Profit Distribution Claims Could Be Successful Without a Related Shareholder Resolution – Jin v. Shanghai JL Company Earnings Distribution Case

By Bai Lituan)The Regulations of Several Issues Concerning Application of the Company Law of the People’s Republic of China (IV) (Legal Interpretation IV of the Company Law) taken into action by the Supreme People’s Court on 1 September 2017 provides that if shareholders claim that the company should distribute its profits without providing a related distribution plan or shareholder resolution, the court should reject the claim unless shareholder rights are abused, causing the company unable to distribute its profits and causing damage to other shareholders. In other words, in principle, courts should reject profit distribution claims brought by shareholders without a related shareholder resolution, unless in exceptional circumstances.

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How to Judge the Validity of Trademark Transfer without Inner Approval of the Company in China

(By Albert Chen) Abstract:

When a company’s trademark agent transfers a trademark without approval, a judgement of the validity of said transfer requires not only a consideration of the company approval, but also a determination of the third party good faith in the transfer. When a condition is not fulfilled the transfer will invariably be considered invalid.

Case Introduction:

In 2001, Leidi (China) Co., Ltd. (“Company L”) was granted the exclusive right in the use of the trademark “雷迪” (read as “Leidi” in Chinese). In November of 2002, Wu, as the executive director of Leidi China, transferred the trademark to the Hua Qu Duo Investment Company (“Company H”). The State Trademark Office made an announcement regarding the transfer in October 2003. Subsequently, Company H licensed the trademark to the Shanghai-based Leidi Mechanics Co., Ltd. (“Company S,” which had no affiliation with Company L).

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How to Judge the Validity of Trademark Transfer without Inner Approval of the Company in China

Abstract:

(By Albert Chen) When a company’s trademark agent transfers a trademark without approval, a judgment of the validity of said transfer requires not only a consideration of the presence (or lack of) company approval, but also a determination of whether there was good faith when considering the third party in the transfer. When it can be shown that no inner-company approval was made, and that the transaction was not undertaken in good faith, such a transfer will invariably be considered invalid.

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