After the Share transfer， the company went bankrupt. Who will bear the unpaid capital contributions?

Introduction

Under the comprehensive implementation of the registered capital subscription system, it is quite common in equity transfer transactions that the transferee only pays the equity consideration to the original shareholder but fails to fulfill the subscription obligation to the target company. When the target company enters the bankruptcy process, the bankruptcy administrator, in accordance with the relevant provisions of the bankruptcy law, demands the current equity transferee to make up for the unpaid capital contributions. This leads to a series of legal disputes such as the division of liability between the old and new shareholders, the determination of subjective fault, and the exercise of the right of recovery. This article, based on the "Enterprise Bankruptcy Law" and the new and old "Company Law" as well as relevant judicial interpretations, distinguishes the equity transfer time points to sort out the rules of liability for capital contributions, clarifies the legal boundaries between the equity transfer consideration and the shareholders' capital contributions, combines judicial judgment rules to construct a complete defense system, evidence rules and practical handling paths, and proposes suggestions for preventing risks before equity transactions, providing theoretical and practical references for handling similar bankruptcy-related disputes over the recovery of capital contributions.

01 The Presentation of the Problem

After the reform of the registered capital subscription system in Chinese companies, shareholders can independently set the time limit for their capital contributions, which significantly lowers the threshold for market entities to enter the market. However, it has also given rise to a large number of equity transfer transactions with zero actual capital contribution and long-term subscription periods. In practice, most equity transferees have legal misunderstandings: they equate the equity transfer consideration paid to the original shareholders with fulfilling the obligation to contribute capital to the company. After acquiring the equity, they no longer make additional capital contributions to the target company. Once the target company's operation deteriorates and it enters the bankruptcy liquidation process, according to the provisions of the "Enterprise Bankruptcy Law of the People's Republic of China", the shareholders' subscription obligations that have not yet expired will be legally accelerated to maturity. The bankruptcy administrator has the right to recover all unpaid capital contributions from the current shareholders registered on the record. This has led to a typical dispute scenario: the minority shareholders who have only paid the equity transfer consideration and have not made actual capital contributions to the company are listed as the subject of recovery by the bankruptcy administrator. Both parties have disputes over issues such as the subject of capital contribution obligations, the division of responsibilities between the new and old shareholders, the determination of subjective fault, the calculation of interest, and the attribution of funds. Such disputes have dual attributes of company law equity rules and bankruptcy law collective liquidation rules. Moreover, after the new "Company Law of the People's Republic of China" was officially implemented on July 1, 2024, the liability rules for equity transfer that have not yet reached the subscription period have undergone significant adjustments, further increasing the difficulty of legal application. This article focuses on the core scenario of equity transferees in bankruptcy proceedings being pursued for capital contributions, and analyzes the legal application logic, responsibility determination standards, judicial defense paths, and rights relief methods layer by layer.

02 Definition of Basic Legal Relationships and Statutory Rules for Recovery of Capital Contributions under Bankruptcy Procedures

2.1 Share Transfer and Shareholder Capital Contribution: The Distinction Between Two Independent Legal Relationships

In judicial practice, the core cause of such disputes lies in the fact that market entities have confused the legal relationship of equity transfer with the legal relationship of shareholder capital contribution. The two have completely independent entities, subjects, funds flow, and legal consequences.

First, the equity transfer is a contractual relationship between shareholders. The two parties involved in the transaction are the original shareholders (the transferring party) and the new shareholders (the acquiring party). The transaction subject is the company's equity. The transfer price paid by the acquiring party belongs to the individual of the transferring party, and the funds do not enter the company's account nor constitute the company's legal property. This action merely changes the shareholder status and does not directly result in the legal effect of capital enrichment.

