Legal remedies for being falsely registered as a shareholder
2024 08/22
In judicial practice, it is not uncommon for some illegal individuals or companies to falsely use the identity information of others and register them as shareholders of the company when handling company registration and change registration. The person whose identity information has been impersonated (hereinafter referred to as the "impersonated person") is not aware of their becoming a shareholder of the company, and may not realize that their identity information has been impersonated until they are sued by the company's creditors, their personal property is sealed and frozen, restricted from leaving the country, restricted from high consumption, or held accountable by relevant departments, thus facing huge legal risks.
When the aforementioned situation occurs, how can the accused revoke false business registration information and protect their legitimate rights and interests? There are usually four legal remedies to choose from:
1. Submit an application to the Market Supervision Administration to revoke the registration of market entities.
2. Initiate an administrative lawsuit against the Market Supervision Administration as the defendant, requesting the court to revoke the administrative action taken by the Market Supervision Administration to register or change the registration of the nominee as a shareholder of the company.
3. A lawsuit was filed against the company as the defendant for a shareholder qualification confirmation dispute (negative confirmation), requesting the court to confirm that the accused person does not have the shareholder qualification of the company. The defendant went to the Market Supervision Administration to handle the registration procedures for revoking the shareholder identity of the accused person.
4. The company is the defendant in a name rights dispute lawsuit, requesting the court to order the defendant company to cease infringing on its name rights and to order the company to revoke the information in its business registration file that the accused person is a shareholder of the company from the Market Supervision Administration.
The following will discuss the four legal remedies mentioned above separately.
Path 1: Apply to the Market Supervision Administration for revoking the registration of market entities
1. Legal basis for submitting an application to the Market Supervision Administration for revoking the registration of a market entity
Article 40, Paragraph 1 of the Regulations on the Administration of Market Entity Registration of the People's Republic of China stipulates: "If a person submits false materials or uses other fraudulent means to conceal important facts and obtain market entity registration, natural persons, legal persons, and other organizations affected by false market entity registration may apply to the registration authority for revocation of market entity registration.
2. Evidence required to be submitted by the impersonated person
The evidence that the accused person needs to submit when applying to the Market Supervision Administration to revoke the registration of a market entity generally includes a handwriting appraisal opinion issued by a professional institution. It would be even better if the accused person could provide documents such as a lost identity card alarm receipt, a lost identity card announcement, and a bank lost identity card record.
In addition, the accused person also needs to cooperate with the market supervision department to verify their identity information through online or offline channels. Due to special reasons, if the person being impersonated is unable to verify their identity information through the real name authentication system, they can submit a natural person identity certificate that has been notarized in accordance with the law, or they can go to the scene with their ID card, or handle it through other channels recognized by the market supervision department.
3. Conditions for the Market Supervision Administration to revoke the registration of market entities
Taking Beijing as an example, if the Market Supervision Administration determines through investigation that there is false market entity registration, and the facts are clear and the evidence is conclusive, the market entity registration should be revoked. In any of the following circumstances, the registration of a market entity may be revoked:
1. Based on the existing evidence, it can be preliminarily proven that there is a false registration of market entities, and the relevant market entities and personnel are unable to contact or refuse to cooperate, and the relevant market entities and their stakeholders have not raised any objections during the public notice period.
2. Other situations where the registration of market entities can be revoked according to law.
However, in any of the following circumstances, the Market Supervision Administration may not revoke the registration of market entities:
1. Revoking the registration of market entities may cause significant harm to the public interest.
2. After revoking the registration of a market entity, it cannot be restored to its pre registration state.
3. Other circumstances stipulated by laws and administrative regulations.
It is understood that in practice, the Market Supervision Administration will also solicit the opinions of company creditors on the revocation of market entity registration. If creditors do not agree to the revocation, the Market Supervision Administration generally does not revoke the market entity registration.
4. The remedy for the Market Supervision Administration's decision not to revoke the registration
If the Market Supervision Administration makes a decision not to revoke the registration, the accused person can choose to file an administrative reconsideration or directly file an administrative lawsuit.
Path 2: Initiate administrative litigation and request the court to revoke shareholder registration information
1. Legal basis for filing administrative litigation
Article 12 of the Administrative Litigation Law of the People's Republic of China stipulates: "The people's court shall accept the following lawsuits filed by citizens, legal persons or other organizations:... (3) When applying for administrative license, the administrative organ refuses or fails to respond within the statutory time limit, or is dissatisfied with other decisions made by the administrative organ regarding administrative license..." Shareholder registration is essentially an administrative license. Therefore, the accused person may file a lawsuit with the Market Supervision and Administration Bureau to request the court to revoke the shareholder registration information in accordance with the above provisions.
