Question raising

Zhang and Li jointly invested 1 million yuan with their marital property to establish Company A with Zhang's friend, and their equity was registered under Zhang's name. Later, due to a strained relationship, the two of them prepared to divorce. Li proposed to transfer 70% of the equity of Company A held by Zhang and divide the proceeds of the equity transfer equally. Unexpectedly, after investigation, it was found that Zhang had secretly transferred 60% of his equity a year ago. Li then sued the court, requesting confirmation that Zhang's unauthorized transfer of equity was invalid. So, can Li's lawsuit be supported by the court?

Lawyer Interpretation

In this case, the equity registered under the name of Zhang, one of the spouses, is contributed through the joint property of the spouses. Therefore, this case involves provisions on equity transfer and joint property of the spouses.

1. The provisions of the Company Law on equity transfer.

Equity is a composite right enjoyed by shareholders in a company based on their identity and status, including the right to asset returns, the right to participate in major decision-making, and the right to choose managers. It also has property and personal rights attributes. According to Article 71 of the Company Law, unless otherwise provided in the articles of association for equity transfer, shareholders of a limited liability company may transfer all or part of their equity to each other; The transfer of equity by shareholders to persons other than shareholders shall be subject to the consent of more than half of the other shareholders. It can be seen that in terms of equity transfer, the legal transfer subject confirmed by the Company Law is the shareholder themselves, rather than their family. Therefore, for the equity registered in the name of one spouse, the specific rights of the equity should be independently exercised by the shareholder themselves, and the shareholder has the right to dispose of the equity separately.

2. The situation where the equity transfer agreement is invalid.

The common situations where equity transfer is ineffective are often in violation of mandatory provisions of laws and regulations, such as violating the principle that "shareholders must obtain more than half of the consent of other shareholders when transferring equity to someone other than shareholders", or malicious collusion between the transferor and the transferee to harm the legitimate rights and interests of others. The party claiming that the equity transfer is invalid shall bear the relevant burden of proof. In the case of "malicious collusion that harms the legitimate rights and interests of others", the party claiming the invalidity of equity transfer must prove that there was malicious collusion between the transferor and the transferee, and the consideration paid was lower than a reasonable market price. This transfer behavior harmed its legitimate rights and interests.

3. The provisions of the Civil Code on joint property between spouses.

According to Article 1062 of the Civil Code, the production, operation, and investment income obtained by the couple during the existence of their marital relationship shall be the common property of the couple and shall be jointly owned by the couple. Based on this, although the equity contributed by the joint property of the couple is registered in the name of one party, the income obtained from the transfer of the equity belongs to the joint property of the couple, and the spouse can demand division in accordance with the law.

In this case, whether Li claimed the invalidity of the equity transfer agreement without his consent, or claimed that a third party colluded maliciously with Zhang without evidence to harm his interests, they did not receive the support of the court.

But if Li could, based on a comprehensive understanding of the facts of the case, existing evidence, and legal relationships, choose to apply for the division of the profits obtained from Zhang's unauthorized transfer of equity, not only would it reduce his burden of proof, but the outcome of the case would also be completely different. Therefore, in litigation, the choice of litigation strategy and cause of action is very important, otherwise it not only consumes time and energy, but also faces the risk of losing the lawsuit.