Category Archives: Operation

Liabilities of Contributed Capital Surreptitiously Withdrawn in New China Corporate Law

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 (By You Yunting) In the end of 2013, China issued a revised Corporate Law updating the provisions about the contributed capital, as discussed in our previous post the Amendment to the Corporate Law. Today we will discuss the legal liabilities of promoters and shareholders with regards to the required contributed capital being surreptitiously withdrawn.

Assumption of liability

Pursuant to the updated Corporate Law, any shareholder who fails to make full payment of the capital contributions at the establishment of the company shall be jointly and severally liable for refunding the paid-in capital – in accordance with the amount of registered capital. As such, it is when the company is unable to pay its debts that the shareholders shall assume the liability of surreptitiously withdrawing the contributed capital.

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Why Shanghai Court Not Accept Nikon D600’s Dispute over False Advertisement?

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NIKON D600

(By You Yunting) Abstract: If Shanghai plans to become an international financial center, it is judicial fairness that is an important aspect of a very good investment environment that must be provided by governments. If the court attempts to protect an enterprise beyond the letter of the law, it will cause greater long-term damage on China’s interests, and on fairness and justice than any immediate benefits obtained now, whatever companies company achieves those benefits.

On March 15, 2014, China CCTV exposed the professional SLR quality problems of Nikon D600 SLR, where black spots frequently appear on photographs. After this exposure, our team, acting as a representative of our client Mr. Xu, brought the case concerning Nikon into court. On March 18, 2014, my colleague Luo Yanjie and our client filed a legal complaint to Huangpu District Primary People’s Court.

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Why Wasn’t Baidu Library Protected Under Safe Harbor Principle?

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(By Luo Yanjie) In our previous post Baidu Library Ordered to Pay Huge Huge Compensation on for Copyright Infringement, we discussed the amount of the compensation in the case of Beijing China Youth Book Inc. vs Baidu Library. Yesterday, we found out the reasoning and judgment held by Beijing No.1 Intermediate People’s Court. Thus, in today’s post we will analyze the legal basis about this case from the perspective of the judgment.

Introduction to the Case:

Plaintiff: Beijing China Youth Book Inc. (the “Youth Book Inc.”)

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Baidu Library Makes Huge Compensation on Copyright Infringement for Publishing Press

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(By You Yunting) Recently, in the proceeding litigation alleging copyright infringement, Beijing China Youth Book Inc. vs Baidu Library, the Beijing No.1 Intermediate People’s Court issued a judgment requiring that Baidu compensate Beijing China Youth Book Inc. 350,000 Yuan. When compared with the 20,000 Yuan compensation required for a pirated movie, the ordered compensation is much larger than expected. This simultaneously reflects the strengthening of legal sanctions against internet copyright infringement and suggests that the standard on which copyright infringement compensation is judged lacks rationality in China.

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Litigation Against Defective Nikon D600 Cameras

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(By You Yunting) On March 15, 2014, China CCTV exposed the quality problems of the Nikon D600 SLR Camera – it frequently produces black spots on photographs. In today’s post, we will introduce analysis about what legal problems might be encountered in litigation.

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China Customs Requires that Patent Holders Update their Valid Certificates

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(By You Yunting) We have already introduced today’s topic in our previous post how to record patents with China Customs. For more background information, please read this article first. Recently the Chinese General Administration of Customs has updated its previous recordation system for intellectual property rights enforcement and began to utilize this latest recording system from March 1, 2014. This updated recording system puts forward a new requirement that upon patent recordation, the right holder of a patent that has been recorded by Customs must present valid documents of the relevant patent rights before the given deadline, otherwise the patent recordation will be canceled.

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China Supreme Court legalizes Part of Corporate Lending

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(By You Yunting) China’s financial system is restricted regulated. Private corporate lending contracts, whereby an enterprise without qualified financial credit lends money to another enterprise is considered to be invalid, and China’s courts would order the lenders return the original amount of money without any interest. Recently, the President of Supreme People’s Court Xi Xiaoming delivered a speech at the National Civil and Commercial Adjudication Work Conference, indicating that the courts have recently begun to expand the validity of corporate lending and are attempting to legalize corporate lending contracts.

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Lessons to Be Learned from Apple Losing Their Apple Trademark for a Game Console in China

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(By You Yunting) In the end of 2013, the Beijing Higher People’s Court rejected Apple Inc.’s trademark opposition towards “苹果” trademark (read “Pingguo” in Chinese and referring to “Apple” in English) under Class 28 for game console against Zhongshan Readboy Electronics Co., Ltd. Thereafter, Apple Inc. has gone through 4 procedures, including the Trademark Office’s opposition proceeding, TRAB’s review procedure and two administrative actions and ultimately lost the “苹果” trademark under Class 28 for game console. The following are abstracts from the judgment of the final trial and our comments.

