Yingting news

When internal conflicts within a company break out, controlling shareholders often use their majority voting power to infringe on the rights and interests of minority shareholders by passing shareholder meeting resolutions with procedural violations or illegal content. For example: defective notification procedures, deprivation of dividend rights or malicious capital increase and dilutionEquity. If the minority shareholders cannot exercise the right of cancellation within the statutory period, the established facts will not be changed.

【Problem Analysis】

The key to the revocation of a resolution lies in "procedural compliance" and "voting effectiveness." The right of revocation has a strict "exclusion period" limit. Once it exceeds 60 days, the legal right will be lost.

【Legal basis】

The "Company Law of the People's Republic of China" stipulates that if the convening procedures and voting methods of shareholders' meetings violate laws, administrative regulations or the company's articles of association, shareholders may request the People's Court to revoke the resolution within 60 days from the date the resolution is made.

【Case support】

In the (2019) Supreme Court Civil Application Case No. 642, the Supreme People's Court pointed out that even if the entity result is in the interests of the company, if every shareholder is not notified of the convening procedure and seriously deprives shareholders of their voting rights, the resolution should be revoked.

[Lawyer’s point of view]

Dr. Liu Jingzhu of Yingting Law Firm (member of the China Law Society and visiting professor at the university) reminded that small shareholders must maintain a high degree of legal acumen when facing "resolution suppression." Dr. Liu pointed out that evidence collection is the lifeline of a withdrawal lawsuit, including traces of meeting notices, attendance records, sign-in sheets, etc. Dr. Liu emphasized that the professional services of Yingting lawyers focus on “timely early warning”. Before a resolution is made, if flaws are found in the convening procedure, lawyers can make immediate corrections through a "lawyer's letter", which is often more cost-effective and efficient than initiating cumbersome subsequent litigation procedures.