[Direct answer]It depends on who the counterparty of the put-call agreement is. If it's the target company, the repurchase or compensation is subject to the company completing the statutory capital reduction procedures and having distributable profits. The company cannot withdraw funds at will, and the founder is generally not liable. For agreements with the founder personally (which is the most common in practice), if the founder signs a personal repurchase obligation in writing, they will have to fulfill it with their personal assets if the deal fails, and the assets owned by their spouse may also be subject to enforcement. To isolate personal risks, it's crucial to clarify the responsibility subject, the scope of guarantees, and exit arrangements during the contract negotiation process.

1. Problem background and typical scenarios

When raising funds, investors required the founder to sign a personal guarantee. The founder thought, "Why should I be responsible for the company's affairs?" But in order to get the money, he still signed it. A few years later, when the performance failed to meet the targets, the repurchase clause was triggered, and the founder's personal property and deposits were frozen. The allocation of responsibility for the failure of the performance guarantee was predetermined at the moment of signing, but many people didn't understand the terms when they signed it.

II. Key points of contention

First, the three-tier structure of the responsible parties: the joint responsibility of the company, the founder personally, and the spouse. Second, the prerequisites for fulfilling the company's anti-betting agreement: capital reduction procedures and profit restrictions. Third, the effectiveness and interpretation boundaries of the personal joint and several provisions. Fourth, the implication of the spouse's property and the identification of joint debts.

III. Professional analysis by Henglue Lawyers

Based on Henglu Lawyer's experience in handling investment-based dispute settlements, the issue of personal liability can be clarified from three perspectives: **First Level**: Reviewing the liability subject provisions in the investment-based dispute settlement agreement. Typically, the agreement stipulates that the target company repurchases shares, the founder assumes joint and several guarantees, or directly undertakes the repurchase obligation. If only the company's stamp is affixed without the founder's signature, the founder is not held liable. If the founder signs a "personal joint and several liability" clause, the investor can directly pursue recovery from the founder if the company fails to fulfill its obligations. There is significant room for negotiation here: setting personal liability caps, excluding the spouse's assets, and limiting liability to equity are common concessionary clauses. **Second Level**: Rules for implementing investment-based dispute settlements with the target company. Repurchases and monetary compensation are not automatically enforceable upon signing: repurchases require completing a capital reduction procedure, and compensation requires available distributable profits. The likelihood of success for compensation claims when the company has no profits is low. This is the legal framework established by the Supreme People's Court's "Nine Civil Interpretations," which provides a statutory buffer zone for founders. **Third Level**: Spouse and family assets. Whether personal investment-based debts extend to the spouse is reviewed based on the rules governing marital joint debts: if the spouse signs and confirms the debt and the funds are used for family living expenses, they share joint liability. If the founder signs alone and the funds are used for company operations, the spouse is generally not liable, but the investor can still enforce the founder's share of the marital assets in enforcement proceedings. **Risk Management Advice**: - Assess the feasibility of achieving investment-based objectives before financing. - Have a lawyer explicitly outline the personal liability scope before signing. - For investors under repurchase pressure, proactively negotiate for extension periods, installment payments, or equity compensation. Passively waiting for a judgment will expose personal assets in full.

IV. Practical suggestions and legal basis

First, before signing the counter-bet document, check the statements of the responsible parties item by item and evaluate the personal joint and several provisions separately; Second, strive to limit the scope and maximum amount of personal liability, excluding the spouse's property and family housing; Third, immediately negotiate with the investors on the extension, installment, or debt-for-equity plan after the triggering of the buyback, and formalize the agreement in writing; Fourth, after being sued, review the company's reduction of registered capital and profit preconditions for the counter-bet and assert corresponding defenses. Main legal basis: Article 577 of the Civil Code of the People's Republic of China (effective from January 1, 2021) on breach of contract liability, and Article 1064 on marital joint debts; The "Notes on Civil and Commercial Judicial Work of the National Courts" (issued on November 8, 2019) regarding the performance rules of the counter-bet with the target company; The specific application shall be subject to the currently effective provisions.

5. Henglue Law Firm's Reminder

Three sentences on personal liability in a counter-bet agreement: When dealing with the company, there are prerequisites of capital reduction and profits; when dealing with individuals, once the agreement is signed, there's no way to escape responsibility; the personal joint and several provisions can negotiate the upper limit and exclude spouses; the signing process is the only negotiation window; when the repurchase triggers, first negotiate the extension of the repayment period to offset the debt; it's better to take the initiative to restructure rather than passively defend against lawsuits. For disputes involving counter-bet agreements, you can resolve them through legal means.Business and contract disputes in enterprisesWe provide a comprehensive solution for services, which includes the design of an equity financing structure that can be integrated into the overall plan.Company and commercial disputesFor the determination of joint debts of a couple, you can refer to the relevant provisions in the "Marriage and Family Code of the People's Republic of China".Marriage, family, and disputesFor inquiries about personal asset protection, please consult the relevant columnSpecial servicesTeam.

VI. Frequently Asked Questions

Q1: Only the company's official seal was stamped. Does the founder need to repay the debt personally?

In principle, it is not necessary. The subject of responsibility shall be determined by the signatory. If the founder has not signed the agreement or provided a personal guarantee, the company shall bear the obligation to perform the agreement; however, if the company is unable to fulfill its obligations, the investors will sue the founder and claim his/her joint and several liability for the breach of contract. This requires a case-by-case review.

Q2: If the company defaults on the repurchase payment agreed upon in the contract with the investor, does the company not have to pay it if it doesn't have the money?

It's not that there's no need to pay, but there are prerequisites for performance: the repurchase must complete the capital reduction process, and the compensation must have distributable profits; if the company enters liquidation, the investor's repurchase claims will be handled according to the liquidation priority, and the founder's personal liability will be judged according to the contractual terms.

Q3: If an individual signs a joint and several liability agreement, will the spouse's property be subject to enforcement?

Properties registered under the spouse's name and for which the spouse has not signed a counter-bet document cannot generally be directly enforced. The founder's share of the couple's jointly owned property can be enforced. If the property under the spouse's name is claimed as a joint debt, it shall be reviewed in accordance with Article 1064 of the Civil Code of the People's Republic of China.

Q4: If the betting target is not achieved, but it's mainly due to market changes, can I be exempt from liability?

It's difficult. Betting is essentially the allocation of uncertainties about the future. Market risks fall under the category of commercial risks and generally do not constitute grounds for exemption from liability. However, if the obvious force majeure or changes in circumstances reach the extent that the contractual purpose cannot be fulfilled, adjustments can be claimed on a case-by-case basis.

Q5: If a buyback has been triggered, how can I negotiate the most favorable terms?

Discuss with a solution: installment payments with guarantees, offsetting with part of the founding team's equity, and extending the performance observation period in exchange for exemption from some obligations; the scope of exemption and the arrangement for lifting the seizure must be specified in the written agreement, and verbal promises are not valid.

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 court 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 relevant evidence materials to avoid missing the statutory time limit.Corporate commercial legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is provided 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 case of disputes, please consult a practicing lawyer in a timely manner.