Case of the Week | Case where a shareholder's qualification, registered and invested for more than 30 years, was denied

Lawyer Zhang Liyan, Secretary-General of the Firm's Business Guidance and Training Committee, Member of the Firm's Human Resources and Appraisal Committee

Bachelor of Law, Jilin University; Master of Civil and Commercial Law, Zhejiang University. Currently a practicing lawyer at Zhejiang Hangtianxin Law Firm, specializing in corporate law-related business and contract dispute resolution. Believes upholding the legitimate rights of clients is a lawyer's professional duty, and pursuing social justice and fairness is a lawyer's lifelong goal.

Contact Information: Mobile: 15616359999 Email: zhangliyan@htxls.com

Case of shareholder qualification denied after more than 30 years of registration and "capital contribution"

【Case Summary】

According to the Hangzhou Municipal Administration for Industry and Commerce, since 2004, Yu and Lu invested to establish a company with a registered capital of 200,000 yuan. The shareholders were Yu and Lu, with equity ratios of 50% and 50%, respectively, and contributions of 100,000 yuan each. In 2011, the company's shareholders changed to Zhang and Wang, acquiring the equity from Yu and Lu. The equity ratio after the transfer became 90% and 10%, respectively. A series of "Equity Transfer Agreements" and "Shareholder Meeting Resolutions" related to the equity transfer were kept in the Industrial and Commercial Bureau. Later, the company was successfully operated and listed by Zhang and Wang.

In 2020, Yu filed a lawsuit with the Hangzhou Binjiang District People's Court, claiming that the signatures on the "Equity Transfer Agreement" and "Shareholder Meeting Agreement" in the above-mentioned equity transfer were forged, requesting confirmation of the invalidity of the equity change and demanding compensation from Lu, Zhang, Yu, and the company based on the loss corresponding to the 10% equity after listing (calculated based on the audited net assets of the listed company in the previous year), totaling more than 2 million yuan.

In addition, Yu provided an "Appraisal Report" issued by an accounting firm, proving that his capital contribution was in place. Furthermore, a certain appraisal agency determined that the signatures on all documents kept in the Industrial and Commercial Registration Office were not Yu's true handwriting.

【Agency Strategy】

After receiving the court documents, the defendant Lu found Lawyer Zhang Liyan of this firm to represent him in this case. Through communication, it was learned that, given the relevant requirements of the Company Law at that time in 2004, one person could not register a company, so he invited Yu to help register the company in question. The registered capital was all contributed by Lu, and Yu did not actually contribute capital, manage, or receive dividends, etc.

Lawyer Zhang analyzed the situation and provided the following agency opinions:

First, Yu was not a true shareholder of the company. Shareholder status cannot be judged solely from the form of industrial and commercial registration; it should be based on the facts themselves. As a "shareholder," Yu, claiming to have only learned about the current situation of the company in 2018, should not have failed to manage, receive dividends, or even inquire about the company's situation for more than 30 years. It is worth mentioning that although the capital contribution to the company is shown in the industrial and commercial registration and the "Appraisal Report" as being made by Yu, it was actually paid by Lu and handled through a company agent. Therefore, the three defendants do not need to bear the corresponding responsibility.

Second, this case has exceeded the statute of limitations, and Lu notified Yu during the equity transfer.

During the trial, the judge asked Yu about the specifics of his capital contribution. Yu stated that he deposited 100,000 yuan in cash into a designated bank account, and the specific time was consistent with the time recorded in the "Appraisal Report." The defense lawyer immediately applied for an investigation order to investigate the time and depositor of this capital contribution. Due to the long time elapsed, the original bank institution has undergone several changes, but the deposit time and depositor of this deposit were still found to be inconsistent with Yu's statement.

【Judgment Result】
 

The court held that although Yu had industrial and commercial registration records and an "Appraisal Report" to prove his shareholder status, the evidence of the deposit time and depositor recorded by the bank had higher probative force. At the same time, from 2004 to the time Yu filed the lawsuit, there was no evidence showing that Yu had ever exercised shareholder rights. Therefore, the court dismissed all of the plaintiff's claims.

【Case Analysis】

The focus of this case is how to confirm the true identity of a shareholder.

The records of industrial and commercial registration have the effect of opposing third parties, but they cannot fully prove whether the person is a true shareholder. Shareholder qualification also needs to be comprehensively determined based on capital contribution, exercise of shareholder rights, and other aspects. Although many years have passed and much evidence is unavailable, the agent's unremitting efforts still enabled the investigation and acquisition of the actual situation of the capital contribution, successfully restoring the objective situation at the time of the case and helping the client avoid undue economic losses.

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