The Study On The Civil Liability Of Equity Transfer Of Defective Capital Contribution In A Limited Liability Company

As an important legal carrier of social wealth，equity is the symbol of shareholders’qualification and identity. The corresponding capital contribution obligations of theshareholders and the promoters have been stated by the laws in our nation. TheCompany Law of the latest amendment，coming into force on March1,2014，makeschanges to the content such as the minimum amount of registered capital and theregistration system of a limited liability company. In addition to the specific areas ofcommercial banks, insurance companies and securities companies, the amount of totalvolume, the way to invest and the permitted time limitation of contribution fromshareholders in a limited liability company should be stipulated independently by thecompany’s articles of association. Although this regulation reduces the cost of setting upa company, also put forward higher requirements to the shareholders. Therefore, in thenext period of time, equity of defective capital contribution in the limited liabilitycompany will still abound，which makes the equity transfer disputes caused by defectivecapital contribution will still continue to emerge in practice. Although the issue has beeninvolved in existing laws of China, the provisions still have some defects.This willdirectly cause insufficient protection of the parties.Therefore，to discuss the civilliability of equity transfer of defective capital contribution is very necessary.Articles research on the defective equity caused by defective capital contribution in thelimited liability company，and discuss the problems by introducing and analyzingmethods. The first part defines the concept of defective equity and the types of it.Followed by the article discusses the premise and basic principles of civil liability of theequity transfer of defective capital contribution. And then, this section introduces fourtheories about the problem.The second part analyzes the foreign legislation about thisproblem.The third part introduces the view of author about the civil liability of equitytransfer of defective capital contribution in detail. The author claims that the civilliability should be divided into three categories，including the liabilities for breach ofcontract to other observant shareholders, the liabilities to pay the contribution to thecompany and the supplementary liabilities to the creditors of the company, and thenanalyzes the main body to bear different responsibilities. First，according to theprinciple of relativity of the contract, the liabilities for breach of contract to otherobservant shareholders shall be borne only by the assignor of the defective equity after the transfer of it. Second, because of the capital contribution obligation is statutory,assignor is still liable for payment of capital contribution of the company unlessotherwise specified. As to the question that whether the assignee is liable for thepayment should be based on the reality of conpensation and the subjective attitude ofthe transferee. Finally, the assignor and the assignee jointly and severally undertake thesupplementary liabilities to the creditors of the company, ignoring the subjective attitudeof the assignor authorized. But if the assignee is a bona fide, he can get conpensationfrom the assignor after bearing responsibilities. Whether the malicious assignee can becompensated depends on the agreement between the parties.