Provisions of the Supreme People's Court on Hearing Civil Cases Concerning Enterprises Restructuring (Revised in 2020)
Provisions of the Supreme People's Court on Hearing Civil Cases Concerning Enterprises Restructuring (Revised in 2020)
Provisions of the Supreme People's Court on Hearing Civil Cases Concerning Enterprises Restructuring (Revised in 2020)
Fa Shi [2020] No.18
December 29, 2020
(Adopted at 1259th meeting of the Judicial Committee of the Supreme People's Court on December 3, 2002; and amended in accordance with the Decision of the Supreme People's Court on Revising 29 Judicial Interpretations on Commercial Cases Including the Official Reply of the Supreme People's Court on Whether the Land Use Right of the Allotted State-Owned Land of a Bankrupt Enterprise Shall Be Listed as Insolvent Property adopted at the 1823rd meeting of the Judicial Committee of the Supreme People's Court on December 23, 2020)
The Provisions are formulated for the purpose of correctly hearing cases of civil dispute related to enterprise restructuring, in accordance with the provisions of the Civil Code of the People's Republic of China, the Company Law of the People's Republic of China, the Law of the People's Republic of China on Industrial Enterprises Owned by the Whole People, the Civil Procedure Law of the People's Republic of China and other laws and regulations and in light of judicial practice.
Part I Acceptance of Cases
Article 1 The people's court shall accept cases of following civil disputes in restructuring of ownership system of enterprises between equal civil subjects:
1. Civil disputes arising from corporate reform of enterprise;
2. Civil disputes arising from joint stock cooperative reform of enterprises;
3. Civil disputes arising from split-off of enterprise;
4. Disputes arising from transfer from credits to equities of enterprise;
5. Disputes arising from sales contract of enterprises;
6. Disputes arising from merger or consolidation contract of enterprises;
7. Other civil disputes related to restructuring of enterprises.
Article 2 Where a party files a lawsuit in compliance with the circumstances listed in Article 1 hereof, and in compliance with the conditions provided in Article 119 of the Civil Procedure Law, the people's court shall accept the case.
Article 3 Where disputes concerning competent government department arise from administrative adjustment and transfer of state-owned assets of enterprises and one party concerned files a lawsuit to the people's court, the people's court shall not accept such case.
Part II Corporate Reform of Enterprises
Article 4 Where a state-owned enterprise is wholly reformed into a solely state-owned limited liability company, liabilities of the original enterprise shall be assumed by the limited liability company arising from the reform.
Article 5 Where an enterprise is wholly reformed into a limited liability company or a company limited by shares through participation by others into the enterprise by share capital increase or transfer of part of titles, liabilities of the original enterprise shall be assumed by the newly established company arising from the reform.
Article 6 In case that an enterprise establishes a new company by part of its properties and corresponding liabilities with other party, where the creditor recognizes the transferred liabilities, the newly established company shall assume civil liabilities thereof; where the creditor has been notified of the transferred liabilities or refuses to recognized such liabilities in case of notification, the original enterprise shall assume the civil liabilities thereof. Where the original enterprise is insolvent and the creditor therefore claims for its rights against the new established company, the newly established company shall assume the civil liabilities jointly with the original enterprise to the extent of the accepted properties.
Article 7 In case that an enterprise establishes a new company by its high quality properties with other party and reserves the liabilities to the original enterprise, where the creditor files a lawsuit for its rights against the original enterprise and the newly established company as joint defendants, the newly established company shall assume the civil liabilities jointly with the original enterprise to the extent of the accepted properties.
Part III Joint Stock Cooperative Reform of Enterprises
Article 8 Where an enterprise is reformed into join stock cooperative enterprise through buying out its titles by its employees, liabilities of the original enterprise shall be assumed by the joint stock cooperative enterprise arising from the reform.
