CHINA: An Introduction to Dispute Resolution: Litigation (PRC Firms)

Changes Brought by the New Company Law : Corporate Control Disputes

On 1 July 2024, the newly revised “Company Law of the People’s Republic of China” (the “New Company Law”) officially came into effect, marking the second revision of the law since its original enactment in 1993. As the New Company Law has now been in effect for nearly a year, we hope to approach it from the perspective of corporate control disputes and explore the safeguards the New Company Law offers in the face of control struggles for shareholders or the company itself.

Strengthening a Shareholder’s Right to Know: The Battle for Information

In corporate control disputes, accessing and understanding company information is crucial for shareholders to formulate strategies and exercise rights. The New Company Law further strengthens shareholders’ right to know:

On one hand, the New Company Law expands the scope of shareholders’ right to information. For limited liability companies, the revisions include: first, an expanded scope of documents shareholders may inspect and copy, now explicitly including the register of shareholders; second, accounting vouchers have been added to the list of inspectable items; third, the right to inspect and copy has been extended to include wholly owned subsidiaries of the company. For joint stock companies, the changes are as follows: first, shareholders are now granted the right to make copies, in addition to inspection, of previously accessible documents; second, shareholders holding a certain proportion of shares are newly granted the right to inspect accounting books and vouchers.

On the other hand, the New Company Law provides intellectual safeguards for shareholders exercising their right to know, allowing them to engage intermediaries like law or accounting firms to assist in exercising these rights.

In specific practice, the courts have further clarified the following rules through cases:

Shareholder Status: The exercise of the right to know requires the party to hold shareholder status. However, a party that signs a share transfer agreement doesn’t automatically lose shareholder status before completion.

Statutory Nature: Shareholder information rights are statutory; reasons for denial must also be statutory, which should not be arbitrarily expanded. The absence of accounting books and vouchers is not a lawful reason to deny access.

Improving the Validity Rules for Company Resolutions: Governance Games

To enhance the feasibility of internal corporate governance, for joint-stock companies, the New Company Law lowers the shareholding threshold for shareholders to submit interim proposals. Shareholders who individually or collectively hold more than 1% of the company’s shares may now submit such proposals.

For core issues like director appointments, the New Company Law provides that shareholders’ meeting resolutions to remove directors take effect immediately upon resolution, regardless of cause.

However, in practice, some shareholders may manipulate the board of directors or the general meeting of shareholders to pass company resolutions that are procedurally improper or legally non-compliant, in order to maximize their own interests. The New Company Law addresses this issue by incorporating the three-tier framework – non-existence, invalidity, and revocability of resolutions – originally established in the Judicial Interpretation (IV) of the Company Law issued by the Supreme People’s Court. This updated framework places greater emphasis on the substantive impact of procedural violations.

According to our experience, the most legally significant and analytically challenging disputes are those involving invalid resolutions. From our view, if a company resolution infringes upon the inherent rights of shareholders or violates the legitimate interests of the company, such a resolution should be deemed invalid on the grounds that its content contravenes laws or administrative regulations. However, with respect to shareholder rights, if shareholders have previously, by unanimous agreement, expressly allowed the company to alter certain rights through resolutions, such actions constitute a voluntary waiver of those rights. Therefore, if the company subsequently adopts a resolution in accordance with proper procedures to modify those rights, it should not fall within the scope of an invalid resolution.

Improved Mechanisms to Hold Shareholders and Directors Accountable: Governance Corrections

In the process of obtaining information and reviewing company resolutions, if shareholders discover that other shareholders and/or directors are engaging in actions that harm the company’s interests or the interests of other shareholders, the New Company Law provides a series of legal tools. The company or shareholders can hold the other shareholders and directors accountable to compensate for the damage to their interests. Specifically, this includes the following:

First, a new board’s duty to call for capital contributions has been introduced. Directors failing this duty may be liable.

Second, a new shareholder disqualification system has been introduced. If it is discovered that a shareholder has failed to pay their capital contribution by the due date specified in the company’s articles of association, and after a written notice requesting payment within the grace period has not been fulfilled, the company, through a board resolution, may issue a disqualification notice, declaring the shareholder disqualified.