2. Judicial practice of filing administrative litigation cases
The author used "shareholder" as the keyword, the parties selected "Market Supervision Administration", and the case type selected administrative cases. They searched the first instance judgments of the Beijing area in the past three years in the Weike Advanced Legal Database, and selected a total of 76 cases where the plaintiff claimed to be registered as a company shareholder under a false name. Among them, 63 cases were supported by the court in the plaintiff's lawsuit to revoke the shareholder registration, and 13 cases were not supported by the court in the plaintiff's lawsuit to revoke the registration. The main reasons for the 63 cases supporting the plaintiff's claim mentioned above are: the signature of the plaintiff in the registration application materials is not signed by the plaintiff himself, which cannot reflect the plaintiff's true intention. Although the Market Supervision Administration has fulfilled its obligation to review the application materials, its industrial and commercial registration based on false application materials lacks factual basis. There is currently no evidence to prove that the plaintiff was aware of or engaged in relevant management and business activities of the company in the industrial and commercial registration, and should be revoked (see judgments such as (2021) Jing0108 Xingchu 1212, (2021) Jing0105 Xingchu 491, (2021) Jing0105 Xingchu 531, etc.).
In these 13 cases, the reasons not supported by the court mainly include: (1) the Market Supervision Administration provided evidence to prove that the plaintiff had completed identity confirmation or facial recognition system through live testing on the Beijing Enterprise Service e-Window Platform, and was aware of the business registration matters (see judgments such as (2021) Jing 0108 Xing Chu 1158 and (2021) Jing 0108 Xing Chu 822); (2) The plaintiff's failure to pay the appraisal fee resulted in the appraisal institution being unable to issue a handwriting appraisal opinion (see judgments such as (2020) Jing 0105 Xing Chu No. 603, 604, etc.); (3) The court has determined that the plaintiff actually participated in the operation of the company (see judgments such as (2021) Jing 0105 Xing Chu 145 and (2021) Jing 0108 Xing Chu 203); (4) In the case where the plaintiff was registered as a shareholder of the company through a change of registration, the plaintiff did not provide effective evidence to prove that the equity transfer was illegal (see judgments such as (2021) Jing 0105 Xing Chu 195).
3. Evidence required by the impersonated person
When filing an administrative lawsuit, the person being impersonated needs to provide evidence of being registered as a shareholder of the company by someone else, including business registration information and handwriting appraisal opinions (proving that the signature of the person being impersonated in the company's business registration file is not the signature of the person being impersonated). After fulfilling the aforementioned burden of proof, the burden of proof is assigned to the defendant Market Supervision Administration to prove that the accused was aware of being registered as a shareholder of the company and did not raise any objections, or that the accused participated in the company's business activities. If the Market Supervision Administration cannot provide evidence to prove the aforementioned facts, the court will generally support the litigation request of the impersonated person and rule to revoke the administrative action taken by the Market Supervision Administration to register or change the registration of the impersonated person as a shareholder of the company.
Of course, if the victim can voluntarily provide evidence to prove that they were not aware of being registered as a shareholder of the company, the likelihood of their lawsuit being supported will be greater, such as evidence of their own ID card loss, replacement, or theft by others.
4. Deadline for filing administrative litigation
It should be noted that there is a time limit for filing administrative litigation. Article 46, Paragraph 2 of the Administrative Litigation Law of the People's Republic of China stipulates: "If a lawsuit is filed over real estate that has been in existence for more than 20 years from the date of the administrative action, or for other cases that have been in existence for more than 5 years from the date of the administrative action, the people's court shall not accept the lawsuit." If the person being impersonated discovers that they have been registered as a shareholder of the company more than 5 years ago, then the administrative lawsuit filed by the person being impersonated will not be accepted by the court, and even if the case is filed, the court will rule to dismiss the lawsuit.
5. How to revoke the registration of a victim who has won a judgment in favor of the victim
After the victim wins the lawsuit, the Market Supervision Administration usually takes the initiative to comply with the effective judgment. If the Market Supervision Administration refuses to revoke shareholder registration information, the accused person may apply to the court for compulsory enforcement.
Path 3: Filing a lawsuit for shareholder qualification confirmation dispute (negative confirmation)
1. Legal basis for filing a shareholder qualification confirmation dispute (negative confirmation) lawsuit
Article 21 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 (III)" stipulates that "if a party sues the people's court to confirm its shareholder qualification, the company shall be the defendant, and any person who has an interest in the disputed equity in the case shall participate in the litigation as a third party." The corresponding cause of action for the above provisions is "shareholder qualification confirmation dispute. The "Guidelines for the Application of Civil Cases by the Supreme People's Court and the Standardization of Request Rights" explains the cause of action of "shareholder confirmation disputes" as follows: "Shareholder qualification confirmation disputes refer to disputes between shareholders or between shareholders and the company over the existence of shareholder qualifications, or the specific amount and proportion of equity holdings." According to this interpretation, shareholder qualification confirmation disputes include two levels: positive confirmation and negative confirmation. In judicial practice, the lawsuit of negative confirmation of shareholder qualification has also been widely recognized by the court.