Article 9 Where an enterprise establishes a joint stock cooperative enterprise by transferring part of its tiles to its employees, liabilities of the original enterprise shall be assumed by the joint stock cooperative enterprise arising from the reform.
Article 10 Where an enterprise is reformed into join stock cooperative enterprise through share capital increase by its employees, liabilities of the original enterprise shall be assumed by the joint stock cooperative enterprise arising from the reform.
Article 11 Where a creditor is notified of the joint stock cooperative reform of an enterprise in accordance with the Company Law and after the joint stock cooperative reform, the creditor files a lawsuit against the joint stock cooperative enterprise concerning liabilities concealed or omitted by the asset managers (contributor) of the original enterprise, if the creditor has applied for such credit within the announcement period, the joint stock cooperative enterprise shall, after assuming civil liabilities, otherwise recover compensation from the assets manger (contributor) of the original enterprise. If the creditor has not applied for such credit within the announcement period, the joint stock cooperative enterprise shall not assume any civil liabilities. The people's court shall notify the creditor of otherwise filing a lawsuit against the assets manager (contributor) of the original enterprise.
Part IV Split-up of Enterprises
Article 12 In case the a creditor claims for its rights against enterprises arising from split-up, where there is agreement on assumption of the original enterprise's liabilities and which is recognized by the creditor, such agreement between the parties shall apply; where there is no such agreement on assumption of the original enterprise's liabilities, or the agreement is unclear, or the creditor refuses to recognize such agreement, the enterprises arising from the split-up shall assume joint liabilities.
Article 13 After enterprises arising from split-up have assumed the joint liabilities, where there is agreement between the enterprises arising from split-up on assumption of the original enterprise's liabilities, such agreement shall apply; where there is no such agreement on assumption of the original enterprise's liabilities, or the agreement is unclear, liabilities of the original enterprise shall be assumed in proportion to their assets when split up.
Part V Transfer of Creditor's Rights to Equities of Enterprises
Article 14 Where a creditor and a debtor voluntarily reach an agreement of transfer of creditor's rights into equities without prejudice to mandatory provisions of laws and administrative regulations, the people's court shall confirm such agreement of transfer of creditor's rights into equities as valid when hearing relevant cases of civil dispute.
Policy transfer of creditor's rights to equities shall be handled in accordance with provisions of competent departments of the State Council.
Article 15 Where a debtor cheats a creditor into an agreement of transfer of creditor's rights into equities by means of concealing enterprise's assets or misrepresenting enterprise's assets and the creditor exercises its right to rescind the agreement within statutory period, the people's court shall be in favor the creditor.
After the agreement of transfer of creditor's rights into equities has been rescinded, the creditor has the right to request the debtor to pay off its debts.
Article 16 Transfer of creditor's rights into equities by part creditors shall not affect other creditors' claim for rights against the debtor.
Part VI Sale of Small-sized State-owned Enterprises
Article 17 Where an enterprise is sold through agreed transfer, the sales contract on which is not approved by local people's government with the right of approval or its authorized functional department, the people's court shall confirm such enterprise sales contract as invalid when hearing relevant case of civil disputes.
Article 18 Where both parties in selling an enterprise maliciously collaborate to damage the State's interests, the people's court shall confirm such enterprise sale activity as invalid when hearing relevant cases of civil disputes.
Article 19 Where in selling an enterprise, the seller's activities are under circumstances provided in laws and the buyer exercises its rights of rescission within the statutory period, the people's court shall be in favor of the buyer.
Article 20 Where one party refuses to perform the contractual obligations or fails to fully perform the contractual obligations upon expiration of performance term of enterprise sales contract and thus cause the contractual purpose fails to be realized, if the other party requires to rescind the contract and claims for compensation, the people's court shall be in favor of the other party.
Article 21 Where one party fails to fully perform the contractual obligations upon expiration of performance term of enterprise sales contract and other party requires to continue performance thereof and claims for compensation, the people's court shall be in favor of the other party. Where both parties fail to fully perform the contractual obligations, each party shall assume civil liabilities based on their respective fault.