Second, the shareholders' contributions represent a legal capital obligation relationship between the shareholders and the target company. The subscribed capital contributions made by the shareholders must be paid to the company's corporate account in accordance with the law and the company's articles of association, and recorded as the company's registered capital, becoming independent legal property of the company, which is used for the company's operations and the settlement of external debts. From this, the core conclusion can be drawn: Paying the consideration for the transfer of equity to the original shareholders does not confer the legal effect of actual payment of capital to the company. The equity transferee cannot claim to be exempted from their legal obligation of capital contribution on the grounds that they have already paid the transfer consideration.

2.2 Rule on Accelerated Maturity of Shareholders' Capital Contributions in Bankruptcy Proceedings

Article 35 of the "Enterprise Bankruptcy Law of the People's Republic of China" clearly stipulates: After the people's court accepts a bankruptcy application, if the contributors of the debtor have not fully fulfilled their capital contribution obligations, the administrator shall require such contributors to make up the capital contributions they have subscribed for, without being subject to the restrictions of the contribution period. In combination with Article 20 of the "Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People's Republic of China (II)", this rule encompasses three layers of meaning:

First, the benefit of the investment term is completely lost.

The subscription deadlines stipulated in the company's articles of association, shareholders' meeting resolutions, and share transfer agreements, will automatically become invalid as of the date the bankruptcy application is accepted by the court. All outstanding subscriptions will be accelerated to maturity. Shareholders cannot use the defense of "the subscription deadline has not yet expired" to argue their case. Such a defense will never be supported in judicial practice.

Secondly, the administrator has the power to uniformly recover the funds.

The recovery of unpaid capital contributions is a legal duty of the bankruptcy administrator. The scope of recovery is not limited to the company's existing external debts. In principle, it is claimed based on the total unpaid capital contributions of the shareholders. Even if the bankruptcy procedure is concluded, the people's court may still rule to retain the administrator's status and continue to recover the unpaid capital contributions.

Thirdly, the recovered assets will be included in the bankruptcy assets and distributed uniformly.

The additional contributions and interest paid by the shareholders are all regarded as the debtor's bankruptcy assets. The administrator shall distribute them fairly to all creditors in accordance with the bankruptcy liquidation order. No entity is allowed to claim individual priority compensation. Any behavior where shareholders privately repay individual creditors is legally deemed as invalid individual repayment.

2.3 Recovery Scope and Interest Calculation Standards

Based on the current judicial practice guidelines, the recovery scope of the bankruptcy administrator includes the unpaid capital + the interest on the capital occupation. Regarding the starting point for calculating the interest, the mainstream judicial opinion holds that it is the date when the bankruptcy application is accepted by the court. The interest calculation standard is calculated based on the Loan Prime Rate (LPR) announced by the National Interbank Funding Center. This interest is essentially the legal loss incurred by the shareholders for occupying the company's capital, and it falls under the category of bankruptcy claims, and should be included in the recovery scope.

03 Legal Application Boundary of the Capital Contribution Liability of Old and New Shareholders in the Context of Equity Transfer

After the equity transfer, the entity responsible for bearing the liability and the form of liability shall be determined based on the implementation date of the new "Company Law" on July 1, 2024. It shall apply the old judicial interpretation for the period before that and the new company law rules for the period after that. At the same time, a comprehensive judgment shall be made by combining the two key elements of "subjective knowledge" and "malicious debt evasion".

3.1 The equity transfer occurred before July 1, 2024.

Applying the "Judicial Interpretation (III) of the Company Law" for equity transfer transactions that were completed before the implementation of the new law and involved changes in the company registration, the provisions of Article 18 of the "Several Provisions of the Supreme People's Court on the Application of the Company Law of the People's Republic of China" (2020 Amendment) shall be uniformly applied. This article uses the subjective fault of the transferee as the core criterion for determining liability:

Elements of liability: The original shareholder transferred the equity without fulfilling or fully fulfilling the capital contribution obligation, and the equity purchaser was aware or should have been aware of the defect in the capital contribution.

Liability form: When the above conditions are met, the company, the bankruptcy administrator or the creditor has the right to request the original shareholders to fulfill their capital contribution obligations, and the acquiring shareholders shall bear joint liability.