Third, the New Company Law introduces a dual shareholder representative lawsuit system and its pre-litigation procedural rules. Qualified shareholders of the parent company are entitled to file a lawsuit against the directors, supervisors, senior executives or others that infringe upon the rights and interests of the wholly-owned subsidiary. This system is conducive to solving the problem of the controlling shareholder of the parent company damaging the interests of the wholly-owned subsidiary.

Fourth, the new Company Law introduces rules for de facto directors, shadow directors. If shareholders discover that the company’s controlling shareholder or actual controller does not serve as a director but is in fact managing the company’s affairs, they can recognize this individual as a de facto director and impose on them the duties of loyalty and diligence of directors. If the controlling shareholder or actual controller of the company instructs directors or senior executives to engage in actions that harm the interests of the company or shareholders, they can hold the shadow director jointly and severally liable for the damage.

According to our experience, in the future, the focus of the dispute in practice will be centred on the determination of whether the controlling shareholders and actual controllers are “actually executing the affairs of the company” or whether its behaviour constitutes “instructing”. Such determinations need to be made in combination with the evidence and rules of thumb, and be comprehensively judged by the judicial institution in individual cases.

Fifth, the New Company Law introduces shareholders’ and responsible directors’, supervisors’, and senior executives’ liability for damages under specific circumstances, including illegal distribution of profits and illegal capital reduction.

Resolving Corporate Control Disputes: Strategic Overview and Multi-Pronged Approach

With the global growth of Chinese enterprises, when disputes over corporate control arise, they often unfold across borders, jurisdictions, and involve multiple parties simultaneously. This reality places high demands on Chinese dispute resolution lawyers, requiring them to be deeply rooted in domestic legal practice while maintaining a global perspective to navigate complex, cross-border corporate conflicts effectively.

If, at the time a dispute arises, the shareholders or the company are able to engage experienced dispute resolution lawyers who can approach the matter with a comprehensive strategy and implement multiple measures in parallel, it may lead to highly efficient and favourable outcomes. This is particularly true in disputes involving corporate control, which are often dynamic and rapidly evolving.

With the New Company Law further clarifying the rights, obligations, and liabilities of all internal and external entities, we believe that designing a flexible governance mechanism that suits the specific needs of the company, and adopting targeted legal strategies when governance disputes arise, are essential responsibilities for corporate management. At the same time, such moments provide a valuable opportunity for commercial dispute resolution lawyers to demonstrate their legal acumen and strategic insight.

公司控制权争议视角下新修订《公司法》的变化

2024年7月1日，新修订的《中华人民共和国公司法》(“新修订《公司法》”)正式施行，是《公司法》自1993年以来第二次修订。在新修订《公司法》已经施行近一年之际，我们希望从公司控制权争议的视角入手，探讨面对公司控制权争夺时，新修订《公司法》为股东或公司自身提供了何种制度保障。

股东知情权保障的深化——信息保卫战

在公司控制权争夺中，了解、掌握公司的信息是股东制定有效策略、行使权利的重要前提。新修订《公司法》进一步加强了股东知情权的保障：

一方面，新修订《公司法》扩大了股东知情权的范围。对于有限责任公司而言，一是股东可查阅、复制的内容增加了股东名册；二是股东可查阅的内容增加了会计凭证；三是将股东可查阅、复制的范围扩展至公司的全资子公司。对于股份公司而言，一是将股东原可查阅的材料增加了复制的权利；二是新增了持有一定比例股份的股东可以查阅公司会计账簿、会计凭证。

另一方面，新修订《公司法》为股东行使知情权增加了智识保障，规定股东查阅时可以委托会计师事务所、律师事务所等中介机构来行使权利。

在具体实践中，法院进一步通过案例明确了如下规则：

一是知情权的行使要求当事人具有股东身份，但是当事人行使股东知情权时如果已与第三人签订了股权转让协议，不必然丧失股东身份。

二是知情权是公司股东的法定权利，公司拒绝股东行使知情权的事由具有法定性，不宜随意扩张。会计账簿、财务会计报告灭失不属于拒绝股东行使知情权的法定事由。

公司决议效力规则的完善——公司治理的博弈局

为了增加公司内部治理的可行性，对于股份有限公司，新修订《公司法》降低了提出临时提案股东的持股比例要求，现只要单独或者合计持有公司百分之一以上股份的股东，即可以提出临时提案。

