Professional Interpretation

Preface

In the process of business activities such as the establishment of companies, many actual investors of companies invest by the way of holding shares for the consideration of the number of shareholders, evasion of legal provisions, investment proportion, identity and other restrictive factors, which leads to the endless litigation of execution objection caused by the act of holding shares for the purpose of holding shares for the company in recent years.

Can the dormant shareholder exercise the right of objection when the creditor of the nominal shareholder requests the court to enforce the equity of the nominal shareholder? Can dormant shareholders effectively fight against creditors of nominal shareholders? How does the court determine the validity of its objection? It is a subject with both practical significance and academic research value. Its essence lies in "whether the act of holding on behalf is applicable to commercial externalism, especially when the act of holding on behalf conflicts with the interests of creditors".

I. In judicial cases, most of the views advocate the application of commercial externalism.

According to the principle of Externalism in commercial law, the effect of transaction behavior is subject to the appearance of the behavior of the parties. Even if the external display is inconsistent with the internal fact, the commercial subject must be bound by the appearance display, and the appearance display is superior to the internal fact. Article 65 of the civil code of the People's Republic of China stipulates that "if the actual situation of a legal person is inconsistent with the registered matter, it shall not be against the bona fide counterpart." Article 32 of the company law stipulates that "the company shall register the name or name of the shareholder with the company registration authority; In case of any change in the registered items, registration of the change shall be carried out. Without registration or alteration of registration, it may not act against a third party. "

Based on the legal basis and logic above, in judicial practice, most cases also believe that if the external creditors are not capable of accessing the facts of holding shares on behalf of them, and conclude a contract with them based on the nominal shareholders' appearance status --- such as industrial and commercial registration, job identity and financial strength --- then the trust interests of the external creditors should be protected.

The following cases of the Supreme People's court support and demonstrate the doctrine of commercial appearance from different perspectives.

Case 1: Dispute case between Wang Renqi and Zhan Zhicai XX 【(2016)Supreme Court Civil Case No. 3132】

In this case, as theArticle 32, Paragraph 3 of the Company Law " demonstrated that the company shall register the name or name of the shareholders with the company registration authority; In case of any change in the registered items, registration of the change shall be carried out. Without registration or alteration of registration, it may not act against a third party. " while the Supreme Court held the view that: industrial and commercial registration is the publicity of the equity situation, and the goodwill third party dealing with the company and the creditor of the registered shareholder have the right to rely on the equity registered by the industrial and commercial authority and make judgment accordingly. In this case, the entrusted shareholding agreement between Wang Renqi and Zhan Zhicai has been confirmed to be true and effective by the court of first and second instance, but its equity holding agreement has only internal effect. For the third party outside, the equity registration has credibility, and the dormant shareholder does not have the legal status of public equity to the outside, The internal equity holding agreement shall not be used to fight against the legitimate rights of external creditors to the shareholders who are named.

This court holds that the third party mentioned in the third paragraph of Article 32 of the Company Law is not limited to the creditors who have equity trading relationship with prominent shareholders. According to the principle of commercial appearance, the appearance of right reflected in the publicity leads to the third party's trust in the appearance of right. Even if the real situation is inconsistent with the third party's trust, as long as the third party's trust is reasonable, the effect of the third party's civil legal act should be given priority protection by law. Based on the above principles, creditors of nominal shareholders who are not based on equity disposal should also belong to the category of "third party" protected by law. 

Therefore, in this case, when Zhan Zhicai became the executee because he failed to pay off his due debts, Liu Aiping, as a creditor, has the right to apply to the people's court for compulsory execution of the equity according to the ownership of equity recorded in the industrial and commercial registration.

Case 2: Retrial case of the action against the execution of objection by Jinan Branch of China CITIC Bank Co., Ltd. and HNA Group Co., Ltd. 【(2016)Supreme Court Civil Retrail Case No. 360】

In this case, the Supreme Court makes detailed reasoning from four aspects, such as agency relationship, protection of trust interests, the measurement of interests distribution of all parties, and judicial value orientation, which is of great reference significance.

