[Direct answer]In the Beijing area, after the death of a natural person shareholder of a limited liability company, his legal heirs can inherit the shareholder status in principle without the consent of other shareholders, unless otherwise stipulated in the company's articles of association. According to Article 90 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024), after the death of a natural person shareholder, his legal heirs can inherit the shareholder status. If the company's articles of association stipulate restrictions or exclusions, the provisions of the articles of association shall prevail. The shares of a joint-stock limited company are transferable assets, and inheritance is generally not restricted. The articles of association serve as a dividing line: if there are no restrictions, the heirs can directly obtain the shareholder status with the certificate of inheritance rights and request to amend the shareholder register and registration; if there are restrictions in the articles of association, the heirs shall negotiate with the company for compensation according to the provisions of the articles of association. It is recommended to first check the articles of association and the shareholder register before determining the approach.

I. Problem background and typical scenarios

Equity inheritance is common in family businesses and companies jointly operated by spouses. Typical scenarios include: the founder suddenly dies, and other shareholders refuse to allow the heirs to join the company on the grounds of "personal partnership"; the articles of association copy templates without stipulating inheritance clauses, and all parties have different opinions on eligibility and valuation; the heirs only want to cash out, while the shareholders want to acquire the shares, but cannot agree on the price; multiple heirs compete for the same equity, or the spouse first divides the marital property and then inherits, leading to overlapping shares; and the deceased shareholder's equity is subject to rights defects such as being held on behalf of others or pledged. In the corporate governance practice of Beijing, pre-arranged provisions on equity inheritance in the articles of association are receiving increasing attention. For matters involving internal corporate governance and contractual arrangements, reference can be made to the relevant provisions.Legal services for corporate commercial and contract disputes.

II. Key points of contention

There are four controversial points. Firstly, the effectiveness of the articles of association: whether the provisions restricting or excluding the inheritance of equity are valid and can bind the heirs is the first hurdle. Secondly, the separation of qualifications and assets: the heirs can choose to inherit the shareholder status, or only claim the property value corresponding to the equity, which can be acquired or transferred by the company or other shareholders. The basis for valuation (net assets, appraisal value, or income method valuation) often leads to disputes. Thirdly, the principle of "analyzing the assets first and then inheriting": if the equity belongs to the couple's joint property, the spouse's half should be separated out first, and the remaining part will be divided as inheritance. Fourthly, the registration confrontation: if the shareholder register has not been changed and registered, the heirs will be hindered in exercising their shareholder rights externally. Regarding the determination of the scope of inheritance, it can be combined with other relevant provisions.Legal services for inheritance and family property divisionClarify the share of responsibility/profit/loss/etc.

III. Professional analysis by Henglue Law Firm

The first step of equity inheritance is still to nail down "what assets there are, who they belong to, and their value", which is consistent with the logic of general inheritance disputes. In a will inheritance dispute handled by our firm, Wang *5 made a self-written will in July 2023, stipulating that his 88-square-meter house at No. 1506 in Fengtai District would be inherited by his spouse, Zhou Min, with the condition that after selling the house, Zhou Min would pay 1 million yuan to three relatives. In September 2023, Wang *5 passed away, and his three siblings sued for immediately auctioning the house and dividing the proceeds. Zhou Min entrusted Yuan Hang, a lawyer from Beijing Henglue Law Firm, to defend against the lawsuit. The lawyer provided evidence that the self-written will was in a complete form and was valid according to Article 1134 of the Civil Code of the People's Republic of China. He also submitted a property valuation report worth about 4.5 million yuan and proposed a "transfer of ownership first, deferred payment" plan to balance the interests of all parties. The Fengtai District Court ruled in 2024 that the house would be inherited by Zhou Min and transferred before January 14, 2025. Zhou Min was required to pay 1 million yuan no later than July 14, 2029. This case was handled by Beijing Henglue Law Firm.Yuan HangThe lawyer (practice license number: 11101202110286151, subject to the document issued by the judicial administrative organ) acts as the agent. This case suggests that regardless of the form of the inheritance, it can be flexibly arranged between "qualification" and "value". In the inheritance of equity, whether the heir enters the company or exits with what consideration can also be designed in advance through the articles of association, wills and negotiations.

IV. Practical suggestions and legal basis

The legal basis is Article 90 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024): "In the event of the death of a natural person shareholder, his/her legal heirs may inherit the shareholder status, unless otherwise provided for in the company's articles of association." For the scope and division of equity as inheritance, Article 1122 (scope of inheritance) and Article 1127 (order of statutory heirs) of the Civil Code of the People's Republic of China (implemented on January 1, 2021) apply. For the division of marital joint property, Article 153 of the Civil Code applies. Practical suggestions in five steps: First, retrieve the company's articles of association, shareholder register, investment certificates, and industrial and commercial archives to confirm whether the articles of association contain inheritance restrictions; Second, clarify the scope of heirs and the spouse's share of the division; Third, negotiate with the company and other shareholders in writing about the succession or buyout plan; Fourth, handle the changes to the shareholder register, amendments to the articles of association, and industrial and commercial registration changes; Fifth, if the articles of association do not make arrangements, take the opportunity to add inheritance clauses to avoid future disputes.

