of making the decision to reduce the registered capital. The creditor shall be notified within 10 days and announced in the newspaper within 30 days. The creditor shall, within 30 days from the date of receipt of the notice, have the right to request the company to pay off the debt within forty-five days from the date of the announcement without receiving the notice. Or provide corresponding guarantees. However, there is no legal liability for the law in China that does not expressly stipulate that the company violates the above-mentioned legal provisions (the main form of behavior is only announced in newspapers without notifying the known creditors in writing).

A case published in the 11th issue of the Supreme People's Court Gazette, "Shanghai Delixi Group Co., Ltd. v. Jiangsu Boen WorldCom High-Tech Co., Ltd., Feng Jun, Shanghai Boen WorldCom Optoelectronics Co., Ltd." It represents the preference opinion of the Supreme People's Court. When the company reduces capital, it should fulfill the notification obligation to the known or known creditors. It cannot directly replace the notification obligation in the form of announcement without prior notice. When the company reduces its capital, it fails to fulfill the obligations of the known or known creditors. The shareholders of the company cannot prove that they are not at fault in the process of reducing capital. If the company reduces the capital, it cannot pay the debt before the capital reduction. At the time, the company's shareholders should assume additional liability for the creditor in respect of the debt. This case is quite useful, but there are many disputes in the areas of joint litigation, legal application, legal argumentation, etc., which deserves further discussion and reflection.

Second, the briefing case brief

In the case that Jiangsu Boen Company still owes 7.7 million yuan to Delixi Company, all the shareholders of Jiangsu Boen Company, Shanghai Boen Company, Feng Jun and Chen Qinyan unanimously passed the capital reduction resolution, agreeing to reduce the capital of the company by RMB 190 million, that is, Feng Jun reduced It invested 190 million yuan and withdrew from the company. Jiangsu Born Company issued a notice of capital reduction, and handled the registration of industrial and commercial changes, but did not notify creditor Delixi in writing. Therefore, Delixi Company appealed to the Qingpu District Court and requested the court to order Jiangsu Boen Company to pay RMB 7.7 million to Delixi Company; it ordered Shanghai Boen Company and Feng Jun to reduce the capital of Jiangsu Province within the scope of RMB 19 million. En company shall pay the supplementary compensation for the payment paid by Delixi Company.

The Qingpu District Court made the first-instance judgment, and supported the other litigation requests of Delixi Company, except that it did not support Shanghai Boen Company to assume supplementary liability within the scope of the capital reduction of RMB190 million.

Delixi Company refused to accept the first-instance judgment and appealed. The Shanghai Second Intermediate People's Court was reconsidered and supported all the claims of Delixi.

Third, the revelation and reflection of the communique case

1. Should the lawsuit for breach of contract and the lawsuit for infringement be combined?

From the perspective of this case, Delixi Company, Jiangsu Boen Company and its shareholders Shanghai Boen Company and Feng Jun also acted as defendants, not only claiming breach of contract liability to Jiangsu Boen Company, but also infringing the company’s shareholders Shanghai Boen Company and Feng Jun. Responsibility, which the people’s courts tried to merge and publish as a case of the communique, seems to represent the Supreme People’s Court’s support for this practice.

However, the author believes that this is not the case. The Supreme People's Court clearly stated in the civil ruling of (2015) Minyi Zhongzi No. 185 in the civil objection of the construction project contract dispute of Shaanxi Nonferrous Construction Co., Ltd. and Zhongqi Giza Construction Group Co., Ltd., due to breach of contract and infringement The complaint is two different petitions, which are not in the joint litigation case stipulated in Article 52 of the Civil Procedure Law. In the case that the shareholders of the company expressly raise objections during the first-instance defense, the people's court cannot merge and accept the company's default as the defendant. The lawsuit and the infringement lawsuit of the company's shareholders as the defendant.

It should be noted that according to the second paragraph of Article 127 of the Civil Procedure Law, if the parties fail to file a jurisdictional objection and respond to the defense, it shall be deemed that the competent people's court has jurisdiction, but violates the level jurisdiction and exclusive Except for jurisdictional provisions. It is important to clearly state the jurisdictional objection during the first-instance defense!

2. Does Delixi have the right to claim overdue payment losses?

In this case, Delixi Company requested the court to order Jiangsu Boen Company to pay 177 million yuan to Delixi Company, but did not claim the overdue payment loss. However, this does not mean that Delixi has no right to claim overdue payment losses.

According to the facts ascertained in this case, the sale and purchase contract should not stipulate the overdue payment liquidated damages or the calculation method of the liquidated damages. According to the provisions of Article 24, paragraph 4 of the Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Cases of Disputes over Contracts for Sale and Purchase, the sale and purchase contract does not stipulate the overdue payment liquidated damages or the calculation method of the liquidated damages. The seller is the buyer. If the breach of contract claims compensation for the loss of overdue payment, the people's court may, based on the benchmark interest rate of the same RMB loan of the People's Bank of China, refer to the overdue penalty interest rate standard. It can be seen that Delixi has the right to claim overdue payment losses according to the law, but it did not claim overdue payment losses in the claim, and voluntarily waived its rights, and suffered many losses invisibly (for example, the Jiangsu court generally supported The overdue payment loss is calculated at 1.95 times the benchmark interest rate of bank loans during the same period.