2. Judicial practice of initiating shareholder qualification confirmation disputes (negative confirmation) cases
The author searched for civil first instance judgments on "shareholder qualification confirmation disputes" in the Beijing area over the past three years in the Weike Advanced Legal Database, and selected a total of 142 cases. Among them, there were 33 cases of negative shareholder qualification confirmation lawsuits, 15 cases where the court supported the plaintiff's claims, and 18 cases where the court did not support them. The main reasons supported by the court in these 15 cases are: (1) the inability to determine the existence of an agreement on equity transfer between the plaintiff and the original shareholders of the company, the possibility of the plaintiff's ID card being used fraudulently, and the existing evidence cannot prove that the plaintiff manages the company or enjoys shareholder rights as a shareholder (see Judgment No. (2021) Jing 0101 Min Chu 24577 for details); (2) The company and its other shareholders acknowledge the plaintiff's claim (see Judgment No. 4813 of 2021 Jing 0109 Min Chu); (3) The plaintiff has never made a true intention to become a shareholder of the company, the plaintiff is not at fault for being registered as a shareholder of the company, and after learning that they have been registered as a shareholder of the company, the plaintiff actively protected their rights from the public security organs and courts (see judgment No. (2021) Jing 0101 Min Chu 11994). The reasons why these 18 cases were not supported by the court mainly include: (1) the plaintiff only provided evidence to prove that the signature in the business registration file was not signed by the plaintiff himself, and the plaintiff did not provide evidence or sufficient evidence to prove that their identity was impersonated and how it was impersonated, which is not enough to deny their shareholder identity (see judgments (2022) Jing 0101 Min Chu 3794, (2021) Jing 0117 Min Chu 6102, (2021) Jing 0112 Min Chu 16265); (2) The plaintiff has economic relations or cooperative relationships with the defendant company (see Judgment No. (2021) Jing 0105 Min Chu 80524 for details); (3) The plaintiff has a close relationship with other shareholders or executives of the defendant company (as detailed in judgments (2021) Jing 0111 Min Chu No. 18020 and (2021) Jing 0108 Min Chu No. 14153); (4) The plaintiff works for the defendant company (see Judgment No. (2021) Jing 0105 Min Chu 57902 for details); (5) The plaintiff has been registered as a company for 20 years, but it is unreasonable for the plaintiff to file a lawsuit for shareholder qualification confirmation only after being held accountable as a shareholder (see Judgment No. (2022) Jing 0105 Min Chu 36692 for details); (6) The plaintiff had lent their ID card to someone else for use (see Judgment No. (2021) Jing 0115 Min Chu 17482 for details); (7) The plaintiff did not deny their shareholder qualifications in other cases (see Judgment No. (2021) Jing 0101 Min Chu 11571 for details).
3. Evidence required by the impersonated person
Article 109 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China stipulates: "If the people's court is satisfied that the possibility of the existence of the facts to be proved, such as fraud, coercion, malicious collusion, or oral will or gift, can be reasonably suspected, it shall recognize the existence of such facts." As the accused person claims that the company obtained market entity registration through fraudulent means, according to the above provisions, the degree of proof of the accused person needs to meet the standard of excluding reasonable suspicion. At the same time, due to the fact that there are indeed some shareholders of companies who file lawsuits for negative confirmation of shareholder qualifications in order to evade debt in practice, the court's review standards for such lawsuits are relatively strict.
From the cases we have currently retrieved in the Beijing area, courts generally believe that providing handwriting appraisal opinions to prove that the signature in the company's industrial and commercial registration file is not the signature of the victim is not enough to prove that they do not have the qualifications of a shareholder of the company. The victim also needs to provide evidence to prove that they were not aware of the registered shareholder of the company or whether they had the true intention to become a shareholder, such as proving whether the victim's ID card was lost, reported as lost, or reprocessed (see Judgment No. 11994 of 2021 Jing 0101 Min Chu and Judgment No. 27674 of 2021 Jing 0105 Min Chu), whether the victim participated in the company's operation (see Judgment No. 7229 of 2021 Jing 0116 Min Chu), Whether the impersonated person actually enjoys shareholder rights (see Judgment No. (2021) Jing 0101 Min Chu 24577 for details) Evidence such as whether the person being impersonated has actually contributed or subscribed capital in accordance with the law (see Judgment No. 27674 of 2021 Jing 0105 Min Chu), whether the person being impersonated is at fault for being registered as a shareholder of the company (see Judgment No. 11994 of 2021 Jing 0101 Min Chu), and whether the person being impersonated actively defended their rights and appealed after discovering that they were being impersonated (see Judgment No. 27579 of 2021 Jing 0102 Min Chu). At the same time, the judge will verify the relationship between the impersonated person and other shareholders and executives of the company, as well as whether the impersonated person has lent their ID card to others.
4. How to revoke registration after the court confirms that the accused person does not have the qualifications of a company shareholder
After obtaining a winning judgment, if the defendant company refuses to comply with the judgment, the defendant may apply to the court for compulsory enforcement, and the court shall send a notice of assistance in enforcement to the Market Supervision Administration.
