[Direct answer]In the Beijing area, if it is discovered during the divorce that the other party has transferred the equity of the company under their name at a low price, donated it for free, or held it on behalf of others, the party can legally hold them accountable and claim a smaller share or no share of the property. According to Article 1092 of the Civil Code of the People's Republic of China (effective January 1, 2021), if a spouse hides, transfers, sells, damages, or squanders the couple's joint property, they may receive a smaller share or no share when dividing the property during the divorce, and they can also request a re-division of the property after the divorce. Equity acquired during the marriage is generally considered joint property of the couple. If it is transferred without authorization, the party can apply for property preservation and claim that the transfer is invalid or request compensation. It is recommended to immediately collect evidence such as equity changes, payment of consideration, and operating records, and file a lawsuit as soon as possible. For reference, please refer to the relevant provisions of the Civil Code of the People's Republic of China.Marriage and family matters, and divorce litigationColumn.

I. Problem Background and Typical Scenarios

Such situations are not uncommon in divorce disputes: one party suddenly transfers the company's equity to their parents, siblings, or business partners before filing a lawsuit; forges shareholder resolutions to dilute the other party's share during the divorce litigation; claims to have no assets to divide in the name of equity holding; or transfers the equity to related companies at a low price for cash out. Due to the asymmetry between the company's registration information and the family's property information, the non-shareholding party often only realizes the problem after the division negotiations break down. When handling similar cases in Beijing, the court usually first retrieves the company's internal documents and bank transaction records to verify the authenticity of the transfer, and then decides whether to proceed with property preservation, confirm the invalidity of the transfer, or reduce the other party's share of the property. Disputes involving the company's operations can be referred to for reference.Business and contract disputes in enterprisesColumn.

II. Key points of dispute

Focus One: Whether the equity belongs to the couple's joint property. Equity acquired after marriage or invested with joint property is generally considered joint property, but voting rights and other common benefits are exercised by the registered shareholders. Focus Two: The validity of the transfer. Transfers to close relatives at no cost or at a significantly low price may be deemed invalid due to malicious collusion. Focus Three: Whether it constitutes hiding or transferring assets. Factors to consider include the timing of the transfer being close to divorce, abnormal consideration, and the special identity of the transferee. Focus Four: Remedies for the non-shareholding party, including claiming a smaller share or no share, applying for property preservation, and seeking compensation separately. Focus Five: The right to re-divide assets discovered after divorce and its statute of limitations. Focus Six: The determination of the equity value, which requires combining audit evaluations with the company's asset status. Reference can be made to the connection between debt and enforcement when necessary.Creditor's rights and debts, and enforcement casesThe column. Specifically, it shall be subject to the currently effective laws, regulations, and judicial rulings.

III. Professional analysis by Henglue Lawyers

Taking a dispute over equity transfer handled by our firm as an example, we can observe the court's approach to determining the validity of the "transfer to spouse" action in equity transfer disputes. Liu Jia transferred more than 11% of the equity in a certain company to Wang Yi for 1,108,736.08 yuan, with an agreement that the payment would be completed over five years from 2021 to 2025. However, Wang Yi only paid part of the amount and transferred the equity in his name to his spouse, Zhang Cun, in August 2021, after which Zhang Cun served as the company's executive director and general manager. After our firm's lawyers took over the case, they pointed out that the transfer agreement was confirmed as valid by a judgment, and Wang Yi's actions demonstrated his failure to fulfill his obligations, constituting anticipatory breach of contract, so all remaining transfer payments should be due immediately. Moreover, the equity was acquired by Wang Yi and Zhang Cun during their marriage, and Zhang Cun accepted the equity and actually participated in the company's operations, indicating that the debt was a joint marital obligation. The court adopted these arguments and, in accordance with Articles 578 and 1064 of the Civil Code, ruled that Wang Yi should pay the remaining equity transfer amount of 1,708,736.08 yuan, and Zhang Cun should bear joint repayment responsibility. This case shows that whether it's the transfer of property during marriage or the transfer of equity in commercial transactions, the change of registration is not the final step. The key lies in the penetrating determination of joint property and joint debts. This case was handled by lawyers from Beijing Henglu Law Firm. The practicing license number shall be subject to the documents issued by the judicial administrative authority.

