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Abstract
This paper focuses on the inheritance procedure of shareholders' qualification in limited liability companies, and discusses the key links, problems and solution paths in the inheritance process through the combing of relevant laws and regulations such as the Company Law and the Civil Code and the analysis of practice cases, aiming to provide theoretical support for the improvement of corporate governance and the protection of the rights and interests of the heirs.
Limited liability companies are characterized by both partnership and capitalization, and the inheritance of shareholders' qualification is complicated and sensitive. When a shareholder passes away, whether his/her heirs can successfully obtain the shareholder qualification is related to the stability of the company's operation and the balance of interests of all parties. With the growth of economic development and the demand for inheritance of family business, it is more and more urgent to clarify the procedure of succession of shareholders' qualification. From the legal point of view, the succession of shareholder qualification involves the synergistic application of multiple laws and regulations, and accurate understanding and application of legal provisions is the key to solving the problem.

First, the succession of shareholders qualification related laws and regulations
Limited liability company shareholder qualification succession is mainly based on the “Company Law of the People's Republic of China (Revised in 2023)” and “Civil Code of the People's Republic of China” of the relevant provisions. After the death of a natural person shareholder, his legal heirs can inherit the qualification of shareholders, except as otherwise provided in the articles of association. In the process of inheritance, it is necessary to consider the property right and identity right attributes of the shareholders' qualification and follow the relevant provisions of the Articles of Association.
Article 90 of China's Company Law provides: “After the death of a natural person shareholder, his legal heirs may inherit the shareholder qualification; however, unless otherwise provided for in the articles of association.” This provision recognizes the right of heirs to inherit the qualification of shareholders, and at the same time gives the company's articles of association a great deal of autonomy, so that the company can restrict or refine the conditions of inheritance based on the consideration of humanity. For example, some high-tech companies, in order to ensure the team's technical research and development strength and cooperation tacit understanding, the articles of association agreed that the heir to the shareholders need to have a professional and technical background in order to inherit the qualification. From the legislative intent, the provisions of this article not only to protect the property rights and interests of the heirs, but also respect for the company's autonomy will, to maintain the basis of human cooperation.
In the case of Qidong City So-and-so Real Estate Development Co., Ltd, Zhou Mou Shareholder Qualification Confirmation Dispute [(2018) Supreme Court Civil Terminal No. 88], the Supreme Court held that Article 75 of the Company Law stipulates that “after the death of a natural person shareholder, his lawful heir may inherit the shareholder qualification; however, except as otherwise provided in the articles of association of the company.” According to this provision, the Company Law grants the heirs of natural person shareholders the right to inherit the qualification of shareholders, but at the same time, it also allows the articles of association of the company to make other arrangements for the disposal of the equity of the deceased shareholders. Therefore, to determine whether Zhou Mou has the right to inherit his father Zhou Mou Mou's shareholder qualification, the key lies in the interpretation of the articles of association of a certain company has made exceptions to the inheritance of shareholder qualification.
In this case, a company since 2007 has experienced five times the articles of association amendments. Since 2009, the articles of association deleted the heir can inherit the qualification of shareholders, and clearly stipulates that the shareholders shall not transfer the equity to people other than shareholders, can reflect a certain company has a high degree of personalities and closed characteristics. Secondly, before Zhou's death, the third paragraph of Article 7 of the Articles of Association of January 10, 2015 had already made provisions for the handling of the equity of the deceased shareholders, although it was not clear that the shareholder qualification of the deceased shareholders could not be inherited, but in combination with the characteristics of a certain company's high degree of personhood and closedness reflected in the Article, as well as the expression that the deceased shareholders should handle the transfer of the equity in a timely manner, it could be concluded that the exclusion of succession of the shareholders' qualification was a part of the Articles of Association. The true meaning of the expression. Again, before the death of ZhouMouMou, shareholders YuShangXin, CaoMinHua in the separation of equity transfer, no longer a certain company shareholders of record, a certain company also in accordance with the articles of association to pay for the period of holding equity return. This example also further confirms the practice that shareholders are no longer entitled to the qualification of shareholders after leaving the company in accordance with the provisions of the articles of association. Therefore, looking at the evolution of the articles of association of a certain company, and combined with a certain company to leave the company's practice of withdrawal of shares, this case should be recognized that the articles of association of the company has been excluded from the inheritance of the qualification of the shareholders.
In determining the scope of heirs, it is necessary to rely on the relevant provisions of the Succession Part of the Civil Code. Article 1127 of the Civil Code provides that inheritance shall be in the following order: (i) first order: spouse, children, parents; (ii) second order: siblings, grandparents, grandparents. When inheritance begins, the first-order heirs shall inherit, and the second-order heirs shall not inherit; if there are no first-order heirs to inherit, the second-order heirs shall inherit. The children referred to in this Part include legitimate children, illegitimate children, adopted children and stepchildren in a dependent relationship. Parents, as referred to in this Part, include biological parents, adoptive parents and step-parents in a relationship of dependency. The siblings referred to in this part include siblings of the same parents, siblings of the same father and mother or of the same mother and father, adopted siblings, and step-siblings with a dependency relationship. This provision clarifies the scope of legal heirs and provides the basis for the identification of heirs in the succession of shareholders.

