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Case Analysis of Changes in Shareholder Equity
Article 44 of the Company Law: The manner of deliberation and voting at the shareholders' meeting shall be stipulated by the company's articles of association, except as otherwise provided by this law. In the absence of special provisions in the articles of association, shareholders of a limited liability company shall exercise their voting rights in proportion to their capital contributions. Except for matters explicitly stipulated by law, the articles of association may provide for the manner of deliberation and voting at the shareholders' meeting. In this article, we will introduce issues to pay attention to regarding changes in shareholder rights through a case analysis, hoping to be of help to you. [Basic Case Facts] In December 2002, Company A and Company B jointly invested to establish a certain agricultural limited liability company, appointing Mr. Xu as the company.
Article 44 of the Company Law: The manner of discussion and voting at the shareholders' meeting shall be prescribed by the company's articles of association, except as otherwise provided by this law. In the absence of special provisions in the articles of association, shareholders of a limited liability company shall exercise their voting rights in proportion to their capital contributions. Except for matters explicitly stipulated by law, the articles of association may provide for the manner of discussion and voting at the shareholders' meeting. This article will introduce issues that need attention regarding changes in shareholder rights through a case analysis, hoping to be of help to you.
【Basic Case Facts】
In December 2002, Company A and Company B jointly invested to establish a certain agricultural limited liability company, appointing Xu as the legal representative, director, and manager of the company. In 2011, the shareholders' meeting resolved to remove Xu from all positions, replacing him with Gao. Xu believed that the shareholders' meeting resolution was illegal and refused to hand over the company seal, contract special seal, and other company items, leading the agricultural company to sue in court. The court found that, based on the company's articles of association filed with the industrial and commercial administration department and the registered shareholder list, the shareholders of the agricultural company were Company A and Company B, and the shareholders' meeting resolution was legal and valid. The court ordered Xu to deliver the company seal, contract special seal, and other company items to the new legal representative Gao by August 20, 2011, in accordance with the company resolution.
【Case Analysis】
First, the term "company" in China's Company Law refers to limited liability companies and joint-stock companies established in accordance with the Company Law within China. The key to determining the nature of a company lies in its name; a limited liability company must include the words "limited liability company" or "Ltd." in its name. Therefore, the agricultural company is a limited liability company. In the absence of special provisions in the articles of association, shareholders of a limited liability company exercise their voting rights in proportion to their capital contributions. Except for matters explicitly stipulated by law, the articles of association may provide for the manner of discussion and voting at the shareholders' meeting.
Second, a limited liability company can be legally converted into a joint-stock company. In this case, the name, business registration, and articles of association of the agricultural company have not changed, and evidence submitted by the defendant Xu does not indicate that the nature of the company has changed. Therefore, the court legally recognized the validity of the shareholders' meeting resolution.
Third, the defendant submitted another piece of evidence proving that Company A's shares had been transferred to other individuals. However, according to the shareholder list, capital contribution certificates, articles of association, and minutes of the shareholders' meeting provided by the plaintiff, the shareholders of the agricultural company have not changed. Therefore, the shareholders' resolution is legal and valid.
【Relevant Legal Provisions】
Article 44 of the Company Law: The manner of discussion and voting at the shareholders' meeting shall be prescribed by the company's articles of association, except as otherwise provided by this law.
Resolutions made by the shareholders' meeting to amend the articles of association, increase or decrease registered capital, and resolutions for company mergers, divisions, dissolutions, or changes in company form must be passed by shareholders representing more than two-thirds of the voting rights.
Article 22 of the Company Law: Resolutions of the shareholders' meeting or shareholders' general meeting and board of directors that violate laws and administrative regulations are invalid.
If the procedures for convening the shareholders' meeting or shareholders' general meeting, voting methods violate laws, administrative regulations, or the articles of association, or if the content of the resolution violates the articles of association, shareholders may request the people's court to revoke the resolution within sixty days from the date the resolution was made.
If shareholders file a lawsuit in accordance with the preceding paragraph, the people's court may, at the request of the company, require the shareholders to provide corresponding guarantees.
If the company has completed the change registration based on the resolutions of the shareholders' meeting or shareholders' general meeting, or board of directors, and the people's court declares the resolution invalid or revokes the resolution, the company shall apply to the company registration authority to cancel the change registration.
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