(1) To Analyze from the perspective of the nature of the legal relationship between the actual investor and the nominal shareholder.

The essence of the legal relationship of holding on behalf belongs to a kind of debt relationship. Subject to the principle of relativity of contract law, the dormant shareholder can only claim the claim to the nominal shareholder, and it will not have effect on the third party other than the parties.

(2) To analyze from the perspective of protecting trust interests.

According to the principle of Externalism in commercial law, the effect of transaction behavior is subject to the appearance of the behavior of the parties. Even if the external display is inconsistent with the internal fact, the commercial subject must be bound by the appearance display, and the appearance display is superior to the internal fact. Once a legal matter is registered, it will produce credibility. The registered matter is presumed to be true, accurate and effective. The act of a good faith third party based on the trust in registration is protected by law. Even if the registered matter is untrue and inconsistent with the trust of a third party, the third party in good faith may claim rights according to the records in the register. As long as the trust of the third party is reasonable, the trust interests of the third party should be protected in priority by law.

(3) To weigh from the perspective of dirstributing the rights and responsibilities of creditors and dormant shareholders.

First of all, the creditor's judgment on the nominal shareholder's property can only be obtained through external information and equity information inquiry, but the proxy holding relationship is difficult to know, which belongs to the risk that the creditor cannot foresee.

Secondly, the rights of the actual investors enjoy the corresponding legal relief mechanism. Even if the equity held by the nominal shareholders is enforced by the court, the dormant shareholders can still request the nominal shareholders to compensate for their losses according to the agreement between them and the nominal shareholders and the basic principles of the trust and entrustment system.

Finally, the implementation of the shares involved did not exceed the psychological expectations of the actual investors. Before the actual investor becomes a shareholder, his psychological expectation or expected interests are only protected by the contract law, not by the company law.

(4) From the value orientation of judicial policy.

In real life, there are many reasons for the phenomenon of holding shares on behalf of others. However, from the perspective of maintaining transaction security and reducing transaction costs, if we focus on recognizing and protecting the rights of dormant shareholders so as to prevent the implementation, we will objectively encourage the way of holding shares on behalf of others to avoid debt, evade supervision and increase social management costs.

Case 3: Retrial case of dissent by the foreign party of Xinxiang Huitong Investment Co., Ltd. and Han Dong 【(2018)Supreme Court Civil Retrial Case No. 325】

In this case, the Supreme Court also believes that: "if the actual investor is easily protected in foreign relations, it will send out inappropriate signals, which will lead to a large increase in abnormal company shareholding, and increase transaction costs, which is not conducive to transaction safety. If the actual investor is admitted to exclude the right to execute, it will make the equity holding agreement a tool to avoid the execution and avoid the obligations in practice, which will lead to the situation that the executed person can not be implemented when it is the actual investor of the equity or the nominal holder. The proxy shareholding may become a way to avoid supervision and restriction, which makes the actual investor avoid the responsibility that should have been borne. "

Case 4: Tuo Siwei, Liu Jin, XX dispute retrial case 【(2019)Supreme Court Civil Retrial Case No. 46】

The chief judge held that: "from the perspective of the value pursuit of the legal system and the value orientation of the judicial policy, the proxy holding relationship itself is not a normal shareholding relationship, which deviates from the company registration system, social integrity system and other systems. Shareholders create the appearance of rights wantonly, which leads to the inconsistency between the registered obligee and the actual obligee. While providing convenience for the actual investor, the proxy holding relationship is not only an effective way to solve the problem, Allowing the well-known shareholders to release false signals of asset prosperity brings confusion to the company's legal relations and registration information, and increases the overall business risks and costs of the society. The risks and costs should be borne by the actual investors themselves. In this case, Tuo Siwei is not the sponsor of Longteng small loan company. He obtained the shareholder status by holding shares on behalf of the company and enjoyed the investment interests of the shareholders. Therefore, he should bear the corresponding responsibility for the risks of holding shares on behalf of the company. If we emphasize the recognition and protection of the rights of the actual investors, it will objectively produce the legal effect of encouraging them to evade supervision and debt by holding shares on their behalf. The reason is that the "holding agreement" is a hidden relationship, and the two parties usually have special status or interest relationship, It is easy to choose whether to "hold on behalf" to avoid legal risks by judging the external risks that will be faced. Therefore, the determination of the rights of the actual investor can not exclude enforcement, which is conducive to the realization of the value of safety, order and efficiency that the law pays attention to and pursues in the commercial field. "

