Is Interest on Securities to be Repurchased in Excess of 24% Annual Interest Rate Valid? – Ma v Yang Securities Repurchase Contract Case

(By Bai Lituan)Securities repurchase is a financial activity of raising funds by selling securities and meanwhile signing an agreement with the buyer to repurchase the same securities at the agreed price and time. There are not many securities repurchase cases because it is not long ago that people in our country began to raise funds in this way. The first case decided by the Shanghai Finance Court is Oriental Securities v Honggao Zhongtai Securities Repurchase case.

Securities repurchase contract related laws mainly include the Securities Law, the Company Law, the minutes of meetings of the Supreme People’s Court on securities repurchase cases and the Notice on Restating Several Issues Connected with Further Standardizing Securities Repurchase Activities published by the Central Bank, the Ministry of Finance and the China Securities Regulatory Commission. All securities repurchase cases courts are dealing with come from the main, small and medium sized business and startup boards. My search result shows no securities repurchase cases relating to the new OTC board (the national share transfer system for small and medium sized businesses).

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Comments on the Preliminary Process for Filing Infringement Action Against False Statements in the Registration-Based Case Filing System

(By Li Xiang)Article Six of the Regulations of the Supreme People’s Court on Hearing Civil Compensation Cases Arising from False Statements in Securities Markets (“Regulations”) states that “courts should accept and hear litigation cases brought by investors claiming damages for themselves arising from a false statement on the basis of decision made by an administrative authority or a criminal court”. According to this, administrative or criminal punishment is the preliminary process for filing a civil compensation case arising from a false statement.

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Application of Laws on Non-Competition Clauses (Part I)

(By Lisa Li) In accordance with relevant laws of People’s Republic of China (“PRC), judicial interpretation by PRC Supreme People’s Court, judicial interpretation by local Superior People’s Courts and local regulations and based on the author’s research into and analysis of over two dozens of litigation cases from Shanghai and Beijing etc, the author elaborates on the application of laws on non-competition clauses from the perspective of Chinese employment law practice. The following is Part I of this topic on application of laws on non-competition clauses.[1]

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Does Engaging Employee liable for Non-Competition Constitute Infringement in China?

(By Yue Mengyan) An employee violates non-competition clause in his previous labor contract with his former employer, and works for a new employer, which has a competitive relationship with his former one. Could the former employer claim the new employer to be liable for such infringement, in addition to the employee’s liability for breach of contract? Pursuant to relevant laws and regulations in China, we will introduce a case and make our analysis in the following.

Case Introduction:

Appellant (defendant of first instance): Liu Guoqing

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Litigation in China–A Long and Rocky Road

(By Dr. Wenbao Qiao) For foreign companies doing business in China, dispute and litigation may sometimes be inevitable. Once a dispute cannot be resolved out of court, there is a long and rocky road to the final success, with several important points to be considered for planning and handling of litigation in China:

Documents and Evidence

The first step of each procedure is to collect and prepare all necessary documents and evidence. According to Chinese law, documents and evidence from another country (such as excerpts from the commercial register or powers of attorney) have to be first notarized in their country of origin and then certified by the Chinese Embassy or Consulate in the respective country. Only notarized and certified documents and evidence will be accepted by Chinese courts. While preparing the documents and evidence, attention should be paid to the timeline required for the notarization and certification. There are several important statutory deadlines shown below. Failure to meet these deadlines can lead to the loss of a case. Notarization and certification in Germany usually takes two to three weeks, which in turn may play a critical role for the time schedule of trial preparation.

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Are Enterprises Entitled to the Rights for Its Prior Enterprise Name?

(By Wang Ting and You Yunting) In enterprise name registration, if an enterprise changed its enterprise name at once, generally the new enterprise name is under protection. This means, the enterprise is no longer entitled to the rights and interests of its prior enterprise name. Such being the case, does another’s registration on the prior enterprise name cause its prior rights, or violate the Article 32 of the Trademark Law on the stipulation that the trademark application shall not infringe upon another party’s prior existing rights? Is the enterprise with a new enterprise name entitled to the prior right for its prior rights? In today’s post, with regard to those questions, the Trademark Office, the Trademark Review and Adjudication Board, Beijing No.1 Intermediate People’s Court and Beijing Higher Peoples Court were divided in their attitude.

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Is It Invalid to Establish Joint Ventures between Foreign Companies and Chinese Citizens in China?

(By You Yunting) Today we would like to introduce a typical case concerning the situation where a Chinese citizen tries to form a joint venture with a foreign individual. Pursuant to Chinese laws and regulations, foreign companies, enterprises, other commercial organizations and individuals (the “foreign investors”) can only form joint ventures with Chinese companies, enterprises and other commercial organizations, rather than with Chinese citizens. For these reasons, the court determined that the contract agreed upon by the Chinese citizens and foreign investors was invalid and each party should undertake the expenses and costs of establishment individually.

