Effect Of The Termination Of The Installment Equity Transfer Contract

The guiding case No.67.has a far-reaching impact on trial practice,as it embodies the principle of organic law as the condition for the dissolution of the equity transfer contract of a limited liability company.The proportion of cases that did not support the transferor to exercise the right of rescission on the grounds of maintaining transaction safety has increased rapidly,and the scope of "transaction safety" has been expanded in subsequent cases,with factors such as the stability of company operation,the combination of limited companies,the change of equity value and the protection of the interests of third parties being introduced to limit the rescission of the contract and its effect.This has led to inconsistency in the system of the rules for the conclusion and dissolution of the equity transfer contract under the principle of "separatism" in the Company Law and the Contract Law.To balance the interests of the parties’ freedom to terminate the contract,the stability of the company’s operation and the security of the transaction,it is necessary to clarify the effect of the termination of the installment equity transfer contract,move the port of the principle of organic law involved in contract evaluation from the effectiveness evaluation to the adjustment of the legal effect,and concretize the rules of equity rotation.Article 566.of the Civil Code makes a general provision on the effect of contract termination,that is,"after the contract is terminated,if it has not been performed,the performance will be terminated;For the installment equity transfer contract,there is no dispute about the first half of the dissolution effect,but the dissolution effect of the fulfilled part needs to be analyzed.First of all,the identification of the fulfilled part of the contract is inseparable from the changes in equity model.The "revised creditor’s rights doctrine" is more in line with the provisions of the current law and is also conducive to the balance of interests among all parties in the process of equity trading.Based on this,it is inferred that the equity right has changed since the establishment of the contract,which belongs to the "fulfilled part of the contract" and the parties can request restitution.Secondly,the nature,content and effect of the right to request"restitution" need further explanation.The premise of this series of explanations is to clarify the effect of the termination on the fulfilled part of the contract.According to the systematic explanation and comparative explanation,the termination of the contract has no retroactivity,and the debts that have been performed are not eliminated,but new debts are returned.Therefore,the claim for restitution is different from the claim for unjust enrichment.Thirdly,based on the concept of total compensation in civil law system,the scope of restitution should be full return.When the transferor requests to return the returned equity,there should be different contents according to the performance of the contract,such as returning the right certificate,cooperating with the company for approval and cooperating with the change registration.Finally,as far as the effect of the exercise of rights is concerned,the right to claim restitution is the right to claim creditor’s rights,so it does not lead to the immediate change of equity once exercised,but needs to follow the corresponding rules for the change of rights to make regression changes.Although requesting restitution is a feasible right for the parties after the termination of the contract,its exercise is still limited.Article 566.of the Contract of the Civil Code stipulates that the parties may request restitution of the performed part according to the performance and the nature of the contract.However,in the installment equity transfer contract,due to the complicated performance and the special nature of the contract object,there are many restrictions on the request for restitution in practice.Based on an analysis of the nature of the contract and the performance,this paper makes the following points.In terms of the nature of the contract,the particularity of the equity is not the same as the particularity of the contract.The installment equity transfer contract is a temporary contract and the payment is not irreversible once it is performed,so the particularity of the equity and payment method does not constitute a restriction on the right to claim restitution.In terms of performance,first,the situation that the value of the equity has changed significantly does not belong to the situation that the subject matter is damaged and lost,and it cannot be returned in fact.In addition,under the principle of separation of ownership and operation of the company,simple capital contribution or simple shareholder status cannot infer the significant influence of shareholders on the company’s operation.The increase or decrease of equity value and even the change of company value are caused by many factors,such as policy orientation,market supply and demand,senior management and so on.The increase or decrease of equity value can also balance the interests of both parties through discount compensation.Secondly,the restriction on equity rotation based on maintaining the stability of the company’s operation should be limited to the consideration of human nature.The spillover effect of equity rotation is also available in the external transfer of equity,and the restrictive provisions of the Company Law on the consent of more than half of other shareholders and the preemptive right when equity is transferred out can be applied by analogy in the equity rotation.The "weak consent right" granted to other shareholders in China’s "Company Law" is aimed at safeguarding the human nature of limited companies.After the equity has been transferred to the transferee and approved by the company,the transferor has lost his shareholder status and his status is no different from that of a third party outside the company.The requirement of the majority consent rule for maintaining the corporate integrity of a limited company in the process of equity transfer and equity rotation should be consistent,and the transferor should also obtain the majority consent of other shareholders in the process of equity rotation.In addition,in the case of termination of the contract,the transferee has no intention to quit the company subjectively.Even if other shareholders do not agree to the transferor’s return to the company,the composition of shareholders will not change,so other shareholders should not be supported to exercise the preemptive right.Thirdly,in the case that the equity transfer involves a third party,the restriction on the request for restitution for the sake of maintaining the transaction security should be limited to the situation where the equity is legally unreturnable due to bona fide acquisition and other reasons,and the restriction caused by this situation should be solved by the relevant institutional arrangements specializing in transaction security.