[Case Summary]This case is a contract dispute (second instance). Zhong * joined XX Company, and the company temporarily withheld his 450,000 yuan for priority subscription to virtual equity. The former legal representative, Chen *, promised to repay the money before his death, and his son, Chen * Zhong, and his wife, Wu *, are the only shareholders. Zhong * entrusted Beijing Henglu Law Firm to handle the case.Wang FangliThe lawyer filed a lawsuit, and the first-instance court determined that XX Company was a de facto one-person company, and Wu * and Chen * should bear joint and several liability. The court ordered them to repay 450,000 yuan and interest. The other party appealed, and the second-instance court upheld the original judgment. The core disputes are the determination of the joint and several liability of a one-person company and whether the appeal is valid. Applicable laws: relevant provisions of the Contract Law, the Company Law, and the Marriage Law.

I. Review of the Case

"Can I recover the virtual equity payment?", "Is the shareholder jointly and severally liable for the debts of a single-person company?", and "Do the shareholder's children need to repay the company's debts?" are common questions related to workplace rights protection. Zhong * joined XX Company as the deputy general of operations in 2014. In 2015, his salary was adjusted to a monthly basic salary of 20,000 yuan, with a virtual equity payment of 15,000 yuan temporarily withheld. On April 25, 2018, Zhong * signed a "Debt Agreement" with the former legal representative Chen *, confirming that the company had temporarily withheld a total of 450,000 yuan in virtual equity payments. Chen * promised to transfer the money by the end of December 2018. However, only 100,000 yuan was repaid. Chen * died of illness in February 2021, and his son Chen * became the sole shareholder. All his heirs waived their inheritance rights. Zhong * entrusted a lawyer to handle the case.Wang FangliThe lawyer sued Chen *zhong and Wu * as defendants.

II. The focus of the case

  • Focus 1: Whether XX Company is a de facto one-person company.The determination of joint and several liability for debts under the sole shareholder structure.
  • Focus II: Whether Wu * and Chen * should bear joint and several liability.Is the first-instance judgment based on legal grounds when imposing joint and several liability?
  • Focus Three: Whether the grounds of appeal in the second instance are valid.The appellant argues that the original judgment can be overturned if the facts are unclear or the applicable law is improperly applied.

III. Professional intervention by Hengluo Lawyers

The plaintiff originally claimed that:Zhong * claimed that XX Company should return the temporarily withheld virtual equity subscription funds of 450,000 yuan and interest, and that Wu * and Chen *, as the sole shareholders and spouses, should bear joint and several liability for repayment.

The appellant (the defendant) claimed that:The XX Company, Chen *zong, and Wu * appealed against the first-instance judgment, arguing that the facts determined by the first-instance court were unclear, that the company's business funds were independent and not a one-person company, that the first-instance judgment applied the law improperly and violated procedural laws, and that there was no basis for Wu * and Chen *zong to bear joint and several liability. They requested that the judgment be revoked or modified.

Legal Opinion by Hengluo Law Firm:Wang FangliThe lawyer pointed out that he agreed with the first-instance judgment but disagreed with the appeal request. This case is a contract dispute. Zhong *'s case is also a contract dispute, not a labor contract dispute or a dispute over the settlement of the decedent's debts, and it does not involve estate issues. The first-instance court's determination based on the relevant provisions of the Contract Law and the Company Law is not improper. The appellant's entanglement with inheritance issues lacks reasonable grounds, and he once forged an authorization to add defendants in order to delay the disposal of property and evade debts. His claims are unfounded and should be rejected.

IV. Outcome of the case

The second-instance court held that the contract was signed and performed before the implementation of the Civil Code, so the law at that time should be applied; XX Company's failure to make payments as agreed constituted a breach of contract, and Zhong *'s claim for repayment and interest was well-founded; it was not improper to determine XX Company as a de facto single-person company according to the Company Law, and it was legally justified for Wu * and Chen *zhong to bear joint and several liability. The judgment is as follows: The appeal is dismissed and the original judgment is upheld (that is, XX Company shall repay the virtual equity subscription amount of 450,000 yuan and interest, and Wu * and Chen *zhong shall bear joint and several repayment responsibilities). The second-instance court won again.

5. Henglu Law Firm's Reminder

This case is handled by Beijing Henglu Law Firm.Wang FangliAttorney (Practice Certificate No.: 11101201911086939, subject to the certificate issued by the judicial administrative organ) acting on behalf of the client. Hengluo Law Firm reminds: The company should have a clear agreement when temporarily withholding employees' salaries; in the case of substantial commingling of assets in a single-member company, shareholders may bear joint and several liability. When protecting rights and interests, attention should be paid to identifying the responsibilities of the company and its shareholders.

VI. Common Questions and Answers about Contract Disputes over Virtual Equity Payments

  1. Q:Can I get back the virtual equity payment deducted by the company?
    A:Yes. If there is an agreement between the two parties stipulating that the company shall return the deposit upon resignation or upon the fulfillment of certain conditions, and the company fails to return the deposit as agreed, the employee may file a lawsuit to demand the return of the deposit and request the company to pay interest on it.
  2. Q:Do shareholders of a one-person company need to bear joint and several liability for the company's debts?
    A:If the assets of a sole proprietorship company are commingled or it is impossible to prove that the assets are independent, the shareholders may bear joint and several liability for the company's debts.
  3. Q:Do the shareholders' children need to repay the company's debts?
    A:Generally, one only bears responsibility within the scope of inheriting the estate, and if one waives the inheritance, they usually do not bear responsibility. However, as the sole shareholder, one may be held directly accountable.
  4. Q:Can I still appeal if the second-instance court upholds the original verdict?
    A:In China, the two-instance final review system is implemented. After the judgment is upheld in the second instance, it takes effect. It can be remedied through special procedures such as retrial, but generally, it is not possible to appeal again.
  5. Q:What should I do if the other party delays the appeal process?
    A:After actively defending against the lawsuit and pointing out that the appeal lacks evidence, if the court upholds the original judgment after review, the original judgment will be enforced.