Article 125
Civil entities enjoy equity and other investment rights in accordance with law.
I. Purpose of this Article
This article is about the provisions on the enjoyment of equity and other investment rights by civil subjects.
II. Evolution of the Provisions
The Civil Code of the People's Republic of China adopts a legislative model that integrates civil and commercial affairs. In countries that adopt the legislative model of separation of civil and commercial affairs, their civil codes do not explicitly provide for commercial rights and interests such as equity and other investment rights, which is related to the fact that they have a separate commercial code. However, countries that adopt the legislative model of civil and commercial integration generally specify in the relevant provisions of the Civil Code that commercial rights and interests such as equity are protected by the Civil Law.
When the original General Provisions of the Civil Law were formulated, Article 91 of the First Draft provided that civil entities enjoy equity or other civil rights in accordance with the law. The first draft does not provide for other investment rights. In the process of compiling the original General Provisions of the Civil Law, some opinions proposed that the right of civil entities to purchase funds and other negotiable securities should also be protected, and suggested that "equity" should be amended to "investment rights". Some opinions suggest that this article be amended to read: "The equity and other investment rights enjoyed by civil entities in accordance with law are protected by law. According to the opinions of various parties, this article of the original General Provisions of the Civil Law finally stipulates that "civil entities shall enjoy equity and other investment rights in accordance with the law. "Compared with the original General Principles of the Civil Law, which did not provide for commercial rights and interests such as equity, the original General Provisions of the Civil Law has made significant progress in comprehensively protecting private rights, and has made a clear definition of the rights system and various types of rights, which has a fundamental role in the development of relevant economic and social activities. This provision is retained in the General Provisions of the Civil Code.
3. Interpretation of Provisions
This article regulates equity and other investment rights.
Equity refers to the right of shareholders to obtain shareholder status or investor qualifications in a lawfully established company based on capital contribution, and to enjoy the right to property income as the core in the company, and to participate in the company's affairs in accordance with the law. Equity is a property right.
Other investment rights refer to the right to operating income enjoyed by a natural person, legal person or unincorporated organization other than equity as an investor or founder, based on its status as an investor or founder obtained by the investor or founder through its contribution to an unincorporated for-profit legal person or unincorporated organization. These other investment rights are also civil rights, similar to equity rights, and are protected by civil law.
The object of equity is a share in a company limited by shares, and a share of capital contribution in a limited liability company. Shares represent partial ownership of the company, which has three meanings: (1) shares are a component of the capital of a company limited by shares, (2) shares represent the rights and obligations of shareholders of a company limited by shares, and (3) shares can express their value in the form of stock prices. The characteristics of shares are: (1) shares have an amount of money, (2) shares have equality, (3) shares have indivisible, (4) shares are transferable, and shareholders can transfer their shares to others in accordance with the law.
The share of capital contribution is the proportion of capital contributed by the shareholders of a limited liability company to the limited liability company. That is, other for-profit legal persons and unincorporated organizations other than a limited liability company shall have a share in the capital composition of the limited liability company and other units based on their capital contributions. The share of capital contribution is a constituent component of capital such as a limited liability company, and also represents the rights and obligations of shareholders such as a limited liability company, and at the same time, its value can be expressed through the proportion of its share, and it can be transferred in accordance with the law.
4. Cases
Zhang Moumou v. Wu Moumou 1 and Wu Moumou 2 Equity Transfer Dispute
Facts: The plaintiff Zhang Moumou claimed that he and Wu Moumou 1 were originally husband and wife, and during the divorce proceedings, Wu Moumou 1 and his father Wu Moumou 2 maliciously colluded to sign an equity transfer agreement to transfer 20% of the equity of Beijing Tiandesheng Template Leasing Co., Ltd. (hereinafter referred to as "Tiandesheng Company") to Wu Moumou 2 at a low price, so that the above equity was not dealt with in the divorce proceedings. Zhang Moumou believed that the above-mentioned equity belonged to the joint property of the husband and wife, and the actions of Wu Moumou 1 and Wu Moumou 2 seriously infringed on their legitimate rights and interests, so he sued the court. The court held that the 20% equity of Tiandesheng Company involved in the case was the property acquired during the marriage between Wu Moumou 1 and Zhang Moumou, which belonged to the joint ownership of the husband and wife, and the husband and wife, as co-owners, enjoyed equal rights to occupy, use, benefit and dispose of the common property, and neither party was allowed to dispose of it without authorization. At present, Wu Mou2 and Wu Mou1 have not provided evidence to prove that they have obtained the consent of the co-co-owner Zhang Moumou for the transfer of equity in advance, and they have not obtained Zhang's recognition afterwards, so Wu Moumou's unauthorized transfer of equity is an act of disposition without authority, which infringes on the legitimate rights and interests of the co-co-owner Zhang Moumou, and Wu Mou2's transfer of 20% of the equity of Tiandesheng Company under the name of Wu Moumou 1 does not constitute a bona fide acquisition. Therefore, Zhang's claim that the equity transfer agreement signed by Wu X 1 and Wu X 2 was invalid was based on law, and this court supported it.
5. Analysis
Equity refers to the right of shareholders to obtain shareholder status or investor qualifications in a lawfully established company based on capital contribution, and to enjoy the right to property income as the core in the company, and to participate in the company's affairs in accordance with the law. Article 125 of the Civil Code stipulates that civil entities enjoy equity and other investment rights in accordance with the law. This case confirms from the side that "civil entities enjoy equity and other investment rights in accordance with the law". In this case, Wu XX1 and Zhang XX were originally husband and wife, and during the existence of the husband and wife relationship, they obtained 20% of the equity of Tiandesheng Company, that is, they jointly enjoyed the equity in accordance with the law, and enjoyed equal rights to occupy, use, benefit and dispose of the common property.