For various reasons, the phenomenon of equity holding is widespread in China. Due to the inconsistency between the actual and nominal investors, it often causes controversy. For a third party with whom there is a creditor's right and debt relationship, whether it can apply to the court to enforce the equity held on behalf of the shareholder is also a matter of concern.

1. Can the equity of nominal shareholders be enforced?

Creditors of nominal shareholders often encounter objections from actual contributors and even lead to enforcement objections. The Supreme People's Court and local courts have undergone an evolutionary process from dissupport to support.

(1) Early view: support enforcement

In the (2013) Min Er Zhong Zi No. 111 Judgment, the Supreme People's Court held that:

Shareholders registered in accordance with the law have the effect of publicity, while hidden shareholders do not have the legal effect of publicizing shareholders in the company's external relations, and they cannot fight against external creditors on the grounds of their agreement with the nominal shareholders.

(2) Later views: Do not support compulsory enforcement

However, in the (2015) Min Shen Zi No. 2381 ruling, the Supreme People's Court held that:

The legislative purpose of the principle of appearanceism in commercial law is to maintain transaction security, and its scope of application should be limited to third parties engaged in transactions with relevant subjects, that is, third parties who have equity transactions with nominal shareholders, except for those who have no trust interests.

(3) Analysis of the reasons for the evolution of views

The author believes that the change in the tendency of the Supreme People's Court is mainly based on the following reasons:

1. Article 25 of the Interpretation of the Company Law (III) affirms the rights of actual investors to enjoy the rights stipulated in the shareholding agreement, and restricts the exercise and disposal of equity by nominal shareholders.

2. The court held that a limited liability company has a personal relationship, and it is the main purpose of the law not to change the company's mature operating structure as much as possible without hindering the security of the transaction.

Therefore, in the case that the creditors of the actual contributor and the nominal shareholder are creditors of the nominal shareholders, the determination of the rights of the actual contributor can hinder the creditor's enforcement.

2. Can the rights and interests of actual investors be enforced?

(1) The nature of the actual contributor's rights

The actual contributor enjoys the rights stipulated in the contract in accordance with Article 25 of the Interpretation (III) of the Company Law, but there is no explicit provision on what this right includes. In addition to requiring nominal shareholders to give dividends to their distribution, it is generally believed that it should include the right to exercise voting rights and other company management rights in accordance with the instructions of actual investors.

However, the relationship between the actual contributor and the nominee shareholder cannot be applied to the theory of anonymous agency, because:

• The actual contributor no longer enjoys ownership of equity and capital contributions
• The actual contributor also does not enjoy the right of intervention of the nominal shareholder when he fails to perform his contractual obligations, but can only claim compensation for losses from the nominal shareholder
• The parties do not have the right of arbitrary termination in the agency relationship

Some scholars believe that the trust relationship between the actual investor and the nominal shareholder can explain the inconsistency between the anonymous agent to a certain extent, but there is no mature theory and law to clarify it.

(2) Scope of compulsory enforcement

What is not in dispute is that the actual contributor has a claim against the nominal shareholder based on the contract. According to the relevant provisions of the Civil Procedure Law:

• The people's court has the right to enforce the claims that are due, that is, it has the right to enforce the dividends that have reached the payment conditions

• However, the non-property part of the creditor's right shall not be enforced