Recovery rules: After the transferee shareholder actually assumes the joint liability for making up the capital contribution, they have the right to fully recover the amount from the original shareholders who failed to fulfill their capital contribution obligations.

Liability exemption rule: If the transferee can provide evidence to prove that they were unaware of and had no fault regarding the flaws in the original shareholder's capital contribution, the joint liability will not be established, and the capital contribution obligation will be solely borne by the original shareholder.

The legislative logic of this rule lies in: attributing liability based on subjective fault, punishing commercial entities that acquire equity despite knowing about the defect in the capital contribution, while protecting the equity recipients who are acting in good faith and without fault.

3.2 The equity transfer occurred after July 1, 2024.

Applicable to Article 88 of the revised "Company Law" of 2023.

The new "Company Law" that will come into effect on July 1, 2024, makes a revolutionary provision regarding the transfer of equity before the due date for capital contribution. Article 88 establishes a liability system where the transferee bears the main responsibility and the transferor provides supplementary liability:

General rule: If a shareholder transfers their equity before the due date for capital contribution, the obligation to make the capital contribution directly falls on the acquiring shareholder, and the acquiring shareholder becomes the primary responsible party. Additionally, there is the supplementary liability rule: If the acquiring shareholder fails to make the capital contribution on time or in full amount, the original transferring shareholder shall bear the supplementary compensation liability. Supplementary liability is different from joint liability. There is a sequence of performance, and only when the main responsible party is unable to fulfill their obligations, will the supplementary responsible party be required to assume responsibility.

There is also a malicious exception rule: If there is evidence proving that the original shareholder transferred the equity with the intention of maliciously evading debts or avoiding the obligation to make capital contributions (such as when the company already had reasons for bankruptcy at the time of the transfer, when the equity was transferred at zero price or at an extremely low price, or when all the equity was transferred in a short period of time), the people's court may break through the supplementary liability rule and order the original shareholder and the transferee shareholder to bear joint liability.

The new law adjustment embodies the principle of commercial formalism: the current shareholders registered in the business registration are the actual obligated parties for the capital contributions, and the registered shareholders shall bear the primary responsibility; the original shareholders only bear the supplementary liability as a last resort.

3.3 Judicial Criteria for the Legal Recognition of "Malicious Debt Deferral"

Whether applying the new law or the old judicial interpretation, the court will examine whether there is any malicious evasion of debts in the股权转让 (share transfer) transaction. This situation serves as an important basis for increasing the liability of the original shareholders. Based on the summary of similar case judgments, malicious debt evasion mainly includes the following circumstances：

First, when the equity was transferred, the company was already insolvent, had a large number of debts that were due but unpaid, and was involved in multiple enforcement cases. In essence, it had all the elements necessary for bankruptcy.

Second, the transaction price for equity transfer is significantly different from the reasonable market value, and there are abnormal transactions such as zero-price transactions, one-yuan transfers, and gratuitous transfers.

Thirdly, the original shareholders transferred their shares but immediately withdrew from the company's operations, went missing, and deliberately severed their status as shareholders.

Fourth, the transferee has no actual ability to make capital contributions and no intention to operate the business. They merely act as a nominal shareholder to take over the deal. There is a suspicion of collusion between the two parties to evade debts.

04 The Defense System and Evidence Construction of the Shareholder Acquiring the Equity

After the bankruptcy administrator initiated the claim for capital recovery, the core defense objectives of the equity transferee were divided into two levels: one is to prove in the old law framework that they were unaware and without fault, thereby exempting them from joint liability; the other is to claim under the new law framework that the original shareholders should bear supplementary liability or joint liability for malicious debt evasion. At the same time, they need to abandon invalid defenses such as "the capital contribution period has not yet expired", and focus on establishing the defense system based on facts and evidence.