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Haidian Court Issued a Copyright Litigation Injunction Preventing Competitor from Broadcasting I am A Singer

我是歌手

(By You Yunting) We have already introduced litigation injunctions regarding patent, trademark and trade-secret proceedings in our previous posts. Today we would like to introduce a copyright injunction that Haidian District Lower People’s Court issued a copyright litigation injunction to prevent Funshion.com from copyright infringement of I Am a Singer (a popular Talent Show in China).

Introduction to the Case:

Plaintiff:  Letv.com

Defendant: Funshion.com

Court:Haidian District Lower People’s Court

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The Confusion of Affiliated Companies shall Assume Joint Liability for Their Debts

(By Luo Yanjie) Abstract: Company’s independent status as a legal person is a prerequisite for bearing liabilities independently incurred to the company. If a company loses its independent status as a legal person, shareholders shall bear several and joint liability for the debts of the company or the affiliated company, similarly for debts incurred in affiliated companies.

    In recent years, there are many disputes regarding abuse of company’s independent status as a legal person that many intelligent merchants attempted to evade the payments of debts by abusing the company’s independent status as a legal person or the limited liability of shareholders. In today’s post, we would like to introduce a typical case regarding the confusion of company’s independent status as a legal person on the Cases Guidance of the Supreme People’s Court in China as follows.

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How an Employer Terminates a Labor Contract with an Unqualified Laborer in China?

(By Luo Yanjie) Abstract: “where a laborer is unqualified for his work and remains unqualified even after receiving a training or an adjustment to another work post”, the employer may terminate a labor contract. The employer shall, if terminates a labor contract with an unqualified laborer, prove the employer to be incompetent from many aspects not just based on a bad performance.

Pursuant to the Labor Contract Law, there are many conditions for termination of a labor contract with laborers. Among these conditions, the most used one is that a labor is unqualified for his work. This means, the employer may not consider rescinding a labor contract unless a laborer is unqualified for his work. During the process of termination, among many disputes between laborers and employers, we would like to introduce a typical cases regarding termination of an unqualified laborer from Case Guidance of the Supreme People’s Court.

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Why did the “Gatekeeper” of the Capital Market Fail to Fulfill its Duties?

(By Yu Zhiyuan and Bai Lituan) In the capital market, agency institutions’ participation greatly reduces the degree of information asymmetry of market subjects, and plays a significant role in the capital market; thus, the agency institutions and their professionals are named by the industry as the “gatekeepers” of the capital market. Ever since the Enron Corporation scandal became public and the Sarbanes-Oxley Act (SOA) was published, in order to better protect the interests of public investors, all countries are attempting to apply new approaches to security supervision. Thus far, enhancing the gatekeepers’ obligations is one of the ways to realize investor protection. Recently, fraudulent securities issuances and severe distortions of information disclosure are occurring frequently in China’s capital market, and this has a direct causal relationship with the gatekeepers’ mechanism failure.

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What Legal Problems are GSK Scandal Involved within China’s Criminal Law?

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(By Zhou Wei) On July 11, 2013, the Ministry of Public Security (the “MPS”) issued a piece of news on its official website that some senior executives of GlaxoSmithKline (China) Co., Ltd (the “GSK”) were being investigated for their involvement in serious unspecific economic crimes, demonstrating a scandal with GSK’s involvement in bribery in China. Utilizing currently disclosed information, this post is aimed at analyzing possible alleged criminal charges and criminal liabilities.

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Foreign Enterprises’ Criminal Risk Prevention in China

GlaxoSmithKline

(By Ding Jinkun) Recently, Glaxo SmithKline, UCB and many foreign pharmaceutical giants are being investigated for their involvement in economic crimes. The entire pharmaceutical industry is involved into this investigation, stated-owned pharmaceutical firms included. Thus, it can be seen that the Chinese medical market has developed some deformities. Among the resulting crimes, some specific acts include unlawfully raising the price of medicine and unreasonably requiring consumers, particular patients, to pay “perks” for the lawbreakers in the form of small fees.

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Trademark “Zhuomuniao”: Cancelled for Squatting Though It Has Been Put into Use

(By Luo Yanjie) Abstract: when applying for a trademark, the trademark office will judge the similarity of the submitted trademark based on the International Classification of the Trademark Registration for Product and Service (the “Classification”), but the court does not use this only standard. Even if the court finds that the later trademark application to be similar with the earlier applications, and the trademark office approves the later applied trademark’s application, the earlier trademark holder shall have no right to demand the later user for any damages.

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