[Direct answer]In the Beijing area, equity can be divided as inheritance, but obtaining shareholder status depends on the company's bylaws. According to Article 112 of the Civil Code of the People's Republic of China, inheritance refers to the personal legal property left by a natural person upon their death, and the property rights in equity can be inherited. The Company Law of the People's Republic of China (amended in 2023 and implemented on July 1, 2024) stipulates that after the death of a natural shareholder, their legal heirs may inherit shareholder status, unless otherwise provided in the company's bylaws. The methods of division typically include three categories: discounted compensation, share division, and transfer for cash. These include allowing other heirs to acquire the equity and pay compensation to the heirs, sharing the equity proportionally, or transferring it subject to compliance with the company's bylaws and preemptive rights rules. In the case of limited liability companies, other shareholders enjoy preemptive rights to purchase the equity under the same conditions.

1. Problem background and typical scenarios

Among the legacies of business owners, company equity is often the most valuable and the most controversial. Common situations include disputes over the ownership of equity among heirs, and other shareholders unwilling to accept new shareholders joining the company; there are also cases where the company's articles of association explicitly exclude inheritance, or where the heirs lack management capabilities and find it difficult to participate in management. When handling similar cases in the Beijing area, the court usually first confirms the property value of the equity, and then selects a division method based on the articles of association, the wishes of the shareholders, and the needs of the company's continued operation.

II. Key points of contention

The disagreements focus on four points: Firstly, whether the heir can directly become a shareholder and how to determine the validity of the restrictive provisions in the articles of association; Secondly, how to determine the value of the equity and whether an evaluation is needed to determine its price; Thirdly, how to exercise the preemptive right of other shareholders and how to grasp the procedures and deadlines; Fourthly, whether the division should take the form of discounted compensation, joint ownership, or transfer and monetization. The court usually takes into account the corporate nature of the company and the property rights of the heirs, and prioritizes achieving a fair division through the method of discounted compensation.

III. Professional analysis by Henglue Lawyers

When handling inheritance cases, Henglue Law Firm often needs to make arrangements regarding the share of the estate and the method of performance. Taking a conditional testamentary inheritance case handled by Attorney Yuan Hang of our firm as an example: The decedent, Wang *5, made a self-written will in July 2023, stipulating that his 88-square-meter house in Fengtai District be inherited by his spouse, Zhou Min, but with the condition that after selling the house, he would pay 400,000 yuan to his sister, Wang *1, and 300,000 yuan each to his brother, Wang *2, and sister, Wang *3, totaling 1 million yuan, with the remaining balance going to Zhou Min. After Wang *5's death, the three siblings sued to immediately auction the house and divide the proceeds, while Zhou Min entrusted our firm to defend the case. Attorney Yuan, on the one hand, provided evidence that the will was in a complete form and legally valid according to Article 1134 of the Civil Code of the People's Republic of China; on the other hand, submitted income certificates and a property valuation report of approximately 4.5 million yuan, arguing that selling the house at a low price in the short term would harm the interests of all parties, and proposed a solution of transferring ownership first and deferring payment. The Fengtai District People's Court of Beijing adopted the defense opinion and ruled in 2024 that the house would be inherited by Zhou Min, with all parties required to complete the transfer of ownership before January 14, 2025. Zhou Min would pay a total of 1 million yuan to the three plaintiffs no later than July 14, 2029. The division approach in this case is similar to that of equity inheritance: one party obtains the property and pays compensation to other inheritors, with the evaluation basis and performance deadlines clearly specified in the judgment or agreement, balancing the integrity of the property and the rights and interests of all parties. This case was handled by Beijing Henglue Law Firm.Yuan HangThe attorney (practice certificate number: 11101202110286151, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action suggestions: First, retrieve the company's articles of association, shareholder register, and industrial and commercial registration materials to confirm whether there are inheritance restriction clauses; Second, apply for an evaluation or audit of the equity value to form a pricing basis; Third, communicate with other shareholders about the preemptive right to purchase to avoid procedural flaws; Fourth, the division plan should specify the payment method, time limit, and breach of contract liability. For matters involving equity and corporate governance, you can refer to the relevant provisions in the Company Law and other laws and regulations.Business and contract disputes in enterprisesFor matters involving inheritance, you can refer to the following for more information:Inheritance of property and division of family assetsLegal basis: Articles 1122, 1123, and 1132 of the Civil Code of the People's Republic of China (all effective from January 1, 2021), and the relevant provisions on the inheritance of shareholder qualifications in the Company Law of the People's Republic of China (amended in 2023 and effective from July 1, 2024). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Firstly, the difficulty of equity inheritance lies in the separation of identity rights and property rights, and the provisions of the articles of association are the key variables. Secondly, when there are significant differences in the value of equity, it is advisable to evaluate it as early as possible to avoid passively accepting the other party's conclusions in litigation. Thirdly, the priority purchase right procedure cannot be omitted, otherwise the transfer may lead to disputes. Fourthly, the division plan should be translated into enforceable deadlines and amounts to reduce subsequent disputes. For issues involving the intersection of corporate property and family matters, it can be resolved through mediation or litigation.Business and contract disputes in enterprisesThe service is supported and can be combined with cases involving inheritance disputes\nInheritance and division of family assets板块。

VI. Frequently Asked Questions

Q1: Can the company's equity be inherited as part of a legacy?

Yes. The property rights in equity belong to the estate, and the heirs have the right to inherit them. Whether they can obtain shareholder status depends on the company's articles of association and the provisions of the Company Law. In a limited liability company, if the articles of association do not impose restrictions, the heirs can generally inherit the shareholder status. If the articles of association stipulate otherwise, they may only be able to claim the property value corresponding to the equity.

Q2: The company's articles of association prohibit equity inheritance. What should I do?

The restrictive provisions of the articles of association are usually respected, and heirs generally cannot directly obtain shareholder status, but they can claim compensation for the property value of the shares. At this time, an evaluation should be applied to determine the value, and the company or other shareholders should be required to pay the consideration according to the evaluation results. If necessary, this can be achieved through litigation.

Q3: How is the value of equity determined?

It can be determined by the two parties through consultation. If no agreement can be reached, the parties may apply to the court to entrust an evaluation agency to evaluate the net assets, or verify the net assets through an audit. The evaluation usually takes into account the company's assets, liabilities, profitability, and industry conditions. If there are objections to the evaluation conclusion, the parties may apply for a review or a reassessment, but they need to state the reasons for their objections.

Q4: Do other shareholders have a preemptive right to purchase the shares?

Under the same conditions, other shareholders of a limited liability company usually enjoy the right of first refusal. When disposing of equity, the other shareholders should be notified in writing and given a reasonable response period. Transfers that fail to comply with the procedures may lead to disputes. The specific rules are subject to the provisions of the company's articles of association and the Company Law. It is recommended that lawyers handle the notification and response process.

Q5: If the heirs cannot agree on how to divide the equity, what should they do?

One party may acquire the equity and pay a discounted price to the other heirs, or share the equity proportionally, or transfer and cash out the equity in accordance with the articles of association and the rules of preemptive rights. The court usually gives priority to discounted compensation to avoid corporate deadlocks. It is recommended to first fix the evaluation conclusion and the equity share, and then discuss the specific performance methods and deadlines.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the courts may vary, which may affect the conclusions. Welcome to consult Henglu Law Firm for specific cases.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Legal services for inheritance·Attorney Yuan Hang·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.