What Is an Equity Contribution?

Equity capital contribution is the act of a shareholder to establish a new company by using its equity in other companies as the capital contribution in accordance with the law and the articles of association. After the establishment of the new company, shareholders transfer their shareholders' equity in other companies to the new company, making it part of the property of the new company. In recent years, equity investment has become an increasingly common form of capital contribution. The completion of capital contribution to a new company through equity replacement is the preferred funding method for many investors, especially during the formation of listed companies.

Equity investment

So-called

1,

Qualification recognition of equity investment object

Administrative Measures for the Registration of Equity Capital Contributions] Administrative Measures for the Registration of Equity Capital Contributions b] (now abolished)

Summary of equity investment

Decree of the State Administration for Industry and Commerce

No. 39

The "Administrative Measures for the Registration of Equity Capital Contributions" ^[3] has been deliberated and approved by the bureau meeting of the State Administration for Industry and Commerce of the People's Republic of China, and is hereby promulgated, effective as of March 1, 2009.

Zhou Bohua

January 14, 2009

Content of equity investment

The first is to regulate the registration of equity investment. These measures are formulated in accordance with the laws and regulations such as the Company Law and the Regulations on the Administration of Company Registration.

Article 2 Investors invest in other domestic limited liability companies or joint stock companies (hereinafter collectively referred to as the investee companies) by using their equity held in limited liability companies or joint stock companies established in China (hereinafter referred to as equity companies) as capital contributions. ) For registration management, these measures apply.

Article 3 The equity used in the capital contribution shall have clear ownership, complete power, and be transferable according to law.

The equity in the following situations shall not be used for capital contribution:

(1) The registered capital of the equity company has not been paid up;

(2) Pledge rights have been established;

(3) It has been frozen according to law;

(4) the articles of association of the equity company shall not be transferred;

(5) The laws, administrative regulations or decisions of the State Council stipulate that the transfer of equity by shareholders of equity companies shall be submitted for approval without approval;

(6) Other circumstances that are not allowed to be transferred in accordance with laws, administrative regulations or decisions of the State Council.

Article 4 The sum of the total amount of capital paid by shareholders and other non-monetary assets shall not exceed 70% of the registered capital of the invested company.

Article 5 The equity used to make capital shall be evaluated by an evaluation agency established in accordance with the law.

Article 6 When the company is established and the investor invests in equity, within one year from the date of establishment of the invested company, the investor shall actually pay, and the invested company shall go through the registration of change in paid-in capital.

When the company increases its registered capital, investors who invest in equity shall actually pay the investment before the investee company applies for registration of the increase in registered capital.

Article 7 Where an investor actually contributes capital by holding the equity of a limited liability company, the equity company shall apply to the company registration authority for registration of change of the holder of the equity to the invested company.

The investor actually pays the capital contribution by holding the shares of the company limited by shares, and the registered equity shall be handled by the stock exchange and the securities registration and settlement institution in accordance with the regulations, and other equity transfers shall be made in accordance with legal methods. To the invested company.

Where laws, administrative regulations or a decision of the State Council require shareholders of equity companies to report their transfer of equity, they must also be approved in accordance with law.

Article 8 After the equity capital is actually paid, it shall be verified by a capital verification institution established in accordance with the law and a capital verification certificate shall be issued.

The capital verification certificate shall include the following:

(1) Where the capital contribution is made with the equity of a limited liability company, the relevant equity shall be subject to change of shareholders registration in accordance with Article 7 of these Measures;

(2) In the case of capital contribution by equity of a company limited by shares, the relevant equity is transferred to the invested company in accordance with Article 7 of these Measures;

(3) the evaluation of equity, including the name of the evaluation agency, the document number of the evaluation report, the evaluation base date, the evaluation value, etc .;

(4) If the equity investment is subject to approval according to law, the approval status.

Article 9 When an investor invests in equity in accordance with the law when the company is established, the invested company shall, when applying for establishment registration, register the name or name of the investor who subscribes for the equity investment, as well as the registration of the amount, method and time of capital contribution. After the investor actually pays the equity investment, the invested company shall apply for registration of change in paid-in capital. If the invested company is a limited liability company or a joint stock limited company established by way of establishment, it shall also apply for the actual paid capital contribution of the relevant investor. , Change of investment time, etc.