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Tenfold Punitive Damages for Auchan’s Inferior Foods Reasonable in China?

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(BY You Yunting) Chinese food safety problems have always puzzled consumers in China. The Food Safety Law that came into force in 2009 strengthens the legal liability of food enterprises that produce inferior foods. Earlier in 2013, China’s Supreme People’s Court published a guidance case regarding the judgment handed down by Jiangning District Lower People’s Court, in Jiangsu Province. In this case, the Auchan Store that sold expired foods was ordered to offer tenfold damages to consumers. For overseas companies that intend to invest in the industry of food production and sales in China, such legal risks should be noted. In judicial practice, however, some local courts have made judgments deciding that products for personal use should not be compensated. Another point of this case is that the Supreme People’s Court has overruled the verdicts issued by some local courts.

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How to Ascertain a Director’s Liability in Chinese Bankruptcy Liquidation?

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(By You Yunting and Wang Ting) With many foreign investors establishing enterprises in China, there are many successful examples as well as the inevitable examples of failure. Bad management may lead an enterprise to eventual failure. In the situation where an enterprise goes bankrupt due to poor management, even an individual foreigner, playing the role as a director or senior officer, may have to assume personal liability. Such liability may arise from either civil or criminal laws. Today, we will discuss what kinds of liabilities directors may assume in bankruptcy liquidation.

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

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(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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How shall Overseas Companies Undergo Registration Procedures When Attempting to Provide Guarantees for a Domestic Loan?

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(By You Yunting and Wang Ting) The Chinese government imposes very strict regulations in regard to guarantees in foreign funds for domestic companies. Overseas companies or institutions, whether acting as a guarantor or a guaranteed person, must perform these registration procedures. Today we would like to introduce how domestic companies perform these registration procedures when overseas companies attempt to provide guarantees for domestic loans.

When overseas companies, in accordance with relevant regulations regarding loans to domestic finance organizations, offer loans to aforesaid finance organizations, these domestic groups can accept such loans and guarantees from both individuals and organizations outside China’s border. Such services provided by individuals and organizations in foreign jurisdictions can support the development of domestic companies, as well as exert positive effects on the investment of enterprise fixed assets and requirements of liquid capital.

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Essential points on Writing Noncompetition Clauses In a China Labor Contract

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(By You Yunting) In today’s post, our website would like to introduce some essential points in writing noncompetition clauses in a labor contract in accordance with relevant Chinese laws and regulations. Pursuant to the Labor Law, the Labor Contract Law and related laws and regulations, combined with the specific conditions of employing units, when writing noncompetition clauses or agreements, we will pay particular attention to the following points:

I. How to determine the scope of the noncompetition clauses?

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Logic and Practical Analysis of Foreign Investment Facilitation in the Shanghai FTZ

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(By Gong Lier) The China (Shanghai) pilot free trade zone (hereafter called ‘the free trade zone’) was officially launched in Waigaoqiao, Shanghai on 29th Sept. 2013. Attention should be paid to the news that the, i.e., the ‘Negative List’, of the free trade zone was issued at midnight on the same day, on which the five Shanghai municipal governmental rules were also implemented one after another, including the China (Shanghai) Pilot Free Trade Zone Administrative Rules (No.7 municipal government’s order) (hereafter called ‘the Free Trade Zone Administrative Rules’), the China (Shanghai) Pilot Free Trade Zone Foreign Investors’ Funded Projects Filing Rules (H.F.F.(2013) No.71) (hereafter called ‘the Foreign Investors’ Funded Projects Filing Rules’), the China (Shanghai) Pilot Free Trade Zone Overseas Investment Projects Filing Rules (H.F.F.(2013) No.72) (hereafter called ‘the Overseas Projects Filing Rules’), the China (Shanghai) Pilot Free Trade Zone Foreign Investors’ Funded Enterprises Filing Rules (H.F.F.(2013) No.73) (hereafter called ‘the Foreign Investors’ Funded Enterprises Filing Rules’), and the China (Shanghai) Pilot Free Trade Zone Overseas Invested and Incorporated Enterprises Filing Rules (H.F.F.(2013) No.74) (hereafter called ‘the Overseas Invested and Incorporated Enterprises Filing Rules’).

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