The actual controller transferred the money to the related person without reasonable reason, and was jointly and severally liable for the company's debts

The opinion of the Supreme People's Court is that if the actual controller of a company transfers the money collected by the company to a company or individual with which it has an affiliated relationship without sufficient and reasonable reasons, it shall be jointly and severally liable for the company's debts

(2019) Supreme Law Min Zhong No. 30

Gist of the Adjudication: The actual controller of the company, after transferring the money collected by the company to other companies and individuals with which it has a related relationship without sufficient and reasonable reasons, makes the company unable to perform the contract and unable to refund the purchase money received by it in a timely manner, thus seriously harming the interests of creditors. Therefore, it was not improper for the original trial court to apply the provisions of Article 20, Paragraph 3 of the Company Law by analogy, and to determine that the actual controller of the company should be jointly and severally liable for the debts incurred by the company.

2. On the issue of whether Du Minhong, Du Mihong, and He Jintang should be jointly and severally liable for the debts in this case

(1) On the issue of whether Du Minhong and Du Mihong should bear joint and several liability. First of all, there is a factual basis for the original judgment to find that Du Minhong and Du Mihong are the actual controllers of Nengsheng Company. The reasons are as follows: First, in the original trial, although He Jintang submitted evidence such as the Equity Transfer Contract, the notice of recording the customer's receipt (payment), and the tax payment letter to prove the authenticity of his transfer and holding of Nengsheng's equity. However, according to the Explanatory Letter issued by Huagan Company to the court of first instance, and through the company's analysis of the above-mentioned information submitted by He Jintang, the Equity Transfer Contract was signed in 2012, and the payment voucher was recorded in 2015. Therefore, under the circumstance that the above-mentioned evidence is insufficient to fully prove that the above-mentioned equity transfer actually occurred, the original judgment found that the authenticity of He Jintang's actual transfer of Nengsheng Company's equity held by Nengshun Company was doubtful, and the fact that Du Minhong and Du Mihong actually controlled Nengsheng Company through He Jintang was highly probable and not improper. He Jintang's claim that the content of the above-mentioned "Equity Transfer Contract" was true on the ground that it was obtained from the Department of Industry and Commerce was insufficient was not supported by this court. Second, even if He Jintang's claim that the fact that he transferred the equity of Nengsheng Company to Nengsheng Company and the payment of the equity transfer price by Nengshun Company is true, if there is evidence sufficient to prove that Nengsheng Company has actual controllers and that the actual controllers are Du Minhong and Du Mihong, the original judgment made a judgment based on Article 216 of the Company Law that "although the actual controller is not a shareholder of the company, he is a person who can actually control the company's behavior through investment relations, agreements or other arrangements". The determination that Du Mihong is the actual controller of Nengsheng Company is in accordance with the law. In other words, the fact that He Jintang is the registered shareholder of Nengsheng Company does not contradict the fact that the original judgment determined that Du Minhong and Du Mihong were the actual controllers of Nengsheng Company based on the evidence of the case. Third, according to the industrial and commercial registration information of Nengsheng Company, Du Minhong was a shareholder holding 90% of the shares of Nengsheng Company from August 8, 2001 to September 2003, and from September 2003 to March 2012, Nengshun Company became 90% of the shareholders of Nengsheng Company, and since the establishment of Nengshun Company in April 1999, its shareholders are Du Minhong and Du Mihong. And although Du Minhong ceased to be a shareholder of Nengsheng Company after September 2003, he and Du Mihong still served as directors or supervisors of Nengsheng Company. It can be seen that Du Minhong and Du Mihong have been actually controlling and controlling Nengsheng Company for a long time by either becoming the controlling shareholder of the company themselves, or making the shareholder of Nengshun Company become the controlling shareholder of Nengsheng Company for a long time shortly after the establishment of Nengsheng Company. Fourth, since March 2012, Nengshun Company has not been a shareholder of Nengsheng Company, however, the audio evidence submitted by Sinopec Jiangxi Branch in the original trial shows that after the dispute in this case, in order to recover the payment from Nengsheng Company, Sinopec Jiangxi Branch negotiated with Du Minhong and Du Mihong on specific repayment matters on several occasions. It shows that Du Minhong and Du Mihong have the actual decision and control over the creditor's rights and debts of Nengsheng Company. Fifth, judging from the flow of funds after the payment of the payment in this case, after receiving the payment from Sinopec Jiangxi Branch, Nengsheng Company transferred part of the money to the Energy and Transportation Company and Longtai Company, and the Energy and Transportation Company transferred part of the money to Du Minhong, He Jintang and others. In the above-mentioned transfers, with regard to the issue of Nengsheng Company's transfer of money to Energy and Transportation Company and Longtai Company respectively, Nengsheng Company asserted that the above-mentioned payment was the payment it made to Energy Transportation Company and Longtai Company for the purchase of fuel oil, and Nengsheng Company submitted four sets of evidence, including bank customer receipts, transaction details inquiry, supply contracts and value-added tax invoices, to prove its claim. In the bank customer receipt submitted by Nengsheng Company, the payer is Sinopec Jiangxi Branch and the payee is Nengsheng Company, and the receipt is indicated as "payment for fuel oil to settle the account", while the payer is Nengsheng Company and the payee is Energy and Transportation Company does not indicate the purpose of transfer. Therefore, the bank customer receipts from which the above-mentioned payer is Nengsheng Company and the payee is Energy and Transportation Company cannot prove that the payment made by Nengsheng Company to Energy Transportation Company is the purchase price of fuel oil. At the same time, since Nengsheng Company failed to submit the proof of delivery of the goods involved in the actual performance of the supply contract, the original judgment found that the evidence submitted by Nengsheng Company was insufficient to prove the authenticity of the underlying transaction of the payment of the goods involved in the case, and it was not improper to find that the evidence submitted by Nengsheng Company was insufficient to prove the authenticity of the underlying transaction of the payment of the goods involved in the case, taking into account the fact that Wu Moumou, a shareholder of the Energy and Transportation Company, was the wife of Du Minhong, Wu Moulin, a shareholder of Longtai Company, and Wu Moumou, the father of Wu Moumou. With regard to the 15.37 million yuan paid by the energy and transportation company to Du Minhong, although Du Minhong submitted evidence such as the loan contract between him and the energy and transportation company, bank transfer vouchers, and receipts issued by the energy and transportation company to prove that there was a loan relationship between Du Minhong and the energy and transportation company, and the 15.37 million yuan paid by the energy transportation company to Du Minhong was a repayment of the loan.

