Article 52 of the "Contract Law" makes special provisions on the statutory circumstances of contract invalidity, especially the invalidity of contracts that "violate the mandatory provisions of laws and administrative regulations" in Item (5). Regarding the "compulsory provisions" in Article 52 (5) of the "Contract Law", the "Judicial Interpretation II of the Contract Law" clearly states that it is a "compulsory provision of validity", but it does not mean that it is a "compulsory provision of validity". No relevant explanation was given. In the "Company Law" or the company's articles of association, there are often restrictions on the transfer of equity. Will the violation of the "Company Law" or the company's articles of association in the equity transfer agreement necessarily result in the invalidation of the contract?
1. The equity transfer agreement violates the "Company Law"
The restrictions on the transfer of equity in the "Company Law" involve Article 71, which is a restrictive provision on the transfer of equity in limited liability companies; Articles 141 and 142 are for limited liability companies. Restrictive provisions on equity transfer.
The first paragraph of Article 71 of the "Company Law" is an arbitrary provision, which clarifies that the company's internal shareholders can freely transfer equity without restrictions. The second and third paragraphs belong to the shareholder's equity transfer outside the company. The provisions of this paragraph do not prohibit the equity transfer, but it is mandatory that the parties must perform the corresponding notification procedures to protect the company’s shareholders’ right of first refusal. The fourth paragraph is to allow the company to agree on equity transfers in the form of articles of association, which is arbitrary. If a shareholder violates the mandatory provisions of this article, fails to perform the obligation of notification, signs an equity transfer agreement and infringes on the preemptive right of other shareholders, can the validity of the agreement be denied on this basis? Is the equity transfer effective?
Article 71 of the "Company Law" does not prohibit the transfer of equity. Instead, it stipulates various rules for the transfer of equity. It is not a mandatory clause for validity. If this clause is violated, the equity transfer agreement is not of course invalid. In the case of invalidity, the contract shall take effect as soon as it is signed. Although the equity transfer agreement is valid, it does not mean that people other than shareholders can legally obtain equity. The transfer agreement signed by the transferring shareholder and a person other than the shareholder is a kind of creditor's right relationship established through the contract. The validity of the transfer agreement does not affect the statutory priority enjoyed by other shareholders of the company in accordance with the Company Law. In the case of shareholders waiving their priority rights, transferees other than the company's right to request for equity delivery and registration can be realized. However, other shareholders of the company did not give up the purchase and claimed to exercise the right of first refusal, and it is difficult to realize the change of equity delivery.
Regarding Article 141 and Article 142 of the "Company Law", it is mainly the restriction on the time and proportion of the equity transfer of the promoters and the directors, supervisors, and senior executives, as well as the restriction on the prohibition of acquiring the company’s equity. Mandatory regulations. The above two provisions of the "Company Law" are mainly to tie the company's core members to the company's interests and prevent manipulation of the stock market for insider trading. This regulation only imposes restrictions on the equity transfer, not prohibitive and effective mandatory regulations. It is a mandatory administrative regulation. Violation of the above clauses does not of course lead to the invalidation of the equity transfer agreement.
2. The equity transfer agreement violates the company's articles of association
The company’s articles of association are a form of internal autonomy of the company and need to be formed through certain procedures. They are binding within the company and have no legal effect on persons outside the company. The articles of association argue that the equity transfer agreement is invalid. Although the company’s articles of association are arbitrary norms, they should also comply with the mandatory provisions of the “Company Law”. For example, the company’s articles of association stipulate that “no transfer of equity to foreign parties” is contrary to the “Company Law” and is invalid. However, the articles of association can stipulate that equity transfer is required. Restrictive clauses. The articles of association of a company do not have the right to relax the regulations, and if the relax regulations violate the "Company Law", it shall be invalid.
Three, case guide
Zhang Guiping v. Wang Hua (Jiangsu High Court of Second Instance)
Regarding the issue of whether the "Share Transfer Agreement" and the "Transitional Operation Management Agreement" in this case are valid and whether they can be revoked. The plaintiff and counterclaimed defendant Zhang Guiping and the defendant and counterclaimed plaintiff Wang Hua, as the promoters of Pudong Company, signed the "Share Transfer Agreement" and "Transitional Operation Management Agreement" on October 22, 2004, two years after the establishment of the Pudong Company. , It was agreed that after the "transition period", Wang Hua would transfer the underlying shares he held under Zhang Guiping's name. The foregoing agreement does not violate Article 147 of the "Company Law" that "the shares of the company held by the promoters shall not be transferred within three years from the date of establishment of the company. The directors, supervisors, and managers of the company shall declare their holdings to the company. Some of the company’s shares shall not be transferred during the term of office, which does not violate the relevant provisions of the Pudong Company’s Articles of Association, nor does it violate the public interest of the society, and shall be deemed legal and effective.
