Li Shu’s team | Beijing YunTing Law Firm
Practice area: Corporate governance and shareholder disputes. Proceedings: Litigation and settlement.
1. Background
The client was a minority shareholder and the company’s former legal representative and executive director. The client was removed from office through company resolutions made under the controlling shareholder’s influence. The company subsequently brought proceedings seeking the return of its seals and corporate documents. The client faced both a loss of control and the pressure of related litigation.
2. The client’s objective
The client sought to resolve the deadlock and exit the company for reasonable consideration.
3. Challenges
The controlling shareholder’s larger stake placed the client at a disadvantage in the control dispute. Related proceedings also required a coordinated procedural approach to create room for negotiations.
4. Strategy
The team examined defects in the process by which the company resolutions were made. It brought an action seeking a declaration that the resolutions had not been formed and, at the same time, applied for a stay of the proceedings concerning the return of the company’s seals and documents. The strategy coordinated the related proceedings to protect the client’s interests.
5. Outcome
After the court accepted the team’s submissions, the client improved its position and gained important negotiating opportunities. Within three months, the parties reached a settlement under which the client exited for RMB 90 million in consideration for the transfer of its equity.
6. Significance
The case illustrates the value of coordinating litigation over corporate resolutions, related proceedings and commercial negotiations in a corporate control dispute. The appropriate claims and procedural steps in another matter must be determined by its facts, articles of association and evidence.
Author: Li Shu, founding partner of Beijing YunTing Law Firm. Practice areas: Commercial disputes, corporate governance and shareholder litigation, finance and enforcement, and criminal defense.