Article 22 Where the seller selling an enterprise fails to perform the disclosure obligation concerning major issues such as assets and liabilities and income of the sold enterprise and thus affect the selling price of the enterprise, if the buyer therefore files a lawsuit in the people's court, the people's court shall be in favor of the buyer.
Article 23 Where an enterprise sales contract is confirmed as invalid or is rescinded, losses to business of the buyer after the enterprise is sold shall be accredited to or assumed by the buyer.
Article 24 After an enterprise is sold, where the buyer integrates the assets of the purchased enterprise into its enterprise or change the purchased enterprise into a branch of its enterprise, liabilities of the purchased enterprise shall be assumed by the buyer, except that the buyer and seller otherwise have an agreement which is recognized by the creditor.
Article 25 After an enterprise is sold, where the buyer evaluates the assets of the purchased enterprise and contributes same to a new company established with other party and the legal personality of the purchased enterprise is deregistered, liabilities of the purchased enterprise before the selling thereof shall be assumed by the buyer with all of its properties, including the equities in the newly established company.
Article 26 After an enterprise is sold, where the buyer re-registers the purchased enterprise as a new legal person and the legal personality of the purchased enterprise is deregistered, liabilities of the purchased enterprise before the selling thereof shall be assumed by the newly registered legal person, except that the buyer and the seller otherwise have an agreement thereon which is recognized by the creditor.
Article 27 After an enterprise is sold, where the legal personality should have been deregistered is not deregistered and the creditor files a lawsuit against the enterprise, the people's court shall, based on the facts after transfer of the enterprise's assets, notify the creditor to add liable subject, and order liable subjects to assume civil liabilities.
Article 28 Where the creditor has been notified by the seller by announcement of the selling of an enterprise in accordance with relevant provisions of the Company Law and after the enterprise is sold, the creditor files a lawsuit against the buyer concerning liabilities of the original enterprise concealed or omitted by the seller, if the creditor has applied for such credit within the announcement period, the buyer shall, after assuming civil liabilities, otherwise recover compensation from the seller.
......
Fa Shi [2020] No.18
December 29, 2020
(Adopted at 1259th meeting of the Judicial Committee of the Supreme People's Court on December 3, 2002; and amended in accordance with the Decision of the Supreme People's Court on Revising 29 Judicial Interpretations on Commercial Cases Including the Official Reply of the Supreme People's Court on Whether the Land Use Right of the Allotted State-Owned Land of a Bankrupt Enterprise Shall Be Listed as Insolvent Property adopted at the 1823rd meeting of the Judicial Committee of the Supreme People's Court on December 23, 2020)
The Provisions are formulated for the purpose of correctly hearing cases of civil dispute related to enterprise restructuring, in accordance with the provisions of the Civil Code of the People's Republic of China, the Company Law of the People's Republic of China, the Law of the People's Republic of China on Industrial Enterprises Owned by the Whole People, the Civil Procedure Law of the People's Republic of China and other laws and regulations and in light of judicial practice.
Part I Acceptance of Cases
Article 1 The people's court shall accept cases of following civil disputes in restructuring of ownership system of enterprises between equal civil subjects:
1. Civil disputes arising from corporate reform of enterprise;
2. Civil disputes arising from joint stock cooperative reform of enterprises;
3. Civil disputes arising from split-off of enterprise;
4. Disputes arising from transfer from credits to equities of enterprise;
5. Disputes arising from sales contract of enterprises;
6. Disputes arising from merger or consolidation contract of enterprises;
7. Other civil disputes related to restructuring of enterprises.
Article 2 Where a party files a lawsuit in compliance with the circumstances listed in Article 1 hereof, and in compliance with the conditions provided in Article 119 of the Civil Procedure Law, the people's court shall accept the case.
