First, the reasons for the holding of equity.
Part of the reason for holding shares on behalf of others is that certain identities or professional subjects are not allowed to become shareholders by law, such as the Civil Service Law, the People's Republic of China People's Police Law and the Securities Law. In addition, Chinese laws clearly stipulate that foreign capital is restricted or prohibited in certain industries, which means that foreign natural persons or foreign legal persons cannot enter certain industries to become shareholders.
Part of the reason is that the company law has provisions on the protection of the interests of minority shareholders and the upper limit of the number of shareholders, in order to avoid these provisions, the equity is concentrated in the hands of one or several people; It is also possible that in order to reduce frequent equity changes caused by resignation, some managers hold shares on their behalf, which is conducive to improving decision-making efficiency; It is also possible that investors want to avoid people's eyes and ears and keep a low profile; Holding shares on behalf of others has even become a hidden form of interest transfer, such as bribery. The stock holding in the securities market may be mainly to avoid the requirements of the restricted period of shares and the voting procedures of related party transactions.
Nominal shareholders in stock rights holding may be natural persons or may appear in the form of companies.
At first glance, share holding and trust are somewhat similar. Article 2 of China's Trust Law stipulates: "Trust in this Law refers to the act that the trustor entrusts its property rights to the trustee based on his trust in the trustee, and the trustee will manage or dispose of it in his own name for the benefit of the beneficiary or for a specific purpose according to the wishes of the trustor". The difference between the two is that equity is not only property right, but also the characteristics of shareholders' personality right; Equity holding directly involves two parties, namely nominal shareholders and actual shareholders, while trust may involve three parties, namely the principal, the trustee and the beneficiary; In addition, the holding of equity is generally hidden, while the trust is different; Trust relationship can be directly bound by trust law, while stock ownership can only be adjusted by individual provisions of civil law.
Second, the identification of equity holding at the legislative level
Generally speaking, the rights and obligations of both parties are determined by entering into an equity holding agreement. 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) Article 25 is a relatively clear provision on the agency agreement at present, which stipulates that "the actual investor of a limited liability company enters into a contract with a nominal investor, stipulating that the actual investor will contribute and enjoy the investment rights and interests, and the nominal investor will be the nominal shareholder. If there is a dispute between the actual investor and the nominal shareholder on the validity of the contract, there is no case as stipulated in Article 52 of the Contract Law. The people's court shall support the dispute between the actual investor and the nominal shareholder as stipulated in the preceding paragraph over the ownership of the investment rights and interests, and if the actual investor claims the rights from the nominal shareholder on the grounds that he has actually fulfilled his investment obligations. If a nominal shareholder denies the rights of the actual investor on the grounds that the company's register of shareholders is recorded and registered by the company registration authority, the people's court will not support it. If the actual investor requests the company to change its shareholders, issue a capital contribution certificate, record it in the register of shareholders, record it in the articles of association and register with the company registration authority without the consent of more than half of the other shareholders of the company, the people's court will not support it. "
In addition, the Supreme People's Court also confirmed the following guiding principles in the form of bulletin cases: (1) If there is a legal relationship on behalf of the equity of the target company, if the "anonymous shareholder" requests to be named, the court will support it with the consent of its nominal shareholder and other shareholders (Wang Cheng has a dispute with Anhui Fuyang Huafang Hetai Real Estate Development Co., Ltd. on shareholder qualification confirmation); (II) Where the creditor of the nominal shareholder applies for compulsory execution of the equity held on his behalf, and the anonymous shareholder raises an execution objection on the grounds that he is the actual right holder of the equity held on his behalf, and requests to stop the execution, the court will not support it (Harbin National Grain Trading Center and Harbin Bank Co., Ltd. Science and Technology Branch and other execution objection disputes).
Articles 14 to 20 of the Supreme People's Court's Provisions on Several Issues Concerning the Trial of Dispute Cases of Foreign-invested Enterprises stipulate in detail the adjudication rules of equity holding in the field of foreign investment.
In addition, the share holding agreement is also a type of agreement, so it is also subject to the provisions of Article 52 of the Contract Law on the invalidity of contracts.
In the field of securities, the Measures for the Administration of Initial Public Offering and Listing stipulates: "The issuer's equity is clear, and there is no major ownership dispute between the controlling shareholder and the shareholders controlled by the controlling shareholder and the actual controller." Article 1 of Chapter 2 of the Business Rules of the National Share Transfer System for Small and Medium-sized Enterprises stipulates that enterprises applying for listing in the National Share Transfer System must have "clear equity and legal and compliant stock issuance and transfer". Many comments therefore think that stock rights holding is prohibited in this field, but the author thinks that the words "clear stock rights" and "clear stock rights" are not accurate, so we can't see the attitude of regulators prohibiting and denying stock rights holding in the securities field.
Three, the judicial level of the identification of equity holding.
Usually, an agreement will be signed between the actual investor and the nominal shareholder to clarify the rights and obligations of both parties. How can the law determine this agreement, and how will the court judge if there is a disagreement among the actual investor, the nominal shareholder and the target company?
Searching for the word "equity proxy" in the case base will lead to thousands of cases. Studying these cases, we will find that the court will basically support the validity of the equity proxy agreement and the property rights of anonymous shareholders, and the equity proxy is closely related to equity transfer and shareholder qualification confirmation.
