[Direct answer]In the Beijing area, after a shareholder's death, the company's articles of association may impose restrictions on the inheritance of shareholder status, but the property rights in the equity shall, in principle, still be inherited by the legal heirs. 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 may inherit the shareholder status, unless otherwise provided in the company's articles of association; the basic rules of inheritance are set out in Article 1122 of the Civil Code of the People's Republic of China. The inheritors should first check whether there are any restrictive provisions in the articles of association, and then choose to claim the confirmation of shareholder status or compensation for the equity. If no agreement can be reached, they should promptly file a lawsuit to avoid delaying the realization of their rights due to a stalemate in corporate governance. For more details, please refer to the following link:Legal services for inheritance and family property division.

I. Problem background and typical scenarios

After the death of shareholders of small and medium-sized companies and family businesses, the disposition of equity often triggers conflicts between families and companies. Typical scenarios include: the articles of association stipulate that shareholder qualifications cannot be inherited or must be approved by other shareholders before they can be inherited; the heirs demand to fully obtain shareholder status and participate in the operation; other shareholders claim that only compensation at a discounted price or payment of consideration is allowed; and the large number of heirs leads to the dispersion of equity and the company falling into a governance impasse. In the judicial practice of Beijing courts, such cases are often intertwined with lawsuits for the confirmation of shareholder qualifications and the effectiveness of company resolutions. It is necessary to review the inheritance relationship and to delineate the boundaries of corporate autonomy. Improper handling may easily harm the heirs' rights and operational stability at the same time. The family background of these cases can be taken into account in the process of handling them.Divorce litigation and family dispute resolution servicesCoordinate and organize things in an orderly manner.

II. Key points of contention

There are three main points of contention. Firstly, the scope of the effectiveness of the restrictive provisions in the articles of association: whether the restrictions are clear, whether they only restrict eligibility without depriving property rights, and whether the provisions were approved by all shareholders when they were formulated, which directly determine what the heirs can claim. Secondly, the scope of heirs and the determination of eligibility: how to handle issues such as spouses, minor children, and conflicts with public office or employment qualifications, which require judgment in combination with the company's articles of association and employment qualification regulations. Thirdly, the basis for valuation compensation: the evaluation time point, the net asset valuation, and whether to deduct liabilities and undistributed profits, often become the core of the tug-of-war between the two parties. For issues involving equity transfer and corporate governance, reference can be made to the relevant provisions.Business and contract dispute services for enterprises.

III. Professional analysis by Henglue Lawyers

Henglue Law Firm has handled a number of representative cases in the field of inheritance disputes. Taking one of the will inheritance disputes as an example: In July 2023, Wang *5 drafted a self-written will, stipulating that the 88-square-meter house located at No. 1506, Fengtai District, under his name would be inherited by his spouse, Zhou Min, but with conditions attached — after selling the house, Wang *1 would be paid 400,000 yuan, and his siblings, Wang *2 and Wang *3, would each be paid 300,000 yuan, totaling 1 million yuan. After Wang *5 passed away in September 2023, the three siblings sued for the immediate auction of the house and the division of the proceeds. Zhou Min entrusted Attorney Yuan Hang from Beijing Henglue Law Firm to defend against the lawsuit. The attorney adopted a "two-step" strategy: First, he consolidated the formal validity of the self-written will in accordance with Article 1134 of the Civil Code; Second, he submitted income certificates and a property valuation report of approximately 4.5 million yuan to demonstrate that selling the house at a low price in the short term would harm the interests of all parties, and he actively proposed a "first transfer of ownership and deferred payment" plan. The Fengtai District Court ruled in 2024 that the house would be inherited by Zhou Min and the transfer of ownership would be completed before January 14, 2025. Zhou Min would pay a total of 1 million yuan to the three plaintiffs no later than July 14, 2029. This case was handled by Beijing Henglue Law Firm.Yuan HangThe attorney (practice license number: 11101202110286151, subject to the document issued by the judicial administrative organ) acts as the agent. Although this case involves the inheritance of real estate through a will, the judicial philosophy of "respecting the testator's disposal intention, taking into account the practical performance, and ensuring that the heirs' property rights and interests are not lost" is consistent with the handling logic of shareholder succession disputes, where "the qualification can be restricted by the articles of association, but the property rights and interests must be protected". Henglue Law Firm has also handled many cases involving the division of statutory inheritance shares, buying a house under another's name, and disputes over the validity of wills. For cases involving the disposition and valuation of real estate, reference can also be made to relevant provisions.Real estate sales and construction project services.

