NON-BANKRUPTCY ACCELERATION OF SHAREHOLDERS' CAPITAL CONTRIBUTION UNDER ARTICLE 54 OF THE PRC COMPANY LAW 2023
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Abstract
This study presents an in-depth analysis of the legal framework and practical implications of Article 54 of the PRC Company Law 2023, focusing on the non-bankruptcy acceleration of shareholders' capital contribution. The study explores the legislative intent behind the provision and evaluates its effectiveness in scenarios outside of formal bankruptcy proceedings. Utilising a qualitative approach that combines legal doctrinal analysis with a comprehensive review of pertinent judicial cases, the study reveals the challenges and limitations in enforcing the acceleration of shareholders' capital contribution, as experienced by corporate creditors.
The findings reveal inconsistencies in judicial interpretations, which have led to a lack of legal predictability and undermined the confidence of corporate creditors in market transaction security. The study proposes targeted legislative enhancements aimed at strengthening legal protections for corporate creditors and fostering innovation in corporate capital and shareholder liability structures. These recommendations are designed to clarify two critical aspects of the acceleration of shareholders' capital contribution mechanism: first, the conditions under which a company is deemed "unable to pay off the due debts," which is a pivotal criterion for triggering the acceleration of shareholders' capital contribution; and second, the "entry rule," which pertains to the legal procedures and requirements that must be met for the acceleration of shareholders' capital contribution to be enforced. By addressing these two elements, the recommendations aim to facilitate a more equitable and efficient application of the acceleration of shareholders' capital contribution mechanism, thereby enhancing the legal predictability and confidence in market transaction security for corporate creditors.
The study contributes to the scholarly discourse on corporate law by offering insights into the operationalization of corporate creditors protection mechanisms and providing guidance for the judiciary on the consistent application of Article 54. It also informs policymakers on crafting a robust legal framework that ensures fairness and enhances the credibility of market transactions.
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