(By Wang Ting and You Yunting)The limited liability of the shareholders means that the liability of the shareholder to the company are limited to its capital contribution, and the independent personality of corporation means that the Company shall fulfill its external liabilities by all of its properties. Therefore, the shareholders usually do not take personal responsibility in IPR infringement cases even when the long-term business of the company is infringement of the intellectual property rights (“IPR”) in most cases. However, today we will introduce a recent case, in which the shareholders were determined to take such joint liabilities for the IPR infringements.
(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.
(By Yu Zhiyuan) Recently, the author was interviewed by the media on the issue of the “two boards” of Jiulongshan, a Chinese listed company. The author would like to analyze the basic legal principles concerned in the “board battle” in this particular case.
I. The ummary of the Issue
Shanghai Jiulongshan Travelling Co. Inc. (hereinafter “Jiulongshan”) is a listed company, and recently, its original biggest shareholder (represented by Mr. Li Qin Fu, chief of the company board) transferred approximately 29.9% of the company’s share options to HNA Property (hereinafter “HNA”). As a result of that transaction, HNA became the biggest shareholder and company registration with the Ministry of Industry and Commerce was amended to reflect those changes. However, HNA has not completed its payments in consideration of the stock transfer. On 21st December 2012, HNA called an impromptu shareholders’ meeting as the company’s biggest shareholder. At the meeting, it passed on the suggestion to recall Mr. Li Qin Fu to act as head of the board of the company, and thereafter voted in new board members. Beijing Kang Da Law Firm filed a brief to affirm the legal effectiveness of the decision and the voting. In reply to Kang Da’s brief, Jiulongshan held its own board meeting on 25th December 2012, at which most board members claimed that HNA lacked the ability to hold its own impromptu shareholders’ meeting. In addition, the board made an announcement, supported by the legal opinions of Shanghai-based Yan Yi Ming Law Firm, that any decisions made by the temporary shareholders at their previous meeting on 21st December 2012 were invalid.
(by Bai Lituan) After six months of tense negotiation without any satisfactory result over a dispute of the 8-1 Pearl Project land plot on the Bund, Fosun (00656.HK) and SOHO China (00410.HK) finally chose to take the case to court in Shanghai. The first hearing of the case was in late November 2012. Before then, Fosun insisted that the share transaction between SOHO China and Shanghai Zendai Group damaged its right of preemption.
By Albert Chen
Trademark assignees may sometimes encounter an awkward situation: the target trademark is in the hands of a company that has had its business license revoked or that has been cancelled. Although the trademark is still valid, others seem to have no legitimate means to acquire it. So, under these circumstances, does the assignee really have no means to acquire the trademark? In today’s post, you will find the answer.
I. Why would trademarks be left unused?
According to relevant statistics, the average life of Chinese companies is seven years, and the average of life of privately owned companies is only 2.9 years. On the other hand, however, the validity period of a trademark is ten years, and there is nothing in Chinese law that states that the trademark shall automatically become invalid when the business license of its holder is revoked or the company is cancelled. Especially when the business license has been revoked, the company still has legal capacity. It is merely incapable of conducting civil acts, including the use and transfer of trademarks, because its business license or chop has been announced invalid or has been confiscated under the punishment of business license revocation.
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.
The post of today is the second part of the latest laws and regulations promulgated in last month in China.
5. The Implementation of the Registration and Management System of Insiders of Listed Companies
On 25th October, 2011, the China Securities Regulatory Commission issued the Regulations Concerning the Establishment of the Registration and Administration System of the Insiders of Listed Companies (hereinafter the Regulations), having been implemented on 25th November, 2011. According to the Regulations, if the initiator of the major matters rising insider information that are sensitive to the price of shares is a listed company, such listed company shall, according to the Regulations, fill the record of the insiders and do well with the confidential management of the inside information; however, if the initiator described above is an other party except for a listed company, such as a shareholder and actual controller of a listed company, its affiliate, etc., an acquirer, the relative party of a major asset reconstruction transaction, and other parties initiates the matters involving the listed company and influencing the price of the shares of the listed company, the parties specified shall separately do well with their registrations of insiders according to the Article 8 of the Regulations, moreover shall submit the record of insiders to the listed company when required, as well as support and cooperate the listed company do well with registration of insiders.