Article 3 Where disputes concerning competent government department arise from administrative adjustment and transfer of state-owned assets of enterprises and one party concerned files a lawsuit to the people's court, the people's court shall not accept such case.
Part II Corporate Reform of Enterprises
Article 4 Where a state-owned enterprise is wholly reformed into a solely state-owned limited liability company, liabilities of the original enterprise shall be assumed by the limited liability company arising from the reform.
Article 5 Where an enterprise is wholly reformed into a limited liability company or a company limited by shares through participation by others into the enterprise by share capital increase or transfer of part of titles, liabilities of the original enterprise shall be assumed by the newly established company arising from the reform.
Article 6 In case that an enterprise establishes a new company by part of its properties and corresponding liabilities with other party, where the creditor recognizes the transferred liabilities, the newly established company shall assume civil liabilities thereof; where the creditor has been notified of the transferred liabilities or refuses to recognized such liabilities in case of notification, the original enterprise shall assume the civil liabilities thereof. Where the original enterprise is insolvent and the creditor therefore claims for its rights against the new established company, the newly established company shall assume the civil liabilities jointly with the original enterprise to the extent of the accepted properties.
Article 7 In case that an enterprise establishes a new company by its high quality properties with other party and reserves the liabilities to the original enterprise, where the creditor files a lawsuit for its rights against the original enterprise and the newly established company as joint defendants, the newly established company shall assume the civil liabilities jointly with the original enterprise to the extent of the accepted properties.
Part III Joint Stock Cooperative Reform of Enterprises
Article 8 Where an enterprise is reformed into join stock cooperative enterprise through buying out its titles by its employees, liabilities of the original enterprise shall be assumed by the joint stock cooperative enterprise arising from the reform.
Article 9 Where an enterprise establishes a joint stock cooperative enterprise by transferring part of its tiles to its employees, liabilities of the original enterprise shall be assumed by the joint stock cooperative enterprise arising from the reform.
Article 10 Where an enterprise is reformed into join stock cooperative enterprise through share capital increase by its employees, liabilities of the original enterprise shall be assumed by the joint stock cooperative enterprise arising from the reform.
Article 11 Where a creditor is notified of the joint stock cooperative reform of an enterprise in accordance with the Company Law and after the joint stock cooperative reform, the creditor files a lawsuit against the joint stock cooperative enterprise concerning liabilities concealed or omitted by the asset managers (contributor) of the original enterprise, if the creditor has applied for such credit within the announcement period, the joint stock cooperative enterprise shall, after assuming civil liabilities, otherwise recover compensation from the assets manger (contributor) of the original enterprise. If the creditor has not applied for such credit within the announcement period, the joint stock cooperative enterprise shall not assume any civil liabilities. The people's court shall notify the creditor of otherwise filing a lawsuit against the assets manager (contributor) of the original enterprise.
Part IV Split-up of Enterprises
Article 12 In case the a creditor claims for its rights against enterprises arising from split-up, where there is agreement on assumption of the original enterprise's liabilities and which is recognized by the creditor, such agreement between the parties shall apply; where there is no such agreement on assumption of the original enterprise's liabilities, or the agreement is unclear, or the creditor refuses to recognize such agreement, the enterprises arising from the split-up shall assume joint liabilities.
Article 13 After enterprises arising from split-up have assumed the joint liabilities, where there is agreement between the enterprises arising from split-up on assumption of the original enterprise's liabilities, such agreement shall apply; where there is no such agreement on assumption of the original enterprise's liabilities, or the agreement is unclear, liabilities of the original enterprise shall be assumed in proportion to their assets when split up.
Part V Transfer of Creditor's Rights to Equities of Enterprises
Article 14 Where a creditor and a debtor voluntarily reach an agreement of transfer of creditor's rights into equities without prejudice to mandatory provisions of laws and administrative regulations, the people's court shall confirm such agreement of transfer of creditor's rights into equities as valid when hearing relevant cases of civil dispute.