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), which governs the succession of shareholder qualifications and the exceptions to the articles of association, as well as Article 1122 of the Civil Code of the People's Republic of China (implemented on January 1, 2021), which defines the scope of inheritance, Article 1123 of the Civil Code, which stipulates the order of succession, and Article 1133 of the Civil Code, which governs the disposition of personal property by will. Practical suggestions: 1. First, retrieve the company's articles of association and internal business records to confirm the content, formation time, and effectiveness of the restrictive clauses. 2. Second, secure the death certificate, proof of kinship, investment certificates, and shareholding certificates. 3. Third, send a written letter to the company and other shareholders, asserting the right to succession or seeking compensation in the form of a discounted payment, and retain the relevant evidence. 4. Fourth, if no agreement can be reached, initiate a lawsuit for the confirmation of shareholder qualifications or a lawsuit for performance of obligations, and, if necessary, apply for an appraisal and property preservation. For cases involving the payment of a discounted amount, the next steps can be taken accordingly.Creditor-debtor relations and enforcement case services.

5. Henglu Law Firm's Reminder

The articles of association can be amended, and it's not advisable for heirs to wait and see - once the shareholding status and articles of association provisions change, the difficulty of asserting rights will increase. Remember: the articles of association restrict shareholder qualifications, but it doesn't mean that the equity property rights will be confiscated. Discounted compensation is the last resort; if there are disputes over the validity of the articles of association provisions, it's better to confirm the rights through litigation in time rather than seize them by oneself. In the trial of corporate disputes in Beijing, the timing of evaluation and preservation has a significant impact on the outcome. If you need an evaluation of a specific case, you can seek help from professionals.Special services and other case-related servicesObtain cross-team support.

VI. Frequently Asked Questions

Q1: After the shareholder's death, can the heir successfully claim the shareholder status?

It all depends on the company's articles of association. If the articles of association do not impose any restrictions, according to Article 90 of the Company Law (effective July 1, 2024), the successor may claim to inherit the shareholder status, and the court will usually support such claims. However, if the articles of association explicitly restrict or prohibit the inheritance of shareholder status, the matter shall be handled in accordance with the articles of association. Nevertheless, the property rights corresponding to the shares will still be protected by law, and the successor may claim dividends, transfer consideration, or compensation in the form of a discounted value, which will generally not fail. Before suing, it is necessary to check the original text of the articles of association and the records of previous amendments, and then determine whether to claim the shareholder status or the discounted value. Properly formulating a strategy is a prerequisite for winning the lawsuit.

Q2: What evidence is needed to claim inheritance of equity rights?

Including death certificates and proof of kinship (confirming the identity and scope of the heirs), company charters and archives of industrial and commercial registration amendments, shareholder registers and investment certificates, stock certificates and investment transaction records, shareholders' resolutions involving restrictive clauses, and the company's financial statements and appraisal materials when claiming compensation at a discounted price. The evidence should be organized around three points: "establishment of the inheritance relationship + the fact of shareholding + the content of the charter". If the industrial and commercial archives cannot be retrieved by oneself, one can apply to the court for retrieval after suing. The more complete the materials are, the more supported the claim will be.

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

The litigation fees are calculated according to the "Measures for the Payment of Litigation Fees" (implemented on April 1, 2007) and accumulated in stages based on the amount of the subject matter. For equity-related cases, the fees are based on the value of the equity or the amount of the request for discounted value, and are borne by the losing party or shared proportionally. Lawyer's fees are charged on a per-case basis, based on the amount of the subject matter, or on an hourly basis, subject to the terms of the contract. There is no unified government pricing for lawyer's fees. For cases requiring appraisal, appraisal fees are paid separately. It is recommended to estimate the value of the equity before filing a lawsuit, and determine the amount of the request after weighing the benefits and costs of the litigation to avoid paying excessive fees for minor disputes.

Q4: How long does a lawsuit for equity inheritance typically take?

The first-instance ordinary procedure shall be concluded within six months, and the summary procedure within three months; where it is necessary to conduct an audit or evaluation of the equity value, the appraisal period shall not be included in the time limit for trial, and the cycle will be extended accordingly; if one party appeals, the second-instance trial will generally take three months. In cases involving corporate governance deadlocks, disputes over the effectiveness of resolutions and liability for harming the company's interests may also arise, with the overall process taking years. It is recommended to preserve evidence and the current status of the equity as soon as possible to prevent the other party from transferring the equity or amending the articles of association during the litigation, which will increase the difficulty of enforcement.

Q5: If you find that the articles of association restrict inheritance, what should the heir do first?

The process can be divided into four steps: First, retrieve the articles of association and the internal corporate documents to confirm the content of the restrictive clauses, the time of their establishment, and any defects in their effectiveness; Second, sort out the scope of heirs and their respective intentions to avoid internal family disputes hindering external claims; Third, send a written letter to the company and other shareholders, clearly stating the claim for succession of shareholder status or compensation in the form of a discounted price, and retain the delivery receipt; Fourth, if no agreement is reached within the time limit, promptly initiate a lawsuit to confirm shareholder status or a lawsuit for compensation, and, if necessary, apply for property preservation simultaneously to prevent the equity from being disposed of or the company's assets from being transferred.

The above answer is based on the judicial practice in the Beijing area. The adjudication opinions 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, 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 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.