5. Henglu Law Firm's Reminder

The articles of association take precedence over statutory rules: if the articles of association have excluded the inheritance qualification, the heirs can only claim the property value of the equity and it will be difficult to obtain support by forcing their way into the company; if the articles of association do not impose any restrictions, other shareholders have no right to set up an additional consent procedure to delay the registration. It is recommended to jointly entrust an appraisal institution to evaluate the equity during the pricing process to prevent over- or under-valuation from triggering secondary litigation. If there are many heirs and the equity is scattered, it may be considered to grant one heir the inheritance qualification and compensate the others according to their value. If the equity is pledged or held on behalf of others, the defects should be rectified first before the change registration is carried out. For those who need to design the arrangements for equity and inheritance in advance, they can combine the following aspects:Intellectual property protection and corporate legal servicesImprove the bylaws and agreements; specific cases can also be handled throughSpecial services and legal services for other casesConsultation.

VI. Frequently Asked Questions

Q1: In the case of a dispute over equity inheritance, can the inheritors win the lawsuit?

The outcome depends on the articles of association and evidence, rather than verbal promises. If the articles of association do not restrict it, according to Article 90 of the Company Law, the heirs can inherit the shareholder status and usually gain the court's support for the request to change the registration; if the articles of association restrict or exclude it, the heirs can claim the property value corresponding to the shares. It is recommended to first consult a lawyer to check the articles of association and company files, evaluate whether it is more beneficial to "contest the status" or "contest the value", and then decide whether to sue to avoid initiating lawsuits blindly and incurring additional costs.

Q2: What evidence do I need to prepare for claiming equity inheritance?

Five categories: the death certificate of the decedent and the proof of inheritance relationship; the company charter, the shareholder register, and the industrial and commercial registration files; the investment certificate, the capital verification or bank vouchers; the evidence of marital joint property (marriage certificates, etc., used for pre-division of property); the pledge of equity, the agency holding agreement, and other materials of rights encumbrance. If the company conceals its operating and financial information, the party concerned may, in accordance with the regulations, request to review the accounting books or apply for an investigation order to obtain the relevant materials in the litigation. With a complete chain of evidence, one will have a solid foundation whether it is to contest the qualification or the valuation of the property.

Q3: How much does it cost to resolve a dispute over equity inheritance?

The litigation fees shall be accumulated in stages according to the corresponding value of the equity shares in accordance with the "Measures for the Payment of Litigation Fees" (effective from April 1, 2007), and shall be borne by the losing party; the appraisal fees shall be calculated separately according to the company's scale and workload; the attorney's fees shall be related to the subject matter and shall be subject to the entrustment contract. If the value of the disputed equity shares is high, the costs will correspondingly increase. It is recommended to first appraise the estimated value range and prioritize negotiating a discounted price, so as to keep the overall costs within a reasonable range.

Q4: How long does it take from filing a lawsuit to completing the change of registration?

The fastest path is negotiation. After reaching an agreement, it usually takes several weeks to handle the shareholder register and industrial and commercial changes. For litigation to confirm ownership rights, the first-instance ordinary procedure takes six months, and the simplified procedure takes three months. If an appraisal is involved, it will take an additional one to two months, and if the other party appeals, it will take about three more months. If the company refuses to cooperate after the judgment takes effect, it can apply for forced execution to handle the changes. Overall, it takes two to three months for a smooth process, but it often takes more than half a year for litigation. It is recommended to start the process as soon as possible and advance the negotiation simultaneously.

Q5: After the heir receives the equity or compensation, what specific steps should they take?

Five steps: First, check the articles of association and business registration files to confirm whether there are inheritance restrictions; Second, handle the notarization of inheritance rights or initiate litigation for shareholder qualification confirmation and inheritance disputes; Third, confirm the succession qualification or compensation plan in writing with the company and other shareholders; Fourth, complete the change of the shareholder register, amendment of the articles of association, and business registration changes; Fifth, for jointly owned marital property, conduct a preliminary division of assets first. Multiple inheritors should negotiate who will inherit and how to compensate, and formalize the agreement in writing. Maintain records throughout the entire process to avoid hidden risks caused by oral agreements.

The above answer is based on the judicial practice in Beijing. The adjudicative guidelines 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 relevant evidence, so as to avoid missing the statutory time limit.Legal services for inheritance·Attorney Yuan Hang·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. If you encounter disputes, please consult a practicing lawyer in time.