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Can a Company’s Creditors Directly Enforce Claims Against Shareholders Who Have Not Fully Paid Their Capital Contributions?

In an enforcement case handled by our firm, the assets of the debtor company were insufficient to cover its total liabilities. Upon investigation, it was discovered that two former shareholders of the debtor company had failed to fulfill their obligations to pay their capital contributions in full.

According to Article 17 of the Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Enforcement, "Where the property of a corporate legal person subject to enforcement is insufficient to satisfy the debts determined by an effective legal document, the enforcement applicant may apply to change or add shareholders, contributors, or promoters who have not paid or have not fully paid their capital contributions, or who are jointly liable for such contributions under the Company Law, as the subject of enforcement. The people's court shall support such an application, and the added parties shall be liable within the scope of their unpaid capital contributions."

Based on the above provision, the two former shareholders are jointly liable for the company’s debts within the scope of their unpaid capital contributions. Accordingly, our firm, representing the client, filed an application to add the two shareholders as subjects of enforcement. The court ruled in favor of the application and added the shareholders as parties subject to enforcement.


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