[Case Summary]This case involves a dispute over the transfer of equity. Mr. N held an 11.3819% stake in Company A. In December 2020, he signed a "Supplementary Agreement on Equity Transfer" with Mr. Wang Yi, transferring the equity for 1,108,736.08 yuan and agreeing to pay the full amount over five years. Later, Mr. Wang Yi transferred the equity to his wife, Ms. Zhang C, and completed the registration change. Mr. N previously won a lawsuit for 400,000 yuan, but the enforcement was terminated due to a lack of assets. Mr. Wang Yi only paid 235,000 yuan and still owes 165,000 yuan. He has entrusted Beijing Henglu Law Firm to handle the case.Xiong BinrongThe lawyer sued for the remaining 708,736.08 yuan and interest, claiming that it was a joint debt of the couple. The court ruled that Wang Yi should pay the remaining 708,736.08 yuan, and Zhang Cing should repay it jointly.

I. Review of the case facts

Shareholders often ask, "What should I do if the equity transfer payment is delayed?" and "Can I recover the equity transferred to the spouse?" Mr. N, the plaintiff, and Wang Yi, the defendant, were originally shareholders of A Co., Ltd. Mr. N held 11.3819% of the company's equity. In December 2020, Mr. N and Wang Yi signed the "Supplementary Agreement on Equity Transfer", which stipulated that Mr. N would transfer all 11.3819% of the equity in A Co., Ltd. he held to Wang Yi at the original investment price of 1,108,736.08 yuan. Wang Yi would pay the full amount in five annual installments from 2021 to 2025, with each installment amounting to 200,000 yuan, and settle the remaining balance in the final year.

Afterward, Mr. N learned that on August 18, 2021, Wang Yi transferred all the 82.9229% of the shares held by him to his wife, Zhang Bing, and completed the registration of the change of ownership. At the same time, Zhang Bing served as the executive director and general manager of A Company. Mr. N requested Wang Yi to pay the full transfer price, but Wang Yi evaded the payment with various excuses. In 2022, Mr. N filed a lawsuit with the court. Ultimately, the second-instance judgment ruled that Wang Yi should pay Mr. N the transfer price of 400,000 yuan that had exceeded the performance period, and the remaining transfer price would be claimed separately after the performance period expired. On April 11, 2023, Mr. N applied to the court for enforcement, but the enforcement procedure was terminated due to the lack of enforceable property under Wang Yi's name. Subsequently, Wang Yi paid the plaintiff, Mr. N, 235,000 yuan, and the remaining 165,000 yuan remains unpaid. To safeguard his legitimate rights and interests, Mr. N entrusted Henglu Law Firm to handle the case for him.Xiong BinrongThe lawyer filed a lawsuit with the court.

II. The focus of the case

  • Focus 1: Payment conditions for the transfer of the remaining equity and the determination of a fundamental breach of contract as anticipated.Wang Yi's actions constitute an anticipated fundamental breach of contract.
  • Focus 2: Whether the equity transfer payment constitutes a joint debt of the couple.At the time of signing the agreement, the marriage relationship between the two defendants was still in effect.
  • Focus Three: Whether Zhang Bing should bear joint liability for repayment.The equity has been transferred to Zhang Bing's name, and he is now involved in the operation of the company.

III. The professional intervention of Hengluo Law Firm

The original plaintiff claimed that:Wang Yi expected that the fundamental breach of contract and the transfer of equity to his wife were malicious. The remaining 708,736.08 yuan and interest should be paid, and this is a joint debt of the couple, which Zhang Cang should share equally.

The defendant argued that:Wang Yi claimed that the transfer of shares between him and Liu Jia was not a genuine equity transfer, but a nominal holding, with a false agreement and a fraudulent lawsuit; Zhang Cing argued that he was unaware of the situation and that the debt was not a joint one.

Hengluo Lawyer's Representation Opinion:Xiong BinrongThe lawyer believes that Wang Yi's actions constitute an anticipated fundamental breach of contract. At the time the equity transfer agreement was signed, the two defendants were still in a marital relationship. Wang Yi transferred the plaintiff's equity to Zhang Ceng's name, while Zhang Ceng served as the executive director and general manager of A Co., Ltd., held 82.9229% of the shares, and participated in the company's management. The equity transfer payment involved in the case is a joint debt of the couple, and the two defendants should bear joint responsibility. Therefore, the plaintiff filed a lawsuit against the court for the remaining equity transfer payment of 708,736.08 yuan and the interest during the period of capital occupation.

IV. Outcome of the case

After the trial, the court adopted the legal opinion of Hengluo Law Firm and finally ruled: First, the defendant, Mr. Wang Yi, shall pay the remaining equity transfer amount of 708,736.08 yuan to the plaintiff, Mr. N, within seven days from the date this judgment takes effect; Second, the defendant, Mr. Zhang C, shall bear joint and several liability for the debt determined in the first item of this judgment to the plaintiff, Mr. N.

5. Henglu Law Firm's Reminder

This case is handled by Beijing Henglu Law FirmXiong BinrongThe attorney (practice certificate number: 11101202211410897, subject to the certificate issued by the judicial administrative organ) acts as the agent. The equity transfer shall stipulate clear payment milestones. In case of anticipated breach of contract, the attorney shall promptly initiate litigation to safeguard the client's rights and interests, and, if necessary, assert the client's joint marital debts.

VI. Common Questions and Answers about Equity Transfer Cases

  1. Q: What should I do if the buyer refuses to pay the equity transfer fee?
    A:You can file a lawsuit to demand payment according to the agreement. If there is an anticipated breach of contract, you can claim all the unpaid amounts at once.
  2. Q: Can we recover the equity transferred to the spouse by the other party?
    A:If the transfer occurs during the continuation of the marriage and the spouse participates in the operation, it can be claimed that the transfer funds belong to the couple's joint debt and should be repaid jointly.
  3. Q: Is the equity transfer payment considered a joint debt of the couple?
    A:The transfer proceeds used for the couple's joint life or with the spouse's knowledge and participation can generally be deemed as joint debts.
  4. Q: Can I still sue after the enforcement of a judgment declaring that the debtor has no property to be executed against?
    A:The execution of the termination does not affect the right to bring separate lawsuits for newly due or anticipated default payments.
  5. Q: Is the equity holding agreement valid?
    A:A holding agreement is generally valid between the two parties, but it cannot be used against bona fide third parties, and the evidentiary requirements are relatively high.