Policy transfer of creditor's rights to equities shall be handled in accordance with provisions of competent departments of the State Council.
Article 15 Where a debtor cheats a creditor into an agreement of transfer of creditor's rights into equities by means of concealing enterprise's assets or misrepresenting enterprise's assets and the creditor exercises its right to rescind the agreement within statutory period, the people's court shall be in favor the creditor.
After the agreement of transfer of creditor's rights into equities has been rescinded, the creditor has the right to request the debtor to pay off its debts.
Article 16 Transfer of creditor's rights into equities by part creditors shall not affect other creditors' claim for rights against the debtor.
Part VI Sale of Small-sized State-owned Enterprises
Article 17 Where an enterprise is sold through agreed transfer, the sales contract on which is not approved by local people's government with the right of approval or its authorized functional department, the people's court shall confirm such enterprise sales contract as invalid when hearing relevant case of civil disputes.
Article 18 Where both parties in selling an enterprise maliciously collaborate to damage the State's interests, the people's court shall confirm such enterprise sale activity as invalid when hearing relevant cases of civil disputes.
Article 19 Where in selling an enterprise, the seller's activities are under circumstances provided in laws and the buyer exercises its rights of rescission within the statutory period, the people's court shall be in favor of the buyer.
Article 20 Where one party refuses to perform the contractual obligations or fails to fully perform the contractual obligations upon expiration of performance term of enterprise sales contract and thus cause the contractual purpose fails to be realized, if the other party requires to rescind the contract and claims for compensation, the people's court shall be in favor of the other party.
Article 21 Where one party fails to fully perform the contractual obligations upon expiration of performance term of enterprise sales contract and other party requires to continue performance thereof and claims for compensation, the people's court shall be in favor of the other party. Where both parties fail to fully perform the contractual obligations, each party shall assume civil liabilities based on their respective fault.
Article 22 Where the seller selling an enterprise fails to perform the disclosure obligation concerning major issues such as assets and liabilities and income of the sold enterprise and thus affect the selling price of the enterprise, if the buyer therefore files a lawsuit in the people's court, the people's court shall be in favor of the buyer.
Article 23 Where an enterprise sales contract is confirmed as invalid or is rescinded, losses to business of the buyer after the enterprise is sold shall be accredited to or assumed by the buyer.
Article 24 After an enterprise is sold, where the buyer integrates the assets of the purchased enterprise into its enterprise or change the purchased enterprise into a branch of its enterprise, liabilities of the purchased enterprise shall be assumed by the buyer, except that the buyer and seller otherwise have an agreement which is recognized by the creditor.
Article 25 After an enterprise is sold, where the buyer evaluates the assets of the purchased enterprise and contributes same to a new company established with other party and the legal personality of the purchased enterprise is deregistered, liabilities of the purchased enterprise before the selling thereof shall be assumed by the buyer with all of its properties, including the equities in the newly established company.
Article 26 After an enterprise is sold, where the buyer re-registers the purchased enterprise as a new legal person and the legal personality of the purchased enterprise is deregistered, liabilities of the purchased enterprise before the selling thereof shall be assumed by the newly registered legal person, except that the buyer and the seller otherwise have an agreement thereon which is recognized by the creditor.
Article 27 After an enterprise is sold, where the legal personality should have been deregistered is not deregistered and the creditor files a lawsuit against the enterprise, the people's court shall, based on the facts after transfer of the enterprise's assets, notify the creditor to add liable subject, and order liable subjects to assume civil liabilities.
Article 28 Where the creditor has been notified by the seller by announcement of the selling of an enterprise in accordance with relevant provisions of the Company Law and after the enterprise is sold, the creditor files a lawsuit against the buyer concerning liabilities of the original enterprise concealed or omitted by the seller, if the creditor has applied for such credit within the announcement period, the buyer shall, after assuming civil liabilities, otherwise recover compensation from the seller.
......