Among them, in a case which was first tried by the Beijing Higher People's Court and second tried by the Supreme People's Court, the parties involved in the case were Bozhi Capital Fund Company (hereinafter referred to as Bozhi Company) and Hongyuan Holding Group Co., Ltd. (hereinafter referred to as Hongyuan Company). Bozhi Company filed many disputes against Hongyuan Company, which never changed, because there was a key and premise in the dispute between the two parties, that is, the validity of the equity holding agreement. The basic facts of the case are as follows: In 2005, Bozhi Company and Hongyuan Company signed the Entrusted Investment and Custody Agreement, which stipulated that Hongyuan Company would hold 9% equity of Xinhua Life Insurance on behalf of Bozhi Company. Based on this, the latter paid the custody fee to the former. There is a dispute between Houbozhi Company and Hongyuan Company based on the investment income of equity transfer. When the court heard the case, it involved the validity of the Entrusted Investment and Custody Agreement signed between Bozhi Company and Hongyuan Company and the question of who owns 9% equity of Xinhua Life Insurance.
Bozhi Company won the support of the Higher People's Court and the negative judgment of the Supreme People's Court in the first instance and the second instance. Among them, in the Supreme People's Court's final judgment, the validity of the agreement was determined as follows: "Although the above-mentioned agreement is the true intention of both parties, the ownership of the equity should be determined according to the legal investment behavior and cannot be freely agreed by the parties. Therefore, although the parties agreed that the relationship between the two parties is an equity holding relationship, it cannot be determined that the relationship between the two parties is an equity holding relationship. However, it should be recognized that the relationship between the two parties is an entrusted investment contract ",which further demonstrates that" although Hongyuan Company was entrusted by Bozhi Company to invest in Xinhua Life Insurance, Hongyuan Company did not invest in Bozhi Company's name, nor did it register the equity involved in the case in Bozhi Company's name, but invested in its own name and registered the equity involved in the case in Hongyuan Company's name, and this investment behavior has not only been approved by the China Insurance Regulatory Commission, but Hongyuan Company also participated in the management of Xinhua Life Insurance in its name. Fulfilling the obligations of shareholders and exercising the rights of shareholders, therefore, it cannot be considered that the equity involved in the case belongs to Bozhi Company, but it should be considered that the equity involved in the case belongs to Hongyuan Company. "
Frankly speaking, the Supreme People's Court's opinion is surprising. In this case, Bozhi Company, as an anonymous shareholder, did not violate the restrictions on foreign investment in insurance companies in China's laws, and the agreement itself was not invalid as stipulated in the Contract Law. In fact, the Supreme People's Court also believed that the agreement was true and effective, but it completely denied the principle of "free will of the parties" and believed that the ownership of the shares could not be freely agreed by the parties. As for the further discussion, it is even more incredible. Hongyuan Company invests in its own name, registers its equity in its own name, participates in the management of the target company in its own name, fulfills its shareholders' obligations and exercises its shareholders' rights. Isn't this the proper meaning of equity holding? Why, in the Supreme People's Court's view, it turned out that Hongyuan Company was the owner of the equity involved, and reached the conclusion that Hongyuan Company enjoyed the equity? As for the Supreme People's Court's summary that "ownership relationship and entrusted investment relationship are two levels of legal relationship, the former is formed by legal investment behavior, while the latter is formed by contract behavior between the parties", it is even more confusing. The relationship between ownership and entrusted investment is not clear-cut, and there is a combination and a separation. In this case, Bozhi Company established the equity investment behavior in the form of contract. The two are not contradictory and not antagonistic, and they are all legal. It is really difficult for the Supreme Court to judge this case. The author speculates that the judgment of this case is not related to whether the target company is a listed company. If we support Bozhi Company, it will affect the transparency of listed companies or it is equivalent to admitting that stock rights holding can exist in the securities field. This is purely speculation by the author.
Fourth, the risk of equity holding
From the above example, we can actually see that holding shares on behalf of others is very risky. As an anonymous shareholder, Bozhi Company is because the famous shareholder Hongyuan Company did not act according to its instructions, and used a series of means such as capital increase and equity transfer to embezzle its equity transfer income, and there was no way to sue. Generally speaking, both equity holders have risks, which are as follows:
The risk that it is difficult for the actual investor to establish the shareholder status: Although the judicial interpretation affirms the effectiveness of the equity holding agreement, the investment rights and interests are not the same as the shareholders' rights and interests, and the investment rights and interests can only be claimed to the nominal shareholders (holders), but not directly to the target company, which has certain limitations. According to the interpretation of the company law, only with the consent of more than half of the shareholders of the company can the actual investor request the company to change its shareholders, issue a capital contribution certificate, record it in the register of shareholders, record it in the company's articles of association and register with the company registration authority.
Risk of nominal shareholders infringing on the interests of actual investors: In the general equity holding relationship, the actual investors are behind the scenes, while the nominal shareholders are in front of the stage to exercise shareholders' rights. Faced with all kinds of temptations, it is likely that the nominal shareholders will infringe on the interests of the actual investors. For example, the nominal shareholders do not transfer the asset income to the actual investors, abuse the shareholders' rights (major decision-making matters have not been negotiated), and dispose of the equity (transfer and pledge) without authorization (as shown in the above example).
Nominal shareholders also have risks. For example, when the actual investor fails to fulfill the obligation of capital contribution, if the creditor makes recourse, the nominal shareholder needs to bear the obligation to repay the capital contribution, and it cannot refuse to bear the responsibility on the grounds that it is not the actual investor. Therefore, a prominent shareholder should clearly understand the identity of the actual investor and correctly judge whether the latter meets the legal conditions for becoming a shareholder and whether the company's operation is in compliance, so as not to become a "white glove" for others to engage in illegal business and a scapegoat after the incident.
In a word, from the above analysis, it can be seen that the validity of the agreement on equity holding is generally recognized by law; The property rights of the actual investor are generally supported by the court; There are certain procedures for the actual investor to decide "naming"; Holding shares on behalf of both parties is risky.