4.1 Summary of Core Defenses

Distinguish legal relationships and reject the erroneous claim that "transfer funds = capital contribution funds"

This defense is a factual defense based on the underlying facts. The transferee must clearly state that the disputed funds were the consideration for the shareholders'股权转让 (share transfer) and flowed into the personal accounts of the original shareholders, not into the accounts of the target company. This does not meet the formal and substantive requirements for legal capital contribution and therefore cannot be regarded as fulfilling the capital contribution obligation. This defense aims to fix the underlying facts and clarify the essence of the dispute.

Prove the subjective good faith and exclude the presumption of fault based on "knowing or should have known"

This defense was the key to waiving joint liability in the old legal framework. In judicial practice, courts adopt an objective presumption standard for "knowledge". The transferee must provide objective evidence to rebut the presumption. The main directions of evidence presentation include:

Main identity evidence: Proving that one is an external minority shareholder, not serving as a director, supervisor, or senior management personnel of the company, not involved in the daily operations or financial management of the company, and having no access to the company's account books or capital contribution vouchers.

Evidence of transaction fairness: Provide the basis for equity valuation, as well as references to similar transactions in the same period, to prove that the transfer price is reasonable and there are no cases of low-price transactions or other abnormal circumstances that can be reasonably inferred to indicate knowledge of such issues.

Transaction background evidence: By querying the company's public information, litigation records, and tax documents, it is proved that during the period of the股权转让， the company was operating normally in appearance， without any public debts or bankruptcy warning information. The transferee was unable to obtain any information about the capital contribution flaws through public channels.

Disclosure of evidence of flaws: Submit the communication records and agreement texts regarding the equity transfer, to prove that the original shareholders concealed the flaws in their capital contributions during the transaction and made a false promise of "having fully contributed the capital".

Abandon the invalid defense and focus on the sharing of responsibilities

After the bankruptcy petition is filed, the acceleration of the due date for capital contributions is a mandatory legal provision. The defenses of "capital contribution period has not yet expired" and "the statute of limitations has passed" cannot be supported in bankruptcy-related cases. In practice, such defenses should be actively abandoned, and the focus of the trial and communication should be placed on core disputes such as the division of responsibilities between new and old shareholders, fault determination, and claim rights, to enhance the effectiveness of the defense.

Special Circumstance: Supplementary Defense of Nominal Shareholder

If the transferee is merely a nominal shareholder while the actual investment, operation and decision-making are all controlled by the actual investor, evidence such as the shareholding proxy agreement, communication records, and fund flow records can be submitted to assert that one does not possess the substantive rights of a shareholder, has no control over the investment flaws, and has no subjective ill will. In judicial decisions, the nominal shareholder still needs to fulfill the investment obligation to the administrator first, but after fulfilling it, they can simultaneously claim double compensation from the original transferee shareholder and the actual investor.

4.2 Construction of a Comprehensive Evidence System

By integrating the entire process of dispute resolution, the evidence is divided into four major modules, forming a closed-loop evidence chain:

Basic factual evidence: Identity certificates of the parties, company business registration files, equity change documents, "Equity Transfer Agreement", transfer payment transfer records, bankruptcy acceptance ruling, and "Notice of Recovery of Capital Contributions" issued by the administrator. These are used to prove the facts of the equity transaction, the start time of the bankruptcy procedure, and the basis for the administrator's recovery actions.

Subjective good faith defense evidence: employment certificates, meeting records of the shareholders' meeting, business documents, equity valuation materials, transaction negotiation records, enterprise credit information inquiry reports. These are used to prove that the transferee is without fault and the transaction is fair.

Evidence for holding the original shareholders accountable: company articles of association, shareholder capital contribution ledger, company's corporate bank account transaction records, verification materials regarding the original shareholders' failure to fully contribute capital, the defective guarantee clause in the股权转让 agreement， notice letters and delivery vouchers. This is used to prove that the capital contribution defect originated from the original shareholders， providing a basis for subsequent claims of joint/ supplementary liability and exercising the right of recourse.