First, the main responsibility of the promoters of a joint stock limited company is to establish the company. The promoters are responsible for the consequences of the failure of the establishment of the company. In the process of establishment of the company, the promoters also need to bear corresponding liabilities if the company loses due to the fault of the promoters. The legislative purpose of Article 147 of the "Company Law (2004)" is to prevent promoters and directors, supervisors, and senior executives from using company establishment to seek improper benefits, and to evade the promoters' possible legal responsibilities by transferring shares.
Second, the transfer of shares by promoters prohibited by Article 147 of the "Company Law (2004)" refers to the fact that the promoters actually transfer shares within three years from the date of establishment of the company. The law does not prohibit promoters from signing a contract in advance for the transfer of shares three years after the establishment of the company. As long as the shares are not actually delivered, there will be no change in shareholder status and equity relationship. That is, the promoter who intends to transfer shares is still a shareholder of the company, and his legal responsibility as the promoter will not be exempted by signing an agreement to transfer shares. At the same time, after the two parties signed the "Share Transfer Agreement" and "Transitional Operation and Management Agreement," Wang Hua, the defendant and counterclaim plaintiff in this case, immediately signed an application to the Pudong Company's board of directors to resign from the company's directorship and ceased to serve as a director of the company. In summary, the above agreement between the parties obviously does not violate the provisions of Article 147 of the "Company Law", nor does it violate the relevant provisions of the "Articles of Association of Pudong Company", and should be deemed as a legal and effective contract.
Third, the nature of the "Transitional Operation and Management Agreement" is a share or equity custody agreement. The two parties have formed a de facto share custody relationship. The nominal shareholder is still Wang Hua, but in fact Wang Hua’s rights and rights as a Pudong company’s shareholder The obligations are enjoyed and assumed by Zhang Guiping. Since my country's "Company Law" does not have prohibitive provisions on the custody of company shares and the custody relationship, the "Transitional Operation and Management Agreement" signed by the parties in this case is legal and effective. Although the two parties agreed in the agreement that all obligations and responsibilities of Wang Hua as a shareholder of Pudong Company during the transition period shall be borne by Zhang Guiping, this agreement is only valid internally between the parties and is not legally binding on the third party. It is precisely because the "Transitional Operation and Management Agreement" does not exempt Wang Hua from responsibilities as promoters and shareholders, the signing of the "Transitional Operation and Management Agreement" and the "Power of Attorney" by Wang Hua and Zhang Guiping should be confirmed as legal and effective.
Fourth, the aforementioned "Share Transfer Agreement" and "Transitional Operation Management Agreement" do not cover illegal purposes in a legal form. As mentioned above, the fundamental purpose of the contract between the two parties is to transfer the shares three years after the establishment of the company. During the transition period, the plaintiff and counterclaimant Zhang Guiping will act on behalf of the defendant and counterclaimant Wang Hua. This purpose is not illegal. The form and content of the aforesaid agreement are legal and effective, and it does not violate the provisions of Article 28 of the Pudong Company’s Articles of Association that “the company’s stocks held by the promoters shall not be transferred within three years from the date of establishment of the company”.
Four, summary
1. According to the equity transfer agreement, the transferee has the right to claim the creditor's rights. It can request the transferring shareholder to deliver the equity and request the company to change the shareholder registration. The equity transfer is an act of disposition of property rights. The two should be treated separately. The validity of the equity transfer agreement shall be determined in accordance with the "Contract Law", and the substantial transfer of equity shall meet the relevant provisions of the "Company Law". That is to say, if the equity transfer agreement does not violate the invalidity provisions of the Contract Law, it should be deemed valid. Whether it violates the restrictions on equity transfer in the Company Law does not affect the validity of the agreement, but only affects the equity transfer.
2. The equity transfer agreement infringes on the shareholder’s right of first refusal, causing the transferee to actually obtain the equity. Where there is evidence that the equity transferor and the transferee have used fraud, malicious collusion and other means to damage the preemptive rights of other shareholders, they can claim the rights within 30 days from the date when they knew or should have known the same conditions for exercising the preemptive rights. Even if there is no malicious collusion between the transferring shareholder and the transferee, and the transfer is paid at a reasonable price and the transfer is registered, other shareholders of the company can claim their rights within one year from the date of the change of registration.
3. The equity transfer agreement violates Article 141 of the "Company Law", resulting in the transferee actually acquiring equity. According to the provisions of Article 140 and Article 141 of my country's "Company Law", the transfer of registered stocks shall be transferred by the shareholders in the form of endorsement; the transfer of unregistered stocks shall take effect after the shareholders deliver the shares to the transferee. Therefore, the law does not stipulate that the transferee has the obligation to investigate whether the transferor has substantive rights, and only needs to rely on the appearance of the rights possessed by the transferor to transfer the shares. However, a limited liability company is a closed company and has a strong personality. Therefore, the procedures for transferring shares are complicated. The counterparty only needs to perform the general duty of care and will not receive the shares from the person without the right to dispose of. Therefore, the transferee should refer to the good faith acquisition system of the "Property Law" to obtain the stock in good faith after satisfying the corresponding legal procedures, and there is no major negligence in good faith, and reasonable consideration has been paid, the transferee will obtain the equity in good faith.