However, among the above-mentioned evidence, first, the amount under the Loan Contract is 16.97 million yuan, which is inconsistent with the above-mentioned transfer amount; Second, the transaction summaries in the transfer vouchers both indicate that they are transfer expenses and transfer deposits, and both receipts also indicate that they are transferred funds, that is, the transfer vouchers and receipts can only show that there is a fund exchange between the two parties, but cannot prove that the money involved is the loan involved in the case claimed by Du Minhong. Combined with the fact that Wu Moumou, a shareholder of the energy and transportation company, and Du Minhong were husband and wife, this court held that the evidence submitted by Du Minhong could not fully prove his above claims. Therefore, the original judgment based on the above circumstances and found that the fact that Du Minhong and Du Mihong were the actual controllers of Nengsheng Company was highly probable and not improper. Secondly, Du Minhong and Du Mihong, as the actual controllers of Nengsheng Company, transferred the money collected by Nengsheng Company to the energy and transportation company, Longtai Company and their individuals without sufficient and reasonable reasons, so that Nengsheng Company was unable to perform the "Purchase and Sale Contract" signed with Sinopec Jiangxi Branch, and was unable to refund the purchase price received by Sinopec Jiangxi Branch in a timely manner, thus seriously damaging the interests of Sinopec Jiangxi Branch. Therefore, the original judgment applied the provisions of Article 20, Paragraph 3 of the Company Law by analogy, and found that Du Minhong and Du Mihong should be jointly and severally liable for the debts of Nengsheng Company in this case, which was not improper.

(2) On the issue of whether He Jintang should bear joint and several liability. Article 63 of the Company Law stipulates that "if a shareholder of a one-person limited liability company cannot prove that the company's property is independent of the shareholder's own property, he shall be jointly and severally liable for the company's debts." Accordingly, the Company Law of the People's Republic of China adopts the principle of reversal of the burden of proof on whether the shareholders of a one-person limited company should be jointly and severally liable for the company's debts, that is, the shareholders of a one-person limited company should provide evidence to prove that their personal property is independent of the company's property, otherwise they should be jointly and severally liable for the company's debts. In the original trial, upon the application of Sinopec Jiangxi Branch, the court of first instance required Nengsheng Company, Nengshun Company, Longtai Company, Du Minhong, Du Mihong, He Jintang and others to submit the original financial information of the above-mentioned companies consistent with the accounting statements filed with the relevant administrative authorities for judicial audit. In this regard, He Jintang should bear the legal consequences of failing to provide evidence. The original judgment found that He Jintang should be jointly and severally liable for the debts in this case, which was not improper.