3. The case should be governed by the judicial interpretation of the company law (3) Article 14, paragraph 2?

Article 14 of the Supreme People's Court's Provisions on Several Issues Concerning the Application of the Company Law of the People's Republic of China (hereinafter referred to as "Judicial Interpretation of Company Law (3)") provides as follows:

The People's Court shall support the shareholders who withdraw the capital and the company or other shareholders request that they return the capital interest to the company and assist other shareholders, directors, senior management or actual controllers who have withdrawn the capital to bear joint responsibility.

If the company’s creditors request the shareholders who have withdrawn the capital to bear the supplementary liability for the part of the company’s debts that cannot be liquidated, and the other shareholders, directors, senior management or actual controllers who assist in the withdrawal of the capital shall bear joint and several liabilities, the people’s court It should be supported; the shareholders who have withdrawn the capital have already assumed the above responsibilities, and if other creditors make the same request, the people's court will not support it. ”

Obviously, the object of the regulation of Article 14 is clearly stipulated as the act of withdrawing capital. The act of improper capital reduction is not within the scope of application of this article. As Professor Wang Zejian said, “The application of the law is a matter of legal interpretation. The applicable law may be limited or expanded, but it may not exceed its possible legal meaning.” [1] The court in this case will recognize “despite the law of our country” The company’s liability is not specified when the company fails to perform the legal procedures for capital reduction, which may result in the loss of creditor’s interests, but it can be determined in accordance with the relevant principles and regulations of the company law. On the other hand, it directly applies the judicial interpretation of company law (3). The provisions of Article 14, paragraph 2, are clearly errors in applicable law.

Professor Larenz once solemnly pointed out that the basis of claim is the starting point of legal thinking, and it must be clear that ... is applicable or analogous, and it is even more incompatible. [2] The so-called "cf." should be "appropriately applied" in the legal method. The premise of analogy is that the law has no explicit provisions, and the analogy applies to the principle of equality of “similar cases, which should be treated the same”. It is easy to say that when certain provisions are imposed on the law, in other similar matters, it should also be applied to implement the concept of justice. The question is how to determine the similarity of the matter. Obviously, this informal logical thinking activity is a legal judgment. [3]

The author fully agrees with the judgment of Shanghai No. 2 Intermediate People's Court. When the company fails to notify the known creditors of the capital reduction, the situation is not different from the essence of the shareholders' illegal withdrawal of capital and the impact on the creditor's interests. Therefore, the company's improper reduction of capital should be applied instead of directly applying the provisions of Article 14 of the Judicial Interpretation of the Company Law (3); for creditors, the provisions of Article 14, paragraph 2, should be applied analogously.

4. Is the subject of the obligation to supplement the liability for compensation due to the company's improper capital reduction limited to the capital reduction shareholders?

Although there is no explicit stipulation in the law, the shareholders of the capital reduction should assume supplementary liability for the company's debt within the scope of capital reduction. It has already become the consensus of the judicial practice community, such as "Jiangxi Ocean Shipping Company and DAC China Special Opportunity (Barbados) Co., Ltd., Fujian Ning Zheng Tenglong Cement Co., Ltd., Fujian Province Ninghua Xiaolong Cement Co., Ltd. Claims Disputes (Supreme People's Court (2012) Min Ti Zi No. 25 Civil Judgment), Wanfeng Photovoltaic Company v. Guangli Investment Company, Ding Wei, etc. The case of the company's improper capital reduction shareholders to assume supplementary liability (Jiangsu Higher People's Court (2016) refers to case No. 37). However, it is undoubted that other shareholders, directors, senior management personnel, etc., other than the capital reduction shareholders, should bear legal responsibility.

As mentioned above, for the company's improper capital reduction, the provisions of Article 14 of the Judicial Interpretation of the Company Law (3) should be applied. Therefore, the subject of the obligation to supplement the liability for the part of the company’s debts that cannot be repaid should include not only the shareholders who improperly reduce the capital, but also other shareholders, directors, senior managers or actual controllers who assist in improper capital reduction. Jointly and severally liable.

However, as far as this case is concerned, Shanghai No. 2 Intermediate People's Court only approved the request of Feng Jun for the reduction of capital by Shanghai Bonn Company and Feng Jun through the resolution of the shareholders' meeting, and did not directly inform Delixi Company that Shanghai Bonn Company did not make reasonable claims. The duty of care should bear the corresponding legal responsibilities, and the reasons for its argument are unbiased.