Program compliance evidence (specific for the supplementary payment stage): The designated account information of the administrator, the transfer receipt of the investment funds, the receipt note, and the document confirming the purpose of the payment. These are used to prove that the supplementary payment has been fully included in the bankruptcy assets, thereby avoiding the risk of individual repayment.

05 The Complete Judicial Disposal Path for Disputes and Rights Relief

Based on the development stage of the case, a standardized disposal process is established, covering objections, negotiations, litigation, supplementary payment, and post-event recovery. This process takes into account both procedural compliance and protection of substantive rights.

5.1 Preparatory Procedure: Submit a written objection to the bankruptcy administrator and the court

After the transferee receives the "Notice of Recovery of Capital Contributions", they shall first initiate the written objection procedure. The "Application for Objection to Capital Recovery" should contain the following three items: First, distinguish the legal relationship between the transfer price of the equity and the shareholder's capital contribution; second, state the background of the equity transaction and explain the fact that the transferee, as a bona fide recipient, was unaware of it; third, in accordance with the law, request the manager to assert rights against the original shareholders with capital defects and legally divide the responsibilities of the new and old shareholders. The written objection must be kept and the delivery receipt should be retained to fix the procedural evidence.

5.2 Pre-litigation Negotiation: Third-party Communication to Resolve Disputes

After the objections and before the formal lawsuit, the transferee organization, the original shareholders, and the bankruptcy administrator will negotiate among themselves. The negotiation plans mainly include three types: First, the original shareholders fully make up the capital contributions to completely resolve the disputes; second, the new and old shareholders share the amount to be paid according to the degree of fault and the proportion of benefits; third, the transferee pays the capital contribution first, and the original shareholders issue a repayment commitment and provide guarantees. During the negotiation process, a written communication record needs to be made, and it is prohibited to transfer funds privately to the creditors or the original shareholders for settlement.

5.3 Litigation Phase: Responding to the Lawsuit

If negotiations fail, the administrator will file a lawsuit for the recovery of capital contributions. When the transferee responds to the lawsuit, the primary procedural action they should take is to request the addition of the original transferor as a co-defendant or a third party. And based on the time of the股权转让， they should choose the litigation claim：

Transactions before July 1, 2024: Asserting one's own good faith and no fault, requesting the court to order the original shareholder to bear the sole liability for the capital contribution, and the party itself not bearing joint liability; if the court determines that joint liability is established, it will clearly reserve the right to claim compensation on the spot.

Transactions after July 1, 2024: Acknowledge one's own obligation as a registered shareholder for the capital contribution, and claim that the original shareholders should bear supplementary compensation liability; if there is a case of malicious debt evasion, request the court to order the original shareholders to bear joint liability. During the trial, the debate focused on subjective fault and liability forms. Regarding the interest part, one can combine one's own situation of good faith and no fault to request the court to adjust the interest calculation standard or the starting point.

5.4 Execution Phase:

Complying with the obligation to make up the payment: If the effective judgment requires the transferee to fulfill the obligation to make up the payment, it is necessary to strictly abide by the rules for managing funds in the bankruptcy process.

First, only transfer funds to the designated corporate account specified by the bankruptcy administrator, and do not transfer to the company's old accounts or personal accounts. Second, clearly indicate the nature of the funds in the transfer remarks as "making up for the subscribed capital contribution". Third, fully retain the transfer receipt, the receiving voucher, and the written document issued by the administrator stating that the assets have been included in the bankruptcy assets, to prevent risks related to individual debt repayment determinations.

5.5 Post-event Relief: Exercise of Recovery Rights Against Original Shareholders

After the transferee fulfills the obligation of making up the payment, it shall legally initiate the recovery procedure: The first step is to send a lawyer's letter to the original shareholder, demanding that they return the paid-in capital, interest, litigation costs and other losses that were advanced; The second step is if the demand is not met, based on the recovery provisions of the "Judicial Interpretation (III) of the Company Law" and the breach clauses of the "Equity Transfer Agreement", file a recovery lawsuit or apply for arbitration. The judgment documents of previous recovery cases, all evidence materials, and payment vouchers can all be used as the core evidence for the recovery case.