II. Commencement of the procedure for succession to shareholders' qualifications
The commencement of the procedure of succession of shareholders' qualification takes the fact of death of the decedent as the starting point, and usually determines the time on the basis of legal documents such as the death certificate, which is the legal prerequisite for the succession of shareholders' qualification, and the rights and obligations related to the succession take effect retroactively from this point onwards. For example, in the case of a company, the shareholder Zhang died of sudden illness on July 5, 2024, and the death certificate issued by the hospital specifies the time, and his family members also rely on this time node to start the subsequent equity inheritance process, and claim their rights to the company.From the legal basis, Article 1121 of the Civil Code provides that the succession starts from the death of the decedent, which provides a clear legal basis for the determination of the beginning of the succession.

III. Definition of the scope of heirship of shareholders
According to the Civil Code, the legal heirs, including spouse, children, parents, first-order heirs, when there is no first-order heirs, the second-order heirs. At the same time, probate succession takes precedence. If the decedent has a legally valid will designating specific legal heirs to inherit the equity, his/her will should be respected to open the equity succession process. In the case of a company, the shareholder Li Mou made a notarized will before his death, designating his sister Li Moujia to inherit part of his shareholding in the company, although Li Moujia is not the first-order legal heir, but by virtue of this valid will successfully enter the shareholding inheritance process, triggering a series of consultation and decision-making process within the company.Article 1123 of the Civil Code provides that, after the beginning of the succession, according to the legal succession; with a will, according to the testamentary succession or bequest; with a bequest support agreement, according to the agreement, which clearly determines the priority of the testamentary succession in the succession of the shareholders' qualification.
In the process of inheritance, it is necessary to consider the property right and identity right attributes of the shareholders' qualification and follow the relevant provisions of the Articles of Association.
Article 90 of China's Company Law provides: “After the death of a natural person shareholder, his legal heirs may inherit the shareholder qualification; however, unless otherwise provided for in the articles of association.”
This provision recognizes the right of heirs to inherit the qualification of shareholders, and at the same time gives the company's articles of association a great deal of autonomy, so that the company can restrict or refine the conditions of inheritance based on the consideration of humanity.For example, some high-tech companies, in order to ensure the team's technical research and development strength and cooperation tacit understanding, the articles of association agreed that the heir to the shareholders need to have a professional and technical background in order to inherit the qualification.From the legislative intent, the provisions of this article not only to protect the property rights and interests of the heirs, but also respect for the company's autonomy will, to maintain the basis of human cooperation. In the case of Qidong City So-and-so Real Estate Development Co., Ltd, Zhou Mou Shareholder Qualification Confirmation Dispute [(2018) Supreme Court Civil Terminal No. 88], the Supreme Court held that Article 75 of the Company Law stipulates that “after the death of a natural person shareholder, his lawful heir may inherit the shareholder qualification; however, except as otherwise provided in the articles of association of the company.”According to this provision, the Company Law grants the heirs of natural person shareholders the right to inherit the qualification of shareholders, but at the same time, it also allows the articles of association of the company to make other arrangements for the disposal of the equity of the deceased shareholders.Therefore, to determine whether Zhou Mou has the right to inherit his father Zhou Mou Mou's shareholder qualification, the key lies in the interpretation of the articles of association of a certain company has made exceptions to the inheritance of shareholder qualification. In this case, a company since 2007 has experienced five times the articles of association amendments.Since 2009, the articles of association deleted the heir can inherit the qualification of shareholders, and clearly stipulates that the shareholders shall not transfer the equity to people other than shareholders, can reflect a certain company has a high degree of personalities and closed characteristics.Secondly, before Zhou's death, the third paragraph of Article 7 of the Articles of Association of January 10, 2015 had already made provisions for the handling of the equity