In the era of knowledge economy, the phenomenon of technology investing in enterprises is becoming more and more common, but because the ownership and value of non-patented technologies are difficult to determine, such capital contribution disputes are also very common. Is the contribution of non-patented technology legally effective?

1. Can non-patented technology be registered as capital contribution without evaluation?

There is a view that non-patented technology must be evaluated before it can be registered as a capital contribution, based on the second paragraph of Article 27 of the Company Law, which states that "non-monetary property as capital contribution shall be assessed and valued, and the property shall not be overvalued or undervalued". However, this view confuses the difference between subscribed and fully paid capital contributions.

First of all, the first paragraph of Article 27 of the Company Law only requires that the property as a capital contribution can be valued in currency and transferred in accordance with the law, while non-patented technology can be appraised by an appraisal agency and transferred through an agreement, which belongs to such property.

Secondly, Article 29 of the Company Law stipulates: "After the shareholders have fully recognized the capital contribution stipulated in the articles of association, the representative designated by all shareholders or the agent jointly entrusted by the company shall submit the company registration application, articles of association and other documents to the company registration authority to apply for establishment and registration", Article 20, paragraph 2 of the "Regulations on the Administration of Company Registration" and the documents published by the Changsha Municipal Bureau of Industry and Commerce for the application for the establishment of a limited company shall be submitted to the company registration authority. Excludes appraisal or capital verification reports.

Therefore, it is legal to subscribe for capital contribution with non-patented technology and does not need to be evaluated at the time of establishment, but if the shareholders have not passed the evaluation and capital verification of the non-patented technology within the period specified in the articles of association, it should be deemed that they have not fully fulfilled their capital contribution obligations and bear corresponding responsibilities.

2. The agreement between the investor to stipulate the value of the non-patented technology

Although non-patented technology can be registered as capital contribution through appraisal, the investor may not evaluate the agreed value due to various considerations. In order to circumvent the provisions of the Company Law, other shareholders contribute capital in cash, and the agreement recognizes the value and nature of the non-patented technology.

Nature of the agreement

It is generally believed that the agreement between shareholders is the scope of the debt of the contract, which is only effective between the parties, but China does not recognize the causelessness of the change of real rights.

The contributor of non-patented technology is also registered as a cash subscription contribution, and the agreement between it and the cash contributor is to obtain the rights enjoyed by the cash contributor due to the capital contribution in consideration for the performance of contractual obligations. When the cash contributor has paid the capital contribution of both parties, but the non-patented technology investor has not performed in accordance with the contract, the relationship between the two parties refers to Article 24 of Interpretation (3) of the Company Law according to the case heard by the Shanghai Minhang District People's Court listed in the book "Integration of Views on the Court's Trial of Equity Transfer Cases" written by Jia Mingjun and Han Lu Regarding the relationship between the actual contributor and the nominal contributor. The Changsha Intermediate People's Court (2017) Xiang 01 Min Zhong No. 2328 Judgment also stated that there was no sufficient evidence to prove that the shareholder contributed capital in accordance with the articles of association or through the performance of the contract as the consideration for the capital contribution of others on behalf of others, and could only be recognized as a nominal contributor.

Obviously unfair or fraudulent?

In the process of performing the above contract, if the cash contributor has doubts about the value of the non-patented technology and entrusts an appraisal, and the appraisal price is very different from the agreed price, can the cash contributor claim to cancel the contract on the grounds of obvious unfairness or fraud?

First, according to Article 147 of the General Provisions of the Civil Code, a revocable and obviously unfair contract not only requires that "the interests of the parties are obviously unbalanced", but also should have the characteristics of "one party taking advantage or taking advantage of the other party's lack of experience". Although the cash funder is not a researcher in the field of the non-patented technology, most of them will investigate, collect information or refer to the opinions of other professionals on the technology before investing, so in judicial practice, it is generally not considered that there is a situation where it is obviously unfair due to lack of experience, as in the Supreme People's Court (2015) Zai Zhong Zi No. 2 Judgment.

Secondly, according to Article 143, Paragraph 2 of the General Provisions of the Civil Code, "fraudulent acts" should have "one party deliberately informs the other party of false information, or deliberately conceals the true situation". In fact, in the absence of evaluation, the investor of non-patented technology can only determine the external objective content such as technical characteristics, and the judgment of value is subjective estimation, which the cash investor knows. Therefore, it is very difficult for cash contributors to claim revocation on the grounds of fraud when the contract conditions have been drafted and fulfilled by both parties.