Case Description

Wang and Li jointly invested and established a company, and Wang recommended his cousin Zhang as the legal representative and executive director. After the expiration of the registered subscribed capital contribution period, Mr. Li has made full capital contributions, but Mr. Wang has defaulted on contributing 500000 yuan due to financial constraints. On the one hand, Zhang hindered his kinship with Wang, on the other hand, he believed that he was also a part-time worker, and that it was the matter of shareholders not to contribute. It was no use urging him to do so, so he did not urge Wang to pay off his contributions as soon as possible. Unexpectedly, the company was later applied for bankruptcy liquidation by creditors due to poor management, and after entering into execution, the court added Wang as the person to be executed according to law. After being enforced, Wang still owed 400000 yuan in capital contributions. Li believes that the executive director Zhang failed to fulfill his obligation to urge the shareholder Wang to fulfill his capital contribution as soon as possible, resulting in losses to the company. Therefore, Zhang was brought to court to request a judgment that Zhang should be held liable for the losses caused to the company, with the scope of liability being the unpaid capital contribution of 400000 yuan by shareholder Wang.

Lawyer Analysis

The focus of the dispute in this case is whether the directors should be liable for compensation for the capital contributions owed by the company's shareholders. Our analysis is as follows:

1. Directors' diligent obligations include supervision and call obligations

Based on the functional positioning of the board of directors (responsible for the company's business operations and affairs management), the importance of the company's capital (capital enrichment and full payment of capital contributions by shareholders are the basis for the company's normal operation), and the position of directors (constituting the board of directors, which is the company's business executive and affairs manager), The law stipulates the duty of diligence of directors: (1) Paragraph 1 of Article 147 of the Company Law stipulates that "directors, supervisors, and senior management personnel shall abide by laws, administrative regulations, and the articles of association of the company, and shall have the duty of loyalty and diligence towards the company"; (2) Paragraph 4 of Article 13 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law (III) stipulates that: "If a shareholder fails to fulfill or fully fulfill his/her capital contribution obligations during the capital increase of the company, and the plaintiff brings a lawsuit in accordance with the first or second paragraphs of this article, requesting that the director or senior manager who fails to fulfill his/her obligations under the first paragraph of Article 147 of the Company Law bear corresponding liabilities for the unpaid capital contribution, the people's court shall support the request. After the director or senior manager bears the liabilities, he/she may seek compensation from the defendant shareholder.". Therefore, the diligent obligation of directors includes the obligation to call on shareholders who have not fulfilled or fully fulfilled their capital contribution obligations.

2. The obligation of directors to supervise and call on shareholders' contributions runs through the entire process of company operation

Although Article 13 (4) of the aforementioned "Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law" (III) is aimed at the provision for capital increase of a company, in practice, the court believes that under the company's registered capital subscription system, shareholders who subscribe to capital contributions at the time of establishment of the company have the same obligation to contribute capital as those who contribute capital at the time of capital increase of the company; Directors also have the obligation to supervise and call on shareholders who have not fulfilled or fully fulfilled their capital contribution obligations, rather than being limited to the company's capital increase stage.

3. Directors who fail to fulfill their duties of diligence shall bear relevant legal liabilities

Article 149 of the Company Law of the People's Republic of China stipulates the legal liability of directors: "If a director, supervisor, or senior management violates laws, administrative regulations, or the articles of association when performing their duties, causing losses to the company, they shall be liable for compensation.". Therefore, if a director fails to fulfill his duty of diligence or is negligent in performing his duty of diligence and thus causes losses to the company, he shall be liable for compensation.

In this case, Zhang, as the executive director of the company, should fulfill his duty of diligence and call for payment in the event that Wang owed his capital contribution, but Zhang failed to submit evidence to prove that he had fulfilled the aforementioned obligation; However, Wang's failure to pay off his capital contribution actually harmed the interests of the company. Therefore, the court ultimately determined that there was a legal causal relationship between Zhang's failure to fulfill his obligation to call on shareholders to make capital contributions and the losses suffered by the company, and ultimately decided that Zhang would be liable for compensation.

Although Zhang can claim compensation from Wang after assuming the liability for compensation, as a director of the company, in order to avoid the occurrence of this case, it is still necessary to exercise due diligence in daily life. In the event that shareholders fail to fulfill or fully fulfill their capital contribution obligations, they should actively supervise, call for payment, and retain relevant evidence, rather than treat them negatively. If a director can prove that he has performed his duty of diligence, he may be exempted from liability for compensation.