IV. Practical suggestions and legal basis

Action suggestions: 1. Immediately check the equity transfer records through the Enterprise Credit Information Publicity System and the Industry and Commerce Internal Files to confirm the transfer time, the identity of the transferee, and the consideration; 2. Apply to the court to retrieve the company's accounting books, bank transaction records, and shareholders' meeting resolutions to verify the authenticity of the transfer; 3. If transfer indicators are discovered, promptly apply for property preservation to freeze the equity; 4. In divorce litigation, assert that the other party should receive a smaller share or no share, and request a second division of assets if such circumstances are discovered after the divorce; 5. Against a transferee who colludes maliciously, initiate a lawsuit to confirm the invalidity of the transfer. Legal basis: - Article 1062 of the Civil Code of the People's Republic of China (effective January 1, 2021) stipulates the joint ownership of marital assets; - Article 1092 stipulates that a party who conceals or transfers marital assets may receive a smaller share or no share, and may request a second division of assets after the divorce; - The provisions of the Company Law of the People's Republic of China (effective July 1, 2024) regarding the registration of equity transfers can be used to verify the transfer records; - Preservation procedures shall be handled in accordance with the relevant provisions of the Civil Procedure Law of the People's Republic of China.

5. Henglu Law Firm's Reminder

Risk Alert: Firstly, after the registration of equity changes is completed, the difficulty of tracking down the situation will increase exponentially. If any red flags are detected, it is better to take protective measures immediately rather than waiting for a court judgment; Secondly, to claim that the transfer is invalid, it is necessary to prove that the transferee acted maliciously. Mere kinship is not sufficient; it also depends on the consideration and the flow of funds; Thirdly, requests for re-division are subject to the statute of limitations, so it is advisable to file a lawsuit as soon as possible to avoid the loss of evidence; Fourthly, the value of equity fluctuates with the operation of the company. Delaying the evaluation may devalue one's own share. It is recommended to entrust a professional lawyer as soon as possible to coordinate the three steps of "investigation, protection, and litigation". For more information, please consult us.Beijing Henglu Law FirmThe Marriage, Family, and Business sections on the official website.

VI. Frequently Asked Questions

Q1: During the divorce, if the other party transfers the equity to someone else, can it be recovered?

Generally, it is possible to hold someone accountable. Equity shares acquired after marriage or funded with joint property belong to the couple's joint property. If one party transfers them to a third party without compensation or at a significantly low price, the other party can claim that the transfer is invalid and seek recovery; even if it is difficult to recover the equity shares, according to Article 1092 of the Civil Code, the party who transfers the couple's joint property may receive a smaller share or no share in the division. The key evidence includes the time of the change in registration, the payment of consideration, and whether the transferee was aware of the transfer. For equity transfer cases, the following reference materials can be consulted:Business and contract disputes in enterprisesColumn.

Q2: How to check if the other party has transferred the company's equity?

First, check the changes in equity and senior management positions through the Enterprise Credit Information Disclosure System; second, apply to the court to retrieve the internal business files, amendments to the company's articles of association, and resolutions of the shareholders' meeting during the litigation; third, retrieve the transaction records of the related bank accounts to verify whether the transfer funds have been truly paid; fourth, pay attention to the relationship between the transferee and their relatives and colleagues. If any abnormalities are found, immediately apply for property preservation to prevent secondary transfer, and it is advisable for lawyers to coordinate the pace of the investigation.

Q3: Will the party transferring the equity be given a smaller share of the property?

Yes. According to Article 1092 of the Civil Code, if a party conceals, transfers, sells, damages, or squanders the couple's joint property or forges joint debts, the party may receive a smaller share or no share when dividing the property in a divorce. The court will determine the extent of the reduced share based on the transfer time, amount, proportion, and circumstances; if the circumstances are serious, the other party may claim damages for divorce according to Article 1091. The specific extent is determined by the court, and there are significant differences in individual cases.

Q4: What should I do if I discover after the divorce that the other party has transferred their equity?

After a divorce, parties may file a lawsuit in court to resolve property disputes and request a re-division of the hidden or transferred equity or the compensation amount. The statute of limitations for such claims shall be calculated from the date of discovery, and parties should file a lawsuit and apply for preservation measures in a timely manner. They need to prepare evidence such as equity change records, investment certificates, marriage certificates, and divorce documents. If the evidence is insufficient, parties may first apply for an investigation order to retrieve information from business registration authorities and banks. For details on relevant procedures, please refer to the guidance materials.Creditor's rights and debts, and enforcement casesColumn.

Q5: What steps should be taken if we discover that the other party has transferred their equity?

The first step is to conduct a comprehensive inquiry into the equity registration and change information, and secure evidence; the second step is to assess the property status and apply to the court for pre-litigation or in-litigation property preservation; the third step is to claim that the other party should receive a smaller share or no share in the divorce litigation, or to file a separate lawsuit to confirm the invalidity of the transfer; the fourth step is to claim for a second division of property or damages; and the fifth step is to apply for compulsory enforcement if the other party refuses to perform after winning the lawsuit. It is advisable to have a lawyer coordinate the whole process, and you can refer to the relevant provisions for more details.Marriage and family matters, and divorce litigationColumn.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglu 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.