Guiding Case by China Supreme Court: JV’s Minority Shareholders May Undertake All Company’s Debt

By You Yunting

By judicial practices in China, in case the Sino-foreign invested company, which however is operated under the management of Chinese shareholder, is trapped in the insolvency, the foreign investors could be judged to take all the debt of the company, not subject to the total amount of its investment, when Chinese partner chooses to disappear or refuse to clear the debt. And in recent, as per the latest 3rd guiding cases by China Supreme People’s Court, by a decision indicated in it, the non controlling shareholder shall be liable to the joint liability to the non-settled debt of the company, that obviously aggravates the burden of the company shareholder. Then, what is the fair way to avoid such risks? We put forward our answer to it in today’s post.

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Introduction on the Regulations concerning the Capital Contribution in IPR or Domain Name in China

Highlight: The contribution of capital in IPR or domain name is permitted by China Company Law, though there regulates the proportion limitation on it. Bridge IP Commentary will introduce you the regulations of the investment in IPR.

Recently, a Company registered in Shanghai made its contribution of the 70% of the total registered capital of the company with domain name, which has been evaluated to be RMB 10 million yuan, and it has been the first company which made its capital contribution in domain name.

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