Path 4: Filing a lawsuit for a name rights dispute
1. Legal basis for filing a name rights dispute
Article 1014 of the Civil Code of the People's Republic of China stipulates: "No organization or individual shall infringe upon the right to a name or the right to a name of another person by interfering, stealing, counterfeiting, or other means." Article 995 states: "If a person's personality rights are infringed upon, the victim has the right to request the perpetrator to bear civil liability in accordance with the provisions of this Law and other laws. The victim's right to cease infringement, eliminate obstacles, eliminate dangers, eliminate influences, restore reputation, and request an apology does not apply to the statute of limitations for litigation." Based on the above provisions, the victim may file a lawsuit for a name rights dispute, demand that the company that impersonates their identity information cease infringement, and revoke the information in the company's industrial and commercial registration file that the victim is a shareholder of the company from the market supervision and administration bureau.
2. Judicial Practice of Filing Name Rights Dispute Cases
The author used the keyword "shareholder" and selected the cause of action "name rights dispute" to search for first instance judgments in the Beijing area in the past three years in the Weike Advanced Legal Database. A total of 20 cases were screened out in which the plaintiff claimed to be registered as a company shareholder under a false name. Among them, 14 cases were supported by the court in the plaintiff's lawsuit to revoke the shareholder registration, and 6 cases were not supported by the court in the plaintiff's lawsuit to revoke the registration or confirm their disqualification as a shareholder. The main reason supported by the court in these 14 cases is that, based on the facts ascertained in this case, the plaintiff's signature displayed on the business registration documents was not written by the plaintiff, and the defendant did not provide evidence to prove that the plaintiff authorized them on the relevant matters. It can be proven that the defendant used the plaintiff's name without the plaintiff's consent, which infringed on the plaintiff's right to name (see judgments (2021) Jing 0108 Min Chu 67705 and (2022) Jing 0105 Min Chu 16024).
The reasons for not supporting the six cases mentioned above are as follows: (1) The court considers that the revocation of industrial and commercial registration does not fall within the scope of civil cases and rejects the lawsuit request for revocation of shareholder registration claimed by the accused (see Judgment No. (2023) Jing 0108 Min Chu 23701 for details); (2) The court believes that confirming the plaintiff's lack of shareholder qualifications does not fall within the scope of handling name rights disputes, and rejects the lawsuit request of the accused person to confirm their lack of shareholder qualifications (see Judgment No. 25530 (2022) Jing 0105 Min Chu); (3) The plaintiff used to be a shareholder of the company and claimed that he has withdrawn from the shareholders' meeting and will no longer serve as a shareholder of the company, but did not provide evidence to prove it (see Judgment No. (2020) Jing 0108 Min Chu 8264 for details); (4) The court held that the plaintiff did not provide evidence to prove that they were falsely registered as a shareholder of the company (see Judgment No. (2021) Jing 0101 Min Chu 12972 for details); (5) The plaintiff does not apply for handwriting verification of the signature (see Judgment No. (2022) Jing 0105 Min Chu 8566 for details); (6) The facts claimed by the plaintiff are contradictory, and the court believes that the plaintiff was aware of being registered as a shareholder of the company (see Judgment No. 49308 of 2021 Jing 0105 Min Chu).
In addition to the aforementioned judgments, the author also retrieved two rulings. The court ruled to dismiss the plaintiff's lawsuit, stating that whether the plaintiff is a shareholder of the defendant company should be determined through the corresponding legal procedures for confirming shareholder qualifications, rather than through the name rights dispute in this case (see rulings (2020) Jing 0105 Min Chu 69081 and (2021) Jing 0105 Min Chu 78118 for details). It can be seen that filing a lawsuit for revocation of shareholder registration in a name rights dispute may result in some courts considering the cause of action to be incorrect and potentially rejecting the lawsuit.
3. Evidence required by the impersonated person
When filing a name rights dispute, the evidence that the accused person needs to provide is similar to the evidence that needs to be provided in the aforementioned administrative litigation. The accused person needs to provide evidence that they have been registered as a shareholder of the company by someone else, including business registration information and handwriting appraisal opinions (to prove that the signature of the accused person in the company's business registration file is not the signature of the accused person). After the accused person completes the aforementioned burden of proof, the burden of proof is usually assigned to the defendant company, which proves that it did not impersonate the name of the accused person. However, some courts may also inquire whether there is a connection between the impersonated person and the company that impersonated their name rights, in order to further determine whether the impersonated person is aware of the registered shareholders of the company (see Judgment No. (2021) Jing 0105 Min Chu 49308 for details). Therefore, if the victim can proactively provide evidence to prove that they were not aware of being registered as a shareholder of the company, the likelihood of their lawsuit being supported will be greater.
How to execute the court's decision to revoke shareholder registration
After the court makes a judgment to revoke the shareholder registration, if the company fails to go to the Market Supervision Administration to revoke the information in the company's industrial and commercial registration file that the impersonated person is a shareholder of the company, the impersonated person can apply to the court for compulsory enforcement, and the court will send an assistance enforcement notice to the Market Supervision Administration.
epilogue
Being falsely registered as a shareholder of a company will pose significant legal risks to the person being falsely registered. Once there is a situation of being falsely registered as a shareholder of the company, there is no need to panic. The falsely registered person can choose the most suitable way from the four paths mentioned above based on the evidence they can collect and their actual situation, and protect their legitimate rights and interests as soon as possible.