II. In judicial cases exist a small number of views that commercial appearance doctrine is not applicable.

In judicial practice, there are also cases that hold different views on the trust interests of external creditors, that is, commercial appearance doctrine. They think that the "third party" referred to in Article 32 of the Company Law should be the third party who actually has equity transactions. If the external creditors do not directly deal with the company in dispute, but have other transactions with the shareholders of the company that have nothing to do with the company, then the external creditors do not have a real and full trust interest relationship with the equity, and consequently there is no problem of trust interest protection.

For example, in the case of the Supreme People's Court (2015) No. 2381, in which Xi'an Nanjiao branch of Bank of China Limited applied for the execution objection of the executor of Shanghai Huaguan Investment Co., Ltd., the Supreme People's court held that commercial appearance doctrine is one of the basic principles of commercial law, In fact, it is a rule of law choice that should be followed to weigh the conflict of interest between the actual obligee and the third party, which can not be directly used as the basis of case handling. The purpose of externalism principle is to reduce costs and maintain transaction security, but its application may also damage the interests of the actual obligee. According to Article 26 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 (3), the application subject of the system of bona fide acquisition of equity is limited to the third party who has equity transactions with nominal shareholders. Therefore, the scope of application of the principle of commercial appearance does not include the non trading third party.

III. Lawyer's point of view

The author believes that from the perspective of maintaining the transaction safety and reducing the transaction cost, if we focus on recognizing and protecting the rights of dormant shareholders and thus preventing the implementation, objectively, it will encourage the debt avoidance, supervision and increase the social management cost by means of holding shares on behalf of the shareholders. However, if the external creditor is not completely "in good faith" or does not trust the appearance of the target equity, the legitimate interests of the dormant shareholders should also be properly protected. In judicial practice, we can find balance in specific cases combining facts and evidence.

When dealing with this type of case, lawyers can demonstrate "the authenticity of equity holding and whether the enforcement measures can be excluded" from the perspectives of reducing the nature of external claims, the transaction background of the claims obtained, whether there is trust interests, and whether the equity holding can be predicted.

In order to maintain the transaction safety, the author also calls on the court to allow the creditors of nominal shareholders to apply for the execution of the equity held by the nominal shareholders on the basis of the correct distinction between the internal and external legal relations between the equity holding and the principle of externalism. But the premise is that the creditor of the nominal shareholder must be in good faith, that is, the creditor has neither the knowledge of the fact of the relationship of the equity holding on behalf nor the obligation to know. At the same time, in order to respect and protect the private property of the dormant shareholders, protect the legitimate interests of the creditors of the dormant shareholders, and highlight the legal concept of people-oriented, we must recognize the limited exception rules outside the principle of externalism. Neither the creditor of the dormant shareholder nor the creditor of the nominal shareholder is limited to the parties to the contract in the transaction relationship, including the applicant in the execution procedure.

Epilogue

Whether the civil rights and interests enjoyed by dormant shareholders are enough to exclude the enforcement of the application for holding shares on behalf of the ordinary creditors of the obvious shareholders, the two opposite opinions mentioned in this paper are supported by many cases of the Supreme Court, and to a certain extent, they have the tendency of different judgments in the same case. It is also suggested that the Supreme Court should issue relevant judicial interpretations as soon as possible, publish a number of guiding cases, and clearly express its judicial attitude, which is conducive to plugging the loopholes in false litigation and maintaining the security of transactions.