Question raised

In the situation where Company A has a large amount of outstanding debts due, a shareholder of Company A must transfer 70% of their equity in Company A to their elderly elder Hu before the subscribed capital is due and fully paid. The creditors of Company A, after failing to pursue Company A, intend to hold former shareholder Xu accountable, but are unsure whether there is a legal basis and what kind of responsibility Xu should bear.

Lawyer analysis

Article 18, Paragraph 1 of the "Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III)" stipulates: "If a shareholder of a limited liability company transfers its equity without fulfilling or fully fulfilling its capital contribution obligation, and the transferee knows or should know about it, and the company requests the shareholder to fulfill its capital contribution obligation and the transferee to assume joint and several liability for it, the people's court shall support it; if a creditor of the company files a lawsuit against the shareholder in accordance with Article 13, Paragraph 2 of these Provisions and requests the aforementioned transferee to assume joint and several liability for it, the people's court shall support it Article 13, Paragraph 2 stipulates: "If a company's creditors request a shareholder who has not fulfilled or fully fulfilled their capital contribution obligations to bear supplementary compensation liability for the portion of the company's debt that cannot be repaid within the scope of the capital contribution principal and interest, the people's court shall support it; if a shareholder who has not fulfilled or fully fulfilled their capital contribution obligations has already borne the above-mentioned liability, and other creditors make the same request, the people's court shall not support it." The aforementioned "failure to fulfill or fully fulfill the capital contribution obligations" refers to the situation where the capital contribution period has expired but has not been fulfilled or fully fulfilled, and does not include the situation where the capital contribution period has not expired.

Before the implementation of the new Company Law, without special circumstances, creditors of Company A were indeed unable to pursue legal responsibility against Mr. Xu and Mr. Hu. However, Article 54 of the new Company Law stipulates: "If a company is unable to repay its due debts, the company or the creditors of the due debts have the right to demand that shareholders who have subscribed for capital but have not yet reached the capital contribution deadline pay their capital contributions in advance." When Company A fails to repay its due debts, according to the aforementioned provisions of the new Company Law, its shareholders must have accelerated the maturity of a certain capital contribution. Therefore, after the implementation of the new Company Law, creditors of Company A's matured debts can, based on the provisions of the aforementioned Company Law and judicial interpretations, demand that Mr. Xu bear supplementary compensation liability for Company A's unpaid matured debts within the scope of his unpaid principal and interest, and that Mr. Hu and Mr. Xu assume joint and several liability.

In the aforementioned case, the scope of responsibility borne by Xu and Hu is limited, and they only bear supplementary compensation liability within the scope of the unpaid principal and interest. If a creditor has filed a lawsuit to pursue the responsibility of Xu and Hu and obtain compensation beyond the scope of the unpaid principal and interest, the creditor who later claims cannot demand that they bear supplementary compensation liability. Therefore, if the company's creditors encounter similar situations, they should sue as soon as possible to avoid the company's shareholders not bearing the responsibility beyond their subscribed but unpaid capital after compensation.