When the investor actually pays the capital contribution with equity when the company increases its registered capital, the investee company shall apply for registration of change of registered capital and paid-in capital. If the invested company is a limited liability company, it shall also apply for registration of changes in the name or name of the investor, as well as the amount of subscribed and actually paid capital contributions, time of capital contribution, etc.

Article 10 Equity companies applying for relevant registration and submission of materials in accordance with Article 7 of these Measures shall be implemented in accordance with the "Regulations on the Administration of Company Registration" and the State Administration for Industry and Commerce's relevant regulations on the submission of materials for enterprise registration.

Article 11 The investee company shall apply for relevant registration procedures in accordance with Article 9 of these Measures. In addition to the Regulations on the Administration of Company Registration and the State Administration for Industry and Commerce's relevant regulations on the submission of enterprise registration materials, it shall also submit the following materials:

(1) Equity subscription commitment signed by the investor who invested in equity. The relevant investor shall make a commitment that the equity to which the capital contribution is subscribed complies with the provisions of Article 3, Paragraph 1 of these Measures, and does not have the circumstances specified in Paragraph 2 of the Article;

(2) A copy of the business license of the equity company (with the seal of the equity company).

Article 12 Where the equity investment of an investor or an investee company violates the Company Law, the Regulations on the Administration of Registration of Companies, and these Measures, the capital verification agency or asset evaluation agency shall issue false certification documents or provide material omissions due to fault In case of a report, the company registration authority shall investigate and deal with it in accordance with the Company Law, the Company Registration Management Regulations and other relevant regulations.

Article 13 Where the matters stipulated in these Measures are otherwise prescribed by laws, administrative regulations or decisions of the State Council, those provisions shall prevail.

Article 14 These Measures shall be implemented as of March 1, 2009.

Legal Issues

Equity investment is a question of the form of investment and belongs to the company's capital system. The value and function of the shareholder contribution system are largely consistent with the value and function of the company's capital system. The change from strict investment legalism to reasonably limited investment liberalism is mainly reflected in the relaxation of restrictions on shareholder investment forms. This article studies the legal issues of equity investment, that is, under the guidance of this concept of capital, in the attributes of equity and the eligibility of capital contribution, the subject matter of equity capital, the performance of equity capital, the performance of equity capital, the evaluation of equity capital, The investment information disclosure, equity investment, and company control transfer were launched. The full text is divided into six chapters: Chapter One is about the diversification of capital contribution forms and the eligibility of equity capital contribution. First, the comparative research method is used to analyze the development trend of diversified investment forms, and the unique advantages of equity investment are discussed. Secondly, based on the analysis of the concepts of equity, capital contribution, and share, it puts forward the attributes of equity with property rights, and supports the claim that equity is a new type of property right and has the appropriateness of equity capital contribution. The second chapter concerns the subject and object requirements of equity investment. The author adopts the method of classification research in this chapter. First of all, the author proposes that the equity capital contribution subject is subject to the general requirements of shareholders in the company law. The equity capital contribution subject should have the right to control the equity investment. Inside. Second, on the basis of putting forward that transferability is the basic condition of the equity investment object, affirm the equity with restricted circulation and the equity investment with the right burden, but strict restrictions on these types of equity investment. Third, the author proposes that there should be no statutory restrictions on the operating status of the stock issuer, and no statutory conditions on the business nature of the stock issuer to encourage investment and promote the establishment of the company. The third chapter is about the performance of equity investment. First, based on the analysis of the stock transfer system, which is the theoretical basis of equity investment, the author has conducted in-depth research on the transfer of equity investment, equity delivery, and the replacement of equity in mergers and acquisitions. The performance is mainly reflected in the behavior of the equity transferor notifying the company in writing, and changes to the shareholder register and company registration are the company's obligation and are not included in the scope of performance of the equity transfer contract. Second, it studies the manifestation and effectiveness of the defective equity investment. Analyzed the investment of unfunded or insufficiently funded shares, the investment of equity with defective transfer rights, the exercise of controversial equity investment with priority, and the investment of equity with established pledges, confirming the parties' acceptance of these defective equity The effectiveness of capital contributions and related regulatory measures. Chapter IV is the evaluation and verification of equity investment. First, it compares the requirements of China's "Company Law" and foreign company law on the evaluation of capital contribution value, and designs the system of equity capital contribution value assessment.