of the deceased shareholders, although it was not clear that the shareholder qualification of the deceased shareholders could not be inherited, but in combination with the characteristics of a certain company's high degree of personhood and closedness reflected in the Article, as well as the expression that the deceased shareholders should handle the transfer of the equity in a timely manner, it could be concluded that the exclusion of succession of the shareholders' qualification was a part of the Articles of Association.The true meaning of the expression.Again, before the death of ZhouMouMou, shareholders YuShangXin, CaoMinHua in the separation of equity transfer, no longer a certain company shareholders of record, a certain company also in accordance with the articles of association to pay for the period of holding equity return.This example also further confirms the practice that shareholders are no longer entitled to the qualification of shareholders after leaving the company in accordance with the provisions of the articles of association.
Therefore, looking at the evolution of the articles of association of a certain company, and combined with a certain company to leave the company's practice of withdrawal of shares, this case should be recognized that the articles of association of the company has been excluded from the inheritance of the qualification of the shareholders.
In determining the scope of heirs, it is necessary to rely on the relevant provisions of the Succession Part of the Civil Code.Article 1127 of the Civil Code provides that inheritance shall be in the following order: (i) first order: spouse, children, parents; (ii) second order: siblings, grandparents, grandparents.When inheritance begins, the first-order heirs shall inherit, and the second-order heirs shall not inherit; if there are no first-order heirs to inherit, the second-order heirs shall inherit.The children referred to in this Part include legitimate children, illegitimate children, adopted children and stepchildren in a dependent relationship.

V. Promotion of internal procedures of the company for the succession of shareholders
(I) Company management should fulfill the obligation of notification
After the company management learns the information of the death of the shareholder, it should timely notify the heirs and other shareholders in writing, open the negotiation process of inheritance, and provide the company's finance, operation and other necessary information to assist in the handling of inheritance matters, and the company may be held liable for the damage caused to the heirs by the failure to notify the heirs after the expiration of the period.In the case of a company, after the death of shareholder Sun Mou, the company management did not notify the heirs for nearly a month due to the poor internal transition, resulting in the heirs missing an important shareholders' meeting decision-making, and the rights and interests of the heirs were damaged. After negotiation, the company gave certain economic compensation and accelerated the succession process, highlighting the importance of timely fulfillment of the notification obligation. Although the Company Law has not made clear and detailed provisions on the duty of notification, based on the principle of honesty and credit in civil law and the concept of protecting the legitimate rights and interests of the heirs, the company has an obligation to notify the heirs in a timely manner, and may be liable for damages if it violates the law.

(ii) Resolution of the shareholders' meeting of the company on succession matters
The company shall convene a shareholders' meeting on the successor's eligibility to become a shareholder, vote in accordance with the articles of association, and pass a resolution by a majority or a specific percentage of votes to accept the successor to become a new shareholder or reject its eligibility in accordance with the articles of association (if the articles of association have restrictive clauses), with the resolution process and results recorded in the records to guarantee the procedural propriety.For example, in the case of a company, the shareholder Zhou died and his heir applied for succession to the shareholder qualification, the company convened a shareholders' meeting to vote in accordance with the articles of association, because the articles of association stipulated that the succession needed to be passed by more than two-thirds of the votes, the final vote was not proportional, and the heir failed to obtain the qualification of the shareholders, but the whole process was in accordance with the rules and regulations and transparent, and all the parties accepted the results. Article 66 of the company law provides that the shareholders' meeting of the proceedings and voting procedures, in addition to the provisions of this law, by the articles of association. (A) the deceased shareholder will review the validity of the will Deceased shareholders who have left a will on the disposition of their equity, the validity of the will needs to be examined.

