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Case Handling Note 18: Can shareholders conduct audits of non-profit legal persons (such as hospitals and schools)?

Release Time:2022-04-15 Topic:Legal person provides false accounts to shareholders for audit Reading:127 Navigation:Stock Liao information > Current Events > Case Handling Note 18: Can shareholders conduct audits of non-profit legal persons (such as hospitals and schools)? phone-reading

Summary of the case: AB and AB jointly established a company in 2010 to engage in external wood products business. AB holds 50% of the shares, and B acts as the legal representative of the company. Because the two of them did not have a sense of compliance in the early stage, A was responsible for developing the market, and at the same time, A was responsible for the payment of the order payment before delivering it to B. B was responsible for supervising production management and had the right to develop business externally. , During the period from 2010 to 2011, after AB's year-end settlement, it was found that the company lost money. A believed that there was a problem with the account, so AB and AB re-agreed that A was responsible for all receipts, and then transferred to B in a unified manner, and B was responsible for all expenses, but in 2012 The annual settlement is still a loss. According to this, A believes that B may misappropriate the company's funds, so he asks B to reconcile the accounts, but B refuses to reconcile.

Case question: If AB establishes a private non-profit legal entity, can A claim the right of inspection?

Case Answer:Yes. Although Article 2 of the "Company Law" clearly stipulates that the term "company" in this Law refers to limited liability companies and joint stock limited companies established within the territory of China in accordance with this Law, the scope of application of the shareholders' right to know should also follow the provisions of this article. But this does not mean that shareholders in non-profit legal persons have no right to know.

For example, in the case of Yangzhou Intermediate People’s Court (2018) Su 10 Min Zhong No. 1528, although the first instance held that the enterprise is a non-profit legal person and should not apply the relevant provisions of the Company Law, The shareholder's right of inspection was not supported, but the second-instance revised judgment still recognized the shareholder's right of inspection.

The court of first instance held that:Wang Shuzhen believed that he was a shareholder of Jiangdu Yimin Hospital and could exercise the shareholder's right to know and had the right to request Jiangdu Yimin The hospital provides accounting financial reports and accounting books for its inspection and copying, and the legal basis for exercising the shareholder's right to know is to refer to Article 33 of the "Company Law of the People's Republic of China". However, the "Company Law of the People's Republic of China" clearly stipulates the application scope of the shareholder's right to know, and the legal person private non-enterprise unit is not within the scope of application of the shareholder's right to know. Now Jiangdu Yimin Hospital is a private non-enterprise unit in the form of a legal person. Therefore, Wang Shuzhen's claim to Jiangdu Yimin Hospital for the right to know has no legal basis.

The court of second instance held that:Article 87 of the General Principles of the Civil Law stipulates: "It is established for public welfare or other non-profit purposes, and no capital contribution shall be made. A legal person that distributes profits obtained by a person, founder, or members is a non-profit legal person. Non-profit legal persons include public institutions, social organizations, foundations, social service organizations, etc." Article 92, paragraph 1, stipulates: "Having a legal person Condition, foundations, social service organizations, etc. established with donated properties for public welfare purposes, have been registered and established in accordance with the law, and have obtained the status of a legal person for donation. The legal person who donated should give timely and truthful answers.” Jiangdu Yimin Hospital is a social organization engaged in non-profit social service activities. It was registered and established by the Civil Affairs Bureau of Jiangdu District, Yangzhou City, and received donations. Legal personality; Wang Shuzhen is the organizer and the donor, and has the right to inquire about the use and management of the donated property from Jiangdu Yimin Hospital. 2. According to the 2016 Articles of Association of Jiangdu Yimin Hospital, Wang Shuzhen also has the right to understand the unit's operating and financial status, and has the right to consult the unit's financial and accounting reports.

In summary, non-profit legal person shareholders have the right to know, and if there is a reasonable agreement on the scope of the right to know, they should follow the agreement, and if there is no agreement, refer to the "Company Law".

Links to Laws: "People's Republic of China"General Provisions of the Law, Articles 87, 92, and 94 of the Civil Code; Article 2 of the Company Law

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Label group:[shareholder] [law] [Legal person shareholder

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