06 Risk Summary and Pre-Transaction Prevention Suggestions

6.1 Summary of Core Legal Risks in Disputes

First, cognitive risk: Market entities' confusion between the transfer payment for equity and the capital contribution by shareholders is the root cause of such disputes. Second, bankruptcy amplification risk: When a company goes bankrupt, the due capital contribution obligations accelerate, and the long-term subscription rights of shareholders are directly eliminated, leading to an immediate outbreak of potential risks. Third, liability transmission risk: The transfer of equity leads to the transfer of capital contribution defects, and the acquiring shareholder is highly likely to be listed as the target for recovery. Fourth, enforcement risk: Even if the transferee wins the lawsuit and seeks compensation from the original shareholder, if the original shareholder has no assets, is unreachable, or has been listed as a person in default of execution, they will face the result of non-enforcement.

6.2 Precautions for Risk Prevention in Advance for Equity Transactions

Based on the entire process of commercial transactions, we aim to avoid the risk of recovering capital contributions resulting from bankruptcy at the source. For the transfer of equity under the subscription system, we propose four risk control suggestions:

Strengthening transaction due diligence: Before acquiring equity, verify the industrial and commercial registration information, bank transaction records, and capital verification documents to confirm the actual contribution status of the original shareholders; through the enterprise credit platform and the court document website, query the company's debt, litigation, enforcement, and bankruptcy warning information, and be cautious when acquiring equity in companies with large debts or abnormal operations.

Improve the terms of the equity transfer agreement: Add a guarantee clause for capital contribution defects, clearly stipulating that the transferor shall ensure that all capital contributions have been fully fulfilled; if there is an unfulfilled contribution situation, the transferor shall bear all the responsibilities for making up the contributions, as well as the liability for breach of contract, and compensate the transferee for all losses incurred, including litigation costs and legal fees.

Optimize the payment method for transaction proceeds: Set up fund supervision and installment payment terms. Agree to reserve a portion of the transfer proceeds. The remaining payment will be made after the original shareholders have completed the actual capital contribution. This ensures that the transferor fulfills their capital contribution obligations as stipulated by the transaction price.

Clearing rights and obligations notification: During the transaction negotiation stage, explain the legal rules to the counterparty, distinguish the different effects of equity transfer and shareholder capital contribution, and avoid fundamental legal misunderstandings at the cognitive level.

07 Conclusion

The disputes arising from股权转让 under the capital contribution subscription system, combined with the collective liquidation rules for companies in bankruptcy, have formed a new type of commercial dispute characterized by complex legal application and multiple liability entities. In the bankruptcy process， the accelerated expiration of shareholders' capital contribution obligations and the unified recovery by the administrator are legal rules. The equity transferee must face up to the legal capital contribution obligations of the registered shareholder and cannot evade responsibility by claiming to have paid the equity transfer consideration. At the legal application level， it is necessary to strictly set July 1， 2024 as the dividing point， distinguishing the liability forms of new and old shareholders based on the new and old company regulations； at the judicial response level， an evidence system centered on "subjective good faith and no fault" should be established to legally claim that the original shareholder assumes joint liability or supplementary liability； at the rights relief level， the supplementary payment process should be improved and the right to claim compensation should be exercised in a timely manner to achieve a responsibility closure. For commercial entities， clarifying legal relationships， conducting thorough transaction due diligence， and improving contract terms are the fundamental paths to prevent such risks. Only by accurately understanding the shareholder capital contribution rules under the subscription system and the bankruptcy liquidation rules can one balance investment interests and legal risks in equity transactions and safeguard one's own legitimate rights and interests.

References

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