As the key basis for the designation of the succession of shareholders qualification of the will, need to strictly review the form and substance of the elements.
Formally, according to the relevant provisions of the Civil Code, a self-written will shall be written by the testator with his own handwriting and signature, indicating the year, month and day; a will written on behalf of a testator shall be witnessed by more than two witnesses, and shall be signed by the testator, the testator and other witnesses, indicating the year, month and day; a printed will shall be witnessed by more than two witnesses.The testator and witnesses shall sign each page of the will, indicating the year, month and day; wills made in the form of audio and video recordings shall be witnessed by the presence of two or more witnesses.The testator and witnesses shall record their names or likenesses, as well as the year, month and day in the audio-visual recording; a notarized will shall be processed by the testator through a notary public.In essence, the testator needs to have full capacity for civil behavior when making the will, with true expression of meaning, without coercion, deception and other circumstances, to ensure that the equity flows according to his true will.

Such as in a company case, shareholder Zhao's children of Zhao's self-written will doubt that the handwriting does not look like and no witness signature.
After the handwriting identification was confirmed to be written by Zhao himself, and combined with the evidence of Zhao's health and mental state at the time of making the will, the will was found to be valid, and the heirs' right to inherit the shareholders' qualification according to the will was safeguarded.
Article 143 of the civil code provides that a will made by a person without civil capacity or with limited civil capacity is invalid.A will must express the true will of the testator, and a will made under fraud or duress is invalid.A forged will is invalid.If a will has been tampered with, the tampered content is invalid, which provides comprehensive legal guidelines for the review of the validity of wills. (ii) Determination of the share of equity to be inherited
Based on the company's business registration, shareholders agreement, articles of association and other information accounting decedent's shareholding, in the event of equity holdings, capital increase and other complexities, the need to synthesize the evidence of all parties to clarify the true ownership, to ensure that the heir share of inheritance is accurate and unambiguous.
For example, in the case of a company, the decedent Chen Mou had 30% of the company's equity under his name, but later found that Chen Mou had held 5% of the equity on behalf of a friend and had a proxy agreement, after detailed accounting, finally confirmed that his heirs could inherit the real equity of 25%, avoiding the share misrecognition in the equity inheritance disputes.In the case of equity holding, “the supreme people's court on the application of the company law of the People's Republic of China > a number of issues of the provisions of (3)” article 24, the limited liability company's actual and nominal contributors to enter into a contract, agreed to be funded by the actual contributor and enjoy the rights and interests of the investment, the nominal contributor for the nominal shareholders, the actual contributor and the nominal shareholder of the contract validity of disputes, such as the absence of legal provisions of invalid circumstances, the people's court should beInvalid situation, the people's court shall find the contract is valid, which provides a judicial basis for dealing with the equity share in the equity share.[...]  
In terms of cross-border succession, although there are some principles of private international law applicable in China, there is a lack of detailed rules for cross-border succession of shareholders' qualifications. In the future, it is necessary to combine the prevailing international practice and the actual situation in China to improve the relevant rules of law, enhance the operability and certainty of the law, and appropriately solve the disputes of cross-border succession.


In summary, the succession procedure of shareholders' qualification of limited liability company is the key puzzle of the company's legal system, which needs to accurately grasp the laws and regulations related to shareholding and succession, and strictly follow the relevant provisions of the Company Law and the Civil Code, and be carried out in accordance with the specific requirements of the company's articles of association. At the same time, the successor shall promptly apply for the relevant change registration procedures to ensure that his/her legally inherited shareholders' qualification can be recognized and exercised.