When the aforementioned situation occurs, how can the accused revoke false business registration information and protect their legitimate rights and interests? There are usually four legal remedies to choose from:
1. Submit an application to the Market Supervision Administration to revoke the registration of market entities.
2. Initiate an administrative lawsuit against the Market Supervision Administration as the defendant, requesting the court to revoke the administrative action taken by the Market Supervision Administration to register or change the registration of the nominee as a shareholder of the company.
3. A lawsuit was filed against the company as the defendant for a shareholder qualification confirmation dispute (negative confirmation), requesting the court to confirm that the accused person does not have the shareholder qualification of the company. The defendant went to the Market Supervision Administration to handle the registration procedures for revoking the shareholder identity of the accused person.
4. The company is the defendant in a name rights dispute lawsuit, requesting the court to order the defendant company to cease infringing on its name rights and to order the company to revoke the information in its business registration file that the accused person is a shareholder of the company from the Market Supervision Administration.
The following will discuss the four legal remedies mentioned above separately.
Path 1: Apply to the Market Supervision Administration for revoking the registration of market entities
1. Legal basis for submitting an application to the Market Supervision Administration for revoking the registration of a market entity
Article 40, Paragraph 1 of the Regulations on the Administration of Market Entity Registration of the People's Republic of China stipulates: "If a person submits false materials or uses other fraudulent means to conceal important facts and obtain market entity registration, natural persons, legal persons, and other organizations affected by false market entity registration may apply to the registration authority for revocation of market entity registration.
2. Evidence required to be submitted by the impersonated person
The evidence that the accused person needs to submit when applying to the Market Supervision Administration to revoke the registration of a market entity generally includes a handwriting appraisal opinion issued by a professional institution. It would be even better if the accused person could provide documents such as a lost identity card alarm receipt, a lost identity card announcement, and a bank lost identity card record.
In addition, the accused person also needs to cooperate with the market supervision department to verify their identity information through online or offline channels. Due to special reasons, if the person being impersonated is unable to verify their identity information through the real name authentication system, they can submit a natural person identity certificate that has been notarized in accordance with the law, or they can go to the scene with their ID card, or handle it through other channels recognized by the market supervision department.
3. Conditions for the Market Supervision Administration to revoke the registration of market entities
Taking Beijing as an example, if the Market Supervision Administration determines through investigation that there is false market entity registration, and the facts are clear and the evidence is conclusive, the market entity registration should be revoked. In any of the following circumstances, the registration of a market entity may be revoked:
1. Based on the existing evidence, it can be preliminarily proven that there is a false registration of market entities, and the relevant market entities and personnel are unable to contact or refuse to cooperate, and the relevant market entities and their stakeholders have not raised any objections during the public notice period.
2. Other situations where the registration of market entities can be revoked according to law.
However, in any of the following circumstances, the Market Supervision Administration may not revoke the registration of market entities:
1. Revoking the registration of market entities may cause significant harm to the public interest.
2. After revoking the registration of a market entity, it cannot be restored to its pre registration state.
3. Other circumstances stipulated by laws and administrative regulations.
It is understood that in practice, the Market Supervision Administration will also solicit the opinions of company creditors on the revocation of market entity registration. If creditors do not agree to the revocation, the Market Supervision Administration generally does not revoke the market entity registration.
4. The remedy for the Market Supervision Administration's decision not to revoke the registration
If the Market Supervision Administration makes a decision not to revoke the registration, the accused person can choose to file an administrative reconsideration or directly file an administrative lawsuit.
Path 2: Initiate administrative litigation and request the court to revoke shareholder registration information
1. Legal basis for filing administrative litigation
Article 12 of the Administrative Litigation Law of the People's Republic of China stipulates: "The people's court shall accept the following lawsuits filed by citizens, legal persons or other organizations:... (3) When applying for administrative license, the administrative organ refuses or fails to respond within the statutory time limit, or is dissatisfied with other decisions made by the administrative organ regarding administrative license..." Shareholder registration is essentially an administrative license. Therefore, the accused person may file a lawsuit with the Market Supervision and Administration Bureau to request the court to revoke the shareholder registration information in accordance with the above provisions.
2. Judicial practice of filing administrative litigation cases
The author used "shareholder" as the keyword, the parties selected "Market Supervision Administration", and the case type selected administrative cases. They searched the first instance judgments of the Beijing area in the past three years in the Weike Advanced Legal Database, and selected a total of 76 cases where the plaintiff claimed to be registered as a company shareholder under a false name. Among them, 63 cases were supported by the court in the plaintiff's lawsuit to revoke the shareholder registration, and 13 cases were not supported by the court in the plaintiff's lawsuit to revoke the registration. The main reasons for the 63 cases supporting the plaintiff's claim mentioned above are: the signature of the plaintiff in the registration application materials is not signed by the plaintiff himself, which cannot reflect the plaintiff's true intention. Although the Market Supervision Administration has fulfilled its obligation to review the application materials, its industrial and commercial registration based on false application materials lacks factual basis. There is currently no evidence to prove that the plaintiff was aware of or engaged in relevant management and business activities of the company in the industrial and commercial registration, and should be revoked (see judgments such as (2021) Jing0108 Xingchu 1212, (2021) Jing0105 Xingchu 491, (2021) Jing0105 Xingchu 531, etc.).
