Is it legal for shareholders to borrow money from the company?

Legal analysis: It is legal for shareholders to lend money to the company. As a legal person, the company itself has no property. All its property is formed by shareholders' investment in the company. Shareholders can lend money to the company after paying the registered capital in full. After the company borrows money from shareholders, it shall be recorded in the accounting books.

Legal basis: Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases.

Article 1 Private lending refers to the financing behavior among natural persons, legal persons and other organizations and among them.

Article 2 When a lender brings a lawsuit to a people's court, it shall provide such creditor's rights certificates as IOUs, receipts, IOUs and other evidence that can prove the existence of the legal relationship between lending and borrowing. If the creditor's rights certificate such as IOUs, receipts and IOUs held by the parties does not specify the creditor, and the party holding the creditor's rights certificate brings a private lending lawsuit, the people's court shall accept it. The defendant raised a factual defense against the plaintiff's creditor qualification. If the people's court considers that the plaintiff is not qualified as a creditor after trial, it shall rule to dismiss the prosecution.

Article 11 The people's court shall support the non-governmental loan contract concluded between legal persons or other organizations for the needs of production and operation, except under the circumstances stipulated in Article 52 of the Contract Law and Article 14 of these Provisions, if the parties claim that the non-governmental loan contract is valid.