Company capital reduction VS targeted capital reduction
According to the relevant laws and regulations, a company can reduce its registered capital after going through legal procedures, so can the company direct a capital reduction to a certain shareholder? If the shareholders' meeting passes a resolution on a directional capital reduction, how effective is the resolution?
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First, the case of targeted capital reduction of the limited company reappeared
2. Key points of the court's judgment on the effectiveness of the targeted capital reduction of a limited company
3. Lawyers' opinions and suggestions on the targeted capital reduction of the limited company
1. The shareholders' meeting of a certain worm company is composed of 6 shareholders, including estrove and Hua, with a registered capital of 6,313,131 yuan.
2. On March 1, 2018, a certain worm company held a shareholders' meeting and made a resolution: First, agreed to a targeted capital reduction of 210,438 yuan in the registered capital subscribed by a certain company, the total registered capital of a certain worm company was reduced to 6,102,693 yuan, after the capital reduction, the equity ratio of a certain company decreased from 10% to 6.9%, and the shareholding ratio of other shareholders increased, of which the equity ratio of Hua increased from 24.47% to 25.32%; Agreed that the worm company returned 5 million yuan of investment money to the company; third, agreed to amend the articles of association; fourth, authorized the executive director of the worm company, Xia, to perform all the necessary acts on behalf of the worm company to complete the capital reduction, including but not limited to the registration of creditor's rights application, the industrial and commercial change procedures for reducing the registered capital, etc.
3. The voting result of the resolution involved in the case was that all other shareholders except Hua agreed, and the shareholders who agreed to the resolution accounted for 75.5% of the total number of shares.
4. The financial statements of a certain worm company show that the company was in a serious loss situation from February to October 2018, and the net assets at the time of the company's resolution were more than 8.42 million yuan, and the net assets in October of the same year were only more than 2.3 million yuan.
5. Hua sued the court, claiming: First, the company's directional capital reduction should be unanimously agreed by all shareholders, rather than the shareholders holding more than 2/3 of the voting rights, and the first, third and fourth items involved in the resolution involved in the case involving the readjustment of the company's equity structure, which violated the basic principle of "same shares and equal rights" in the Company Law without the unanimous consent of all shareholders, and should be a resolution that should not be established; second, the practice of returning the capital reserve fund to individual shareholders by so-and-so worm company is actually a disguised distribution of company assets to individual shareholders in disguise without liquidation procedures. Not only does it infringe on the company's property rights, but it also harms the interests of other shareholders and the company's creditors, and moreover, the company is in a loss-making situation, and allowing the shareholders to withdraw the capital reserve fund will lead to the interests of external creditors cannot be protected, so it is claimed that the second item of the resolution involved in the case is invalid.
6. On August 8, 2018, the Shanghai Pudong New Area People's Court rendered the (2018) Hu 0115 Min Chu No. 32686 Civil Judgment: all of Hua's litigation claims were rejected.
After the first-instance judgment, Hua was not satisfied and appealed to the Shanghai No. 1 Intermediate People's Court. On February 1, 2019, the Shanghai No. 1 Intermediate People's Court rendered the (2018) Hu 01 Min Zhong No. 11780 Civil Judgment, ruling: 1. To revoke the (2018) Hu 0115 Min Chu No. 32686 Civil Judgment made by the Shanghai Pudong New Area People's Court; It was confirmed that the second item in the resolution of the shareholders' meeting made by the appellee, Worm Company on March 1, 2018, was invalid.