In these 13 cases, the reasons not supported by the court mainly include: (1) the Market Supervision Administration provided evidence to prove that the plaintiff had completed identity confirmation or facial recognition system through live testing on the Beijing Enterprise Service e-Window Platform, and was aware of the business registration matters (see judgments such as (2021) Jing 0108 Xing Chu 1158 and (2021) Jing 0108 Xing Chu 822); (2) The plaintiff's failure to pay the appraisal fee resulted in the appraisal institution being unable to issue a handwriting appraisal opinion (see judgments such as (2020) Jing 0105 Xing Chu No. 603, 604, etc.); (3) The court has determined that the plaintiff actually participated in the operation of the company (see judgments such as (2021) Jing 0105 Xing Chu 145 and (2021) Jing 0108 Xing Chu 203); (4) In the case where the plaintiff was registered as a shareholder of the company through a change of registration, the plaintiff did not provide effective evidence to prove that the equity transfer was illegal (see judgments such as (2021) Jing 0105 Xing Chu 195).
3. Evidence required by the impersonated person
When filing an administrative lawsuit, the person being impersonated needs to provide evidence of being registered as a shareholder of the company by someone else, including business registration information and handwriting appraisal opinions (proving that the signature of the person being impersonated in the company's business registration file is not the signature of the person being impersonated). After fulfilling the aforementioned burden of proof, the burden of proof is assigned to the defendant Market Supervision Administration to prove that the accused was aware of being registered as a shareholder of the company and did not raise any objections, or that the accused participated in the company's business activities. If the Market Supervision Administration cannot provide evidence to prove the aforementioned facts, the court will generally support the litigation request of the impersonated person and rule to revoke the administrative action taken by the Market Supervision Administration to register or change the registration of the impersonated person as a shareholder of the company.
Of course, if the victim can voluntarily provide evidence to prove that they were not aware of being registered as a shareholder of the company, the likelihood of their lawsuit being supported will be greater, such as evidence of their own ID card loss, replacement, or theft by others.
4. Deadline for filing administrative litigation
It should be noted that there is a time limit for filing administrative litigation. Article 46, Paragraph 2 of the Administrative Litigation Law of the People's Republic of China stipulates: "If a lawsuit is filed over real estate that has been in existence for more than 20 years from the date of the administrative action, or for other cases that have been in existence for more than 5 years from the date of the administrative action, the people's court shall not accept the lawsuit." If the person being impersonated discovers that they have been registered as a shareholder of the company more than 5 years ago, then the administrative lawsuit filed by the person being impersonated will not be accepted by the court, and even if the case is filed, the court will rule to dismiss the lawsuit.
5. How to revoke the registration of a victim who has won a judgment in favor of the victim
After the victim wins the lawsuit, the Market Supervision Administration usually takes the initiative to comply with the effective judgment. If the Market Supervision Administration refuses to revoke shareholder registration information, the accused person may apply to the court for compulsory enforcement.
Path 3: Filing a lawsuit for shareholder qualification confirmation dispute (negative confirmation)
1. Legal basis for filing a shareholder qualification confirmation dispute (negative confirmation) lawsuit
Article 21 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 (III)" stipulates that "if a party sues the people's court to confirm its shareholder qualification, the company shall be the defendant, and any person who has an interest in the disputed equity in the case shall participate in the litigation as a third party." The corresponding cause of action for the above provisions is "shareholder qualification confirmation dispute. The "Guidelines for the Application of Civil Cases by the Supreme People's Court and the Standardization of Request Rights" explains the cause of action of "shareholder confirmation disputes" as follows: "Shareholder qualification confirmation disputes refer to disputes between shareholders or between shareholders and the company over the existence of shareholder qualifications, or the specific amount and proportion of equity holdings." According to this interpretation, shareholder qualification confirmation disputes include two levels: positive confirmation and negative confirmation. In judicial practice, the lawsuit of negative confirmation of shareholder qualification has also been widely recognized by the court.
