Research On The Legal Effect Of Invalid Equity Holding Agreement

Equity holding is a hot issue in the field of corporate law,especially as it is widely used in commercial activities as an investment method.As the current laws have incomplete provisions on proxy holdings and judicial practice disputes on proxy holdings far exceed the provisions of the existing laws,it has brought difficulties to the court’s judgment work.This paper tries to find a reasonable solution to this problem by combining the current practical solutions and related theoretical research.Chapter Ⅰ is an introduction to the relevant cases,as well as the focus of the judgment of the legal consequences of invalid equity holdings summarized in the aforementioned cases and analyzes separately.In the existing judicial judgments,in the case of determining that the equity holding agreement is invalid,the issues involved in the invalid equity holding dispute and the disputes of the parties to the dispute mainly include the ownership of the disputed equity,the return of investment funds,and the distribution of investment interests.Through combing the existing judgments,understand the court’s judgment thinking,and exploring the existing problems and the focal issues involved in disputes.The first is the issue of the ownership of the disputed equity.In most cases of equity holding disputes,the actual investor will usually put forward a claim that the nominee shareholder transfers the equity holdings,especially when the investment company is operating well.Therefore,the issue of the ownership of the equity holdings is inevitable.On this issue,there is a more uniform judgment result in judicial practice,that is,the nominal shareholders continue to hold this part of the equity,but the judgment basis is different.The second is the distribution of capital contributions and investment interests,which is also the core issue of the legal effects of invalid equity holdings.The current practice has formed a judgment idea based on the "principle of fairness" in which the above-mentioned property interests are distributed according to a certain proportion.Although this kind of adjudication method is supported by practice and theoretical scholars to some extent,there are also doubts about why the actual investor can obtain compensation through an invalid legal relationship?Some scholars also put forward the idea of penalizing and confiscating investment income.Chapter Ⅱ is an analysis of the current dilemmas faced by the courts in the process of handling equity disputes,including legal and theoretical dilemmas.The first is at the level of legal rules.The company law does not make corresponding provisions on the issue of equity holdings.Although the judicial interpretation of the company law supplements the issue of equity holdings,the aspects involved are still very narrow and the supplementary regulations themselves are also inadequate.The current lack of legal provisions on the issue of equity holdings has resulted in the courts having no specific legal norms to invoke in resolving such issues.The court turned to apply the provisions of the existing contract law to deal with the problem,and the issue of equity holdings also impeded the application of the general rule of contract invalidity.The second is the theoretical level.Due to the absence of the law,the nature of the equity holdings is unresolved,and the courts are unable to apply the corresponding legal system to solve the problem with the help of theoretical qualitative.Chapter Ⅲ is the operation plan for dealing with the related issues involved in the legal consequences of invalid equity holdings.First of all,in the process of adj udication,the court should follow the principle of party autonomy.When the two parties are unable to resolve the dispute by consensus,regarding the ownership of equity,based on commercial appearance doctrine,this article supports the consensus formed injudicial practice that the nominal shareholder continues to hold equity.The second is the handling of investment funds,which can be handled in accordance with the legal effects of invalid contracts.But it is necessary to distinguish the profit and loss of the company,and the actual investor and the nominal shareholder shall jointly bear the losses and risks incurred in the investment and business activities.The last is the distribution of investment interests.The investment interests here refers to the increase in the value of the company’s equity due to good management and other reasons,including dividends and share appreciation.This should be considered comprehensively with reference to the degree of fault and contribution of the nominal shareholder and the actual investor.