Application Dilemma of and Solution to the New Capital Contribution Liability PatternComment on Supplementary Liability after Transfer of Non-expired Capital Contribution Equity

The Revised Draft of the Company Law (second and third drafts) stipulates that after the transfer of non-expired capital contribution equity, the transferor shall bear supplementary liability, if transferee fails to pay on time. This supplementary liability is a new form of capital contribution liability in the legislation and judicial practice of company law in China. The application of this supplementary liability will increase the contracting cost of equity transfer, the supervision cost of the transferor and the cost of realizing rights. The possible ways to solve this dilemma include: to replace the supplementary liability model with other liability models, and to improv the existing supplementary liability. As the shareholder’s contribution obligation is not only an obligation in contract law, but also an obligation in organization law, it is necessary to take into account the relevant legal rules and principles of organization law and contract law. Considering the balanced protection between the company’s capital adequacy and the freedom of equity transfer, the internal harmony of the company law’s capital liability system, and the effect of the company’s internal incentive rules.The replacement path is not feasible, and an improvement path should be adopted. The specific improvement measures include allowing internal contract between the transferor and the transferee, limiting the transferor’s liability and reducing the procedural burden of rights realization.