2. Judicial practice of initiating shareholder qualification confirmation disputes (negative confirmation) cases
The author searched for civil first instance judgments on "shareholder qualification confirmation disputes" in the Beijing area over the past three years in the Weike Advanced Legal Database, and selected a total of 142 cases. Among them, there were 33 cases of negative shareholder qualification confirmation lawsuits, 15 cases where the court supported the plaintiff's claims, and 18 cases where the court did not support them. The main reasons supported by the court in these 15 cases are: (1) the inability to determine the existence of an agreement on equity transfer between the plaintiff and the original shareholders of the company, the possibility of the plaintiff's ID card being used fraudulently, and the existing evidence cannot prove that the plaintiff manages the company or enjoys shareholder rights as a shareholder (see Judgment No. (2021) Jing 0101 Min Chu 24577 for details); (2) The company and its other shareholders acknowledge the plaintiff's claim (see Judgment No. 4813 of 2021 Jing 0109 Min Chu); (3) The plaintiff has never made a true intention to become a shareholder of the company, the plaintiff is not at fault for being registered as a shareholder of the company, and after learning that they have been registered as a shareholder of the company, the plaintiff actively protected their rights from the public security organs and courts (see judgment No. (2021) Jing 0101 Min Chu 11994). The reasons why these 18 cases were not supported by the court mainly include: (1) the plaintiff only provided evidence to prove that the signature in the business registration file was not signed by the plaintiff himself, and the plaintiff did not provide evidence or sufficient evidence to prove that their identity was impersonated and how it was impersonated, which is not enough to deny their shareholder identity (see judgments (2022) Jing 0101 Min Chu 3794, (2021) Jing 0117 Min Chu 6102, (2021) Jing 0112 Min Chu 16265); (2) The plaintiff has economic relations or cooperative relationships with the defendant company (see Judgment No. (2021) Jing 0105 Min Chu 80524 for details); (3) The plaintiff has a close relationship with other shareholders or executives of the defendant company (as detailed in judgments (2021) Jing 0111 Min Chu No. 18020 and (2021) Jing 0108 Min Chu No. 14153); (4) The plaintiff works for the defendant company (see Judgment No. (2021) Jing 0105 Min Chu 57902 for details); (5) The plaintiff has been registered as a company for 20 years, but it is unreasonable for the plaintiff to file a lawsuit for shareholder qualification confirmation only after being held accountable as a shareholder (see Judgment No. (2022) Jing 0105 Min Chu 36692 for details); (6) The plaintiff had lent their ID card to someone else for use (see Judgment No. (2021) Jing 0115 Min Chu 17482 for details); (7) The plaintiff did not deny their shareholder qualifications in other cases (see Judgment No. (2021) Jing 0101 Min Chu 11571 for details).
3. Evidence required by the impersonated person
Article 109 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China stipulates: "If the people's court is satisfied that the possibility of the existence of the facts to be proved, such as fraud, coercion, malicious collusion, or oral will or gift, can be reasonably suspected, it shall recognize the existence of such facts." As the accused person claims that the company obtained market entity registration through fraudulent means, according to the above provisions, the degree of proof of the accused person needs to meet the standard of excluding reasonable suspicion. At the same time, due to the fact that there are indeed some shareholders of companies who file lawsuits for negative confirmation of shareholder qualifications in order to evade debt in practice, the court's review standards for such lawsuits are relatively strict.
From the cases we have currently retrieved in the Beijing area, courts generally believe that providing handwriting appraisal opinions to prove that the signature in the company's industrial and commercial registration file is not the signature of the victim is not enough to prove that they do not have the qualifications of a shareholder of the company. The victim also needs to provide evidence to prove that they were not aware of the registered shareholder of the company or whether they had the true intention to become a shareholder, such as proving whether the victim's ID card was lost, reported as lost, or reprocessed (see Judgment No. 11994 of 2021 Jing 0101 Min Chu and Judgment No. 27674 of 2021 Jing 0105 Min Chu), whether the victim participated in the company's operation (see Judgment No. 7229 of 2021 Jing 0116 Min Chu), Whether the impersonated person actually enjoys shareholder rights (see Judgment No. (2021) Jing 0101 Min Chu 24577 for details) Evidence such as whether the person being impersonated has actually contributed or subscribed capital in accordance with the law (see Judgment No. 27674 of 2021 Jing 0105 Min Chu), whether the person being impersonated is at fault for being registered as a shareholder of the company (see Judgment No. 11994 of 2021 Jing 0101 Min Chu), and whether the person being impersonated actively defended their rights and appealed after discovering that they were being impersonated (see Judgment No. 27579 of 2021 Jing 0102 Min Chu). At the same time, the judge will verify the relationship between the impersonated person and other shareholders and executives of the company, as well as whether the impersonated person has lent their ID card to others.
4. How to revoke registration after the court confirms that the accused person does not have the qualifications of a company shareholder
After obtaining a winning judgment, if the defendant company refuses to comply with the judgment, the defendant may apply to the court for compulsory enforcement, and the court shall send a notice of assistance in enforcement to the Market Supervision Administration.
