Our client, the majority shareholder of a company, initially contributed cash to establish the company, while the minority shareholder contributed proprietary technology as their capital contribution. The company’s business license was later revoked. During the company’s self-liquidation process, we discovered that the minority shareholder not only failed to transfer and deliver the relevant proprietary technology to the company but also applied for patents based on the technology. These patents have since expired and were never transferred to the company.

We subsequently filed a shareholder capital contribution dispute lawsuit, requesting the court to order the minority shareholder to fully fulfill their capital contribution obligation in monetary form. The case was heard by the Putuo District People’s Court in Shanghai.

We argue that contributing proprietary technology as capital requires not only an asset valuation but also the completion of a technical disclosure process. "Technical disclosure" refers to the complete transfer and delivery of relevant technical materials, including but not limited to design drawings, technical specifications, and other core technical documents, by the owner of the proprietary technology to the company. This ensures that the company’s relevant functional employees can operate, test, produce, and manage the technology independently without the guidance or involvement of the technology owner.

The most critical feature of proprietary technology is its secrecy, which is also the basis of its value as a capital contribution. If the technology owner applies for a patent, the technical content is disclosed to the public through the patent specification and claims, thereby losing its secrecy and, consequently, its value as proprietary technology. Its value then shifts from relying on secrecy to relying on the exclusive rights granted by the patent.

Shareholder capital contribution is a process of transferring ownership of property and converting it into capital. The effect of capitalization is not only that the company has the right to legally use the technology but also that it can exercise independent disposal rights, such as transferring or licensing the technology to third parties, and even using it for refinancing. Therefore, the company’s use of the technology does not equate to the completion of the shareholder’s capital contribution. Only when the technology has been properly evaluated, its value accurately determined, and legally transferred to the company as capital can the technical contribution be considered complete.