The effective judgment of the court held that the directional capital reduction will directly break through the equity distribution situation at the time of the establishment of the company, and if only two-thirds of the voting shareholders can make different capital reduction resolutions, in fact, it is in the form of a majority decision to change the equity structure formed by the unanimous decision of the promoters when the company is established. The resolution on the targeted capital reduction involved in the case violated the basic principle that the equity structure at the time of the establishment of the company was the result of the agreement of all parties. Items 1, 3 and 4 of the resolutions of the shareholders' meeting in the case are in line with Article 5 (5) of the Interpretation of the Company Law (4) "Other Circumstances Leading to the Failure of the Resolution to Be Established". At the same time, the trial court also held that the company was in a continuous loss situation, and if the company was allowed to return 5 million yuan of investment funds to the company, it would lead to a large-scale reduction in the company's assets, damage the company's property and credit foundation, and also harm the interests of other shareholders and creditors of the company. Therefore, the invalidity of the second item of the resolution of the shareholders' meeting involved in Hua's claim has a factual and legal basis and should be supported.
Paragraph 2 of Article 43 of the Civil Company Law stipulates: "Resolutions made at the meeting of shareholders to amend the articles of association of the company, increase or decrease the registered capital, as well as resolutions on the merger, division, dissolution or change of the form of the company, must be passed by shareholders representing more than two-thirds of the voting rights." "But why were the matters related to the resolutions of the shareholders' meeting of the company involved in the case determined to be invalid or invalid by the effective judgment of the court?" How is the legal connotation of this article understood? How will the company reduce its capital? The following analysis is made by our lawyers for the reference of shareholders in their practice.
1. The second paragraph of Article 43 of the Company Law contains only the reduction of the registered capital of the company itself
The second paragraph of Article 43 of the Company Law stipulates the rules of procedure for the reduction of capital of the company, that is, the resolution of the company to reduce the registered capital shall be passed by the shareholders representing more than two-thirds of the voting rights. From the perspective of legal interpretation, the "reduction of registered capital" in this paragraph only refers to the reduction of the registered capital of the company itself, and does not cover the distribution of the capital reduction share among the shareholders, so the provision of the paragraph on "representing more than two-thirds of the voting rights" only restricts the company to reduce the registered capital, and does not restrict the redistribution of the capital reduction share among the shareholders.
2. Whether a limited company can direct a capital reduction: it can be done without express prohibition in the law
Regarding the classification of corporate capital reductions, there will be different types according to different criteria. According to whether the proportion of capital reduced by shareholders is the same, the company's capital reduction can be divided into equal proportion of capital reduction and unequal proportion of capital reduction. Equal proportion of capital reduction refers to the capital reduction of each shareholder's capital contribution or share ratio remains unchanged after the company's capital reduction; the unequal proportion of capital reduction is a targeted capital reduction, which refers to the capital reduction method in which the capital contribution or share ratio of each shareholder changes after the capital reduction.
Can the company make a targeted capital reduction? The Civil Company Law does not make explicit provisions, but the Civil Company Law does not make negative provisions for the targeted capital reduction of companies. In accordance with the principle that the law can do nothing without express prohibition, a limited company may direct a capital reduction.
3. Rules of Procedure for Directional Capital Reduction of Limited Companies: Subject to the unanimous consent of all shareholders
Limited companies are both capital-oriented and more human-specific. The shareholding ratio is directly related to the basic rights and obligations of shareholders and should be in accordance with the principle of voluntariness. If a shareholder representing more than two-thirds of the voting rights can make a resolution on a different proportion of capital reduction, it is actually a majority decision to change the equity structure formed by the unanimous resolution of the promoters at the time of the establishment of the company, which violates the principle of shareholder voluntariness. At the same time, the exercise of rights in proportion to capital contribution is the basic expression of the equal rights of shareholders, and the targeted capital reduction resolution made without the unanimous consent of all shareholders also violates the basic principle of "same shares and same rights". Therefore, the directional capital reduction of a limited company is subject to the unanimous consent of all shareholders.
Therefore, the major shareholders and actual controllers of the company should correctly understand the relevant provisions of the Company Law and perform the agreement between the shareholders in good faith. An one-sided understanding of the relevant provisions of the law and an attempt to harm the interests of minority shareholders or creditors with "lawful" resolutions will not be supported by law.