Path 4: Filing a lawsuit for a name rights dispute
1. Legal basis for filing a name rights dispute
Article 1014 of the Civil Code of the People's Republic of China stipulates: "No organization or individual shall infringe upon the right to a name or the right to a name of another person by interfering, stealing, counterfeiting, or other means." Article 995 states: "If a person's personality rights are infringed upon, the victim has the right to request the perpetrator to bear civil liability in accordance with the provisions of this Law and other laws. The victim's right to cease infringement, eliminate obstacles, eliminate dangers, eliminate influences, restore reputation, and request an apology does not apply to the statute of limitations for litigation." Based on the above provisions, the victim may file a lawsuit for a name rights dispute, demand that the company that impersonates their identity information cease infringement, and revoke the information in the company's industrial and commercial registration file that the victim is a shareholder of the company from the market supervision and administration bureau.
2. Judicial Practice of Filing Name Rights Dispute Cases
The author used the keyword "shareholder" and selected the cause of action "name rights dispute" to search for first instance judgments in the Beijing area in the past three years in the Weike Advanced Legal Database. A total of 20 cases were screened out in which the plaintiff claimed to be registered as a company shareholder under a false name. Among them, 14 cases were supported by the court in the plaintiff's lawsuit to revoke the shareholder registration, and 6 cases were not supported by the court in the plaintiff's lawsuit to revoke the registration or confirm their disqualification as a shareholder. The main reason supported by the court in these 14 cases is that, based on the facts ascertained in this case, the plaintiff's signature displayed on the business registration documents was not written by the plaintiff, and the defendant did not provide evidence to prove that the plaintiff authorized them on the relevant matters. It can be proven that the defendant used the plaintiff's name without the plaintiff's consent, which infringed on the plaintiff's right to name (see judgments (2021) Jing 0108 Min Chu 67705 and (2022) Jing 0105 Min Chu 16024).
The reasons for not supporting the six cases mentioned above are as follows: (1) The court considers that the revocation of industrial and commercial registration does not fall within the scope of civil cases and rejects the lawsuit request for revocation of shareholder registration claimed by the accused (see Judgment No. (2023) Jing 0108 Min Chu 23701 for details); (2) The court believes that confirming the plaintiff's lack of shareholder qualifications does not fall within the scope of handling name rights disputes, and rejects the lawsuit request of the accused person to confirm their lack of shareholder qualifications (see Judgment No. 25530 (2022) Jing 0105 Min Chu); (3) The plaintiff used to be a shareholder of the company and claimed that he has withdrawn from the shareholders' meeting and will no longer serve as a shareholder of the company, but did not provide evidence to prove it (see Judgment No. (2020) Jing 0108 Min Chu 8264 for details); (4) The court held that the plaintiff did not provide evidence to prove that they were falsely registered as a shareholder of the company (see Judgment No. (2021) Jing 0101 Min Chu 12972 for details); (5) The plaintiff does not apply for handwriting verification of the signature (see Judgment No. (2022) Jing 0105 Min Chu 8566 for details); (6) The facts claimed by the plaintiff are contradictory, and the court believes that the plaintiff was aware of being registered as a shareholder of the company (see Judgment No. 49308 of 2021 Jing 0105 Min Chu).
In addition to the aforementioned judgments, the author also retrieved two rulings. The court ruled to dismiss the plaintiff's lawsuit, stating that whether the plaintiff is a shareholder of the defendant company should be determined through the corresponding legal procedures for confirming shareholder qualifications, rather than through the name rights dispute in this case (see rulings (2020) Jing 0105 Min Chu 69081 and (2021) Jing 0105 Min Chu 78118 for details). It can be seen that filing a lawsuit for revocation of shareholder registration in a name rights dispute may result in some courts considering the cause of action to be incorrect and potentially rejecting the lawsuit.
3. Evidence required by the impersonated person
When filing a name rights dispute, the evidence that the accused person needs to provide is similar to the evidence that needs to be provided in the aforementioned administrative litigation. The accused person needs to provide evidence that they have been registered as a shareholder of the company by someone else, including business registration information and handwriting appraisal opinions (to prove that the signature of the accused person in the company's business registration file is not the signature of the accused person). After the accused person completes the aforementioned burden of proof, the burden of proof is usually assigned to the defendant company, which proves that it did not impersonate the name of the accused person. However, some courts may also inquire whether there is a connection between the impersonated person and the company that impersonated their name rights, in order to further determine whether the impersonated person is aware of the registered shareholders of the company (see Judgment No. (2021) Jing 0105 Min Chu 49308 for details). Therefore, if the victim can proactively provide evidence to prove that they were not aware of being registered as a shareholder of the company, the likelihood of their lawsuit being supported will be greater.
How to execute the court's decision to revoke shareholder registration
After the court makes a judgment to revoke the shareholder registration, if the company fails to go to the Market Supervision Administration to revoke the information in the company's industrial and commercial registration file that the impersonated person is a shareholder of the company, the impersonated person can apply to the court for compulsory enforcement, and the court will send an assistance enforcement notice to the Market Supervision Administration.
epilogue
Being falsely registered as a shareholder of a company will pose significant legal risks to the person being falsely registered. Once there is a situation of being falsely registered as a shareholder of the company, there is no need to panic. The falsely registered person can choose the most suitable way from the four paths mentioned above based on the evidence they can collect and their actual situation, and protect their legitimate rights and interests as soon as possible.
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