Neglect of liquidation duties by limited company shareholders – Law.asia

Limited liability of shareholders is an important feature of modern companies. Article 3.1 of the Company Law provides that the liability of a shareholder shall be limited to the amount of their capital contribution/the number of their subscribed shares. However, under special circumstances, such as when a shareholder neglects to fulfil liquidation obligations, resulting in failure to liquidate the company due to the loss of company property, the limited liability system may not suffice.

In the past decade, many changes have been made to the judicial practice of determining the neglect to fulfil liquidation obligations and responsibilities by shareholders in limited liability companies.

Early attitudes