A company in which a state-owned enterprise held shares became involved in a dispute over board resolutions. While the chairman remained able to perform the role, the vice-chairman convened an extraordinary board meeting and resolutions affecting the business were adopted. The client retained Li Shu’s team to seek revocation on the basis that the convening procedure breached the articles of association.
The client sought to revoke the disputed resolutions and protect the governance process. Some resolutions had already been implemented. The team therefore needed to frame the claim within the applicable period and establish defects in convening authority and procedure through the meeting records. Disagreement with a commercial outcome alone was not the basis of the challenge.
The lawyers checked the sequence for convening and chairing meetings under the articles against the facts concerning the chairman’s performance. They collected notices, minutes and resolution texts, identified inconsistencies between notice dates and dates recorded in the resolutions, and explained their procedural significance.
According to YunTing’s related case account, the Beijing Haidian District People’s Court revoked the board resolutions. The case illustrates the importance of promptly securing evidence on convening authority, notices and meeting records.
Current-law update: Article 26 of the Company Law effective from July 1, 2024 permits revocation claims for qualifying procedural or constitutional defects, but excludes minor defects that have no substantive effect on the resolution. The usual sixty-day period from adoption should be considered; shareholders not notified of a shareholders’ meeting are subject to the article’s special rule. The law applicable in time, type of resolution and claimant’s standing must be checked in each case.
Shareholders should preserve the articles, evidence of their status, notices, service records and resolution texts. Claims for revocation, invalidity and non-existence should be distinguished, with the remedy selected according to the defect’s significance and the applicable deadline.
Legal source: PRC Company Law, revised in 2023 (Chinese text).