What needs to be clarified is that the capital reduction procedure is that the shareholders' meeting will make the capital reduction resolution first, and the creditors will be notified later. According to the argumentation logic of Shanghai No. 2 Intermediate People's Court, as long as the shareholders voted in favor of the capital reduction resolution, and the company did not notify the known creditors in writing afterwards, they all need to share the responsibility with the capital reduction shareholders, which is obviously unfair to other shareholders. The so-called law does not force a person to do what he can't do. If other shareholders do not actually control the company and require it to ensure that the company notifies the known creditors after the capital reduction resolution, it is difficult for the strongman to injustly increase the legal risks of other shareholders in an unreasonable manner. Therefore, the argumentation logic of the communique case is very harmful.

Although the summary of the referee in this case increases the constituent elements of the shareholder's fault, the principle of fault presumption is applied, and the company's shareholders are required to prove that they are not at fault in the process of reducing capital, and there is neither legal basis nor rationality.

The author does not believe that Shanghai Boren should not be liable for compensation, but believes that the reasons for the argument of Shanghai Second Intermediate People's Court are debatable. The author believes that, first of all, after the reduction of capital by Jiangsu Born, the registered capital was reduced to 10 million yuan, of which: Shanghai Born Company invested 7 million yuan, Chen Qinyan invested 3 million yuan. Therefore, Shanghai Born Company is the controlling shareholder of Jiangsu Born Company after the capital reduction, and actually controls the company, and is obliged to ensure that the company performs the capital reduction procedures according to law. If Jiangsu Born Company is in the process of reducing capital, it can presume that it is at fault. Secondly, according to the first paragraph of Article 177 of the Company Law, “When a company needs to reduce its registered capital, it must prepare a balance sheet and a list of assets.” According to Article 21 of the Accounting Law, “Financial Accounting Reports shall The person in charge of the unit and the person in charge of accounting work, the person in charge of the accounting department (accounting officer) shall sign and seal; the unit that sets up the chief accountant shall also be signed and sealed by the chief accountant. The person in charge of the unit shall guarantee the financial accounting report. True and complete. As the legal representative of Jiangsu Born Company after the capital reduction, it is not only obliged to prepare a balance sheet, but also to ensure that the financial accounting report is true and complete, and that it has the obligation to ensure that the company fulfills the capital reduction procedure according to law and signs the change registration application. Verify before the book whether the company notifies known creditors. If Jiangsu Born Company is in the process of reducing capital, it is also presumed that it is at fault. As for whether it is presumed that the general manager of the company, the person in charge of finance, and other entities are at fault in the process of reducing capital, there is no doubt about the fault of the behavior of the notice.

To sum up, as far as this case is concerned, the author believes that the main body that should bear the supplementary liability for the part of the company's debts that cannot be repaid includes at least: (1) Feng Jun, the shareholder of improper capital reduction; and (2) other shareholders who assist Feng Jun in improperly reducing capital. Shanghai Born Company; (3) Legal representative of Jiangsu Boen Company (after capital reduction) to assist Feng Jun in improperly reducing capital.

5. Is the scope of loss due to improper compensation for the company's improper capital reduction limited to capital reduction?

As mentioned above, for the company's improper reduction of capital, it should be analogized to the provisions of Article 14 of the Judicial Interpretation of the Company Law (3). Therefore, the scope of the supplementary liability for the company's improper capital reduction should not be limited to the reduction of capital, but should include the reduction of capital.

Based on this, as far as the case is concerned, the plaintiff only advocated Shanghai Boen Company and Feng Jun to assume supplementary liability within the scope of capital reduction of RMB190 million, but did not claim that Shanghai Born Company and Feng Jun were responsible for the reduction of capital interest of RMB190 million. Supplementary liability is actually equivalent to the plaintiff’s voluntarily giving up part of his rights. Creditors of similar cases must not copy the above-mentioned communique case, and according to the cat painting tiger, invisibly damage some of their rights and interests.

Fourth, the conclusion

As Professor Wang Zejian said, "The growth of civil law lies in the substantive law on the one hand and the vigilance, reflection and breakthrough in methodology on the other." [4] When the company fails to notify the known creditors of the capital reduction, the situation The nature of shareholders’ illegal withdrawal of capital and the impact on the creditor’s interests are not different in nature. Therefore, for the company's improper capital reduction behavior, it should be applied analogously instead of directly applying the provisions of Article 14 of the Judicial Interpretation of Company Law (3).

Specifically, when the company fails to comply with the obligations of the known or known creditors in the event of capital reduction:

(1) The entity exercising the right to request shall include not only the company's creditors but also the company or other shareholders;

(2) The entity responsible for supplementing the liability for compensation shall not only include shareholders who improperly reduce capital, but also other shareholders, directors, senior management or actual controllers who assist in improper capital reduction, and shall bear joint and several liabilities with each other.

(3) The scope of the loss of the liability for supplementary compensation shall not be limited to the reduction of capital, but shall include the scope of interest reduction.

(4) Shareholders who improperly reduce capital have already assumed the above responsibilities, and other creditors have no right to make the same request.

As a legal person, you must not only know what it is, but also know why it is, always maintain the spirit of suspicion and truth-seeking, and must not blindly believe in the case of the Supreme People's Court.

 

Note:

[1] Wang Zejian: "The principle of lifting weights and balances