在公司决议事项中，对最为核心的董事人事权，新修订《公司法》明确了股东会有权通过决议，在无特别事由的情况下解任董事。

然而，在实践中，部分股东会把控董事会、股东会，通过不合程序或者不符合法律规定的股东会/董事会形成公司决议，以最大化自身利益。针对公司决议，新修订《公司法》吸收了此前规定在《最高人民法院关于适用<_e4b8ad_e58d8e_e4baba_e6b091_e585b1_e5928c_e59bbd_e585ac_e58fb8_e6b395_>若干问题的规定(四)》(“《公司法司法解释四》”)中的规定，打造了决议不成立-决议无效-决议可撤销的三层次体系，聚焦于不同程序瑕疵对决议的实质影响。

根据我们的经验，最为值得挖掘或者探讨的是确认公司决议无效的纠纷。我们理解，如果公司决议侵害了股东的固有利益、侵害了公司的合法权益，则应当属于决议内容违反法律、行政法规的范畴，应属无效。但是对于股东权益而言，如果股东此前已经通过一致合意的方式，明确允许公司通过决议的方式改变特定的权利，则属于股东已自愿让渡自己的权利，后续公司按照程序达成决议改变股东的权利，则不构成决议无效。

追究股东、董事责任的制度改进——公司治理的矫正术

在获取信息、审查公司决议过程中，如果股东发现公司的其他股东和/或者董事存在损害公司或者其他股东利益的行为，新修订《公司法》还提供了一系列法律武器，公司或者股东可以通过追究其他股东、董事责任，以弥补受损害利益。具体包括如下：

一是新增董事会的催缴义务，如果未履职，负有义务的董事要承担赔偿责任。

二是新增股东的失权制度，如果发现公司中有股东未按照公司章程规定的出资日期缴纳出资，且经过书面催缴书载明的出资宽限期尚未履行出资业务，可以由公司经董事会决议发出失权通知，宣告该股东失权。

三是新增股东双重代表诉讼及其前置程序规则。即，符合条件的母公司股东对董监高或他人侵犯全资子公司权益的行为有权提起双重股东代表诉讼，该制度有助于解决母公司控股股东损害全资子公司利益的问题。

四是新增事实董事、影子董事规则。如果股东发现公司的控股股东、实际控制人不担任公司董事但实际执行公司事务的，可以确认其为公司的事实董事，并对其苛以董事的忠实、勤勉义务；如果发现公司的控股股东、实际控制人指示董事、高级管理人员从事损害公司或股东利益的行为的，则可以要求该等影子董事对损失承担连带责任。

根据我们的经验，未来在实践中争议的焦点会集中在认定控股股东、实际控制人是否“实际执行公司事务”或者是否构成“指示”。该等认定需要结合在案证据和经验法则，由审判机构在个案中综合判断。

五是增加特定情形下股东及负有责任的董事、监事、高级管理人员的赔偿责任，特定情形包括违规分配利润、违法减资等。

公司控制权的争议解决——全局概览、多管齐下

随着中国企业的全球化发展，一旦发生公司控制权争夺，则可能是跨境、跨法域、多主体之间争夺的同时爆发。这就对中国争议解决律师提出了立足本土、放眼世界的高要求。

如果在发生争议时，股东或者公司能够找寻到合适的争议解决律师，以全局概览，多措施齐下，则可能能够取得事半功倍的效果。特别是，公司控制权的争议解决往往是一个动态变化的过程，有些事实一旦形成，可能很难再行回转。

随着新修订《公司法》对公司内外部各主体权利、义务、责任的进一步明晰，在新修订《公司法》的框架下，设置符合公司自身需求的弹性治理机制、在公司治理发生争议时对症下药，是公司管理者的必修课，也是商事争议解决律师展现专业水平的好时机。