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Equity Dispute FAQ
Below are frequently asked questions on equity and shareholder disputes, compiled by Lawyer Kevin Jun Lin from litigation practice. Every case differs — please consult a lawyer for advice on your specific situation. Answers are currently published in Chinese; use the language switch for the Chinese version, or contact us in English through the form.
Can a guardian sell the child's equity to save a struggling business?
No. Civil Code Art. 35 expressly forbids a guardian from disposing of the ward’s property except for the ward’s benefit. Even motivated by “saving the company to indirectly protect the child’s dividends,” it is hard to have recognized judicially—unless the transaction is clearly favorable to the child (e.g., a high-price cash-out), it can be voided and liability pursued.
Read the answer ›The transfer happened three years ago—can I still revoke?
Revocation may be impossible, but a reduced share is still claimable. The longest period is five years from the act (Art. 541); three years is within five, but you must prove “knew or should have known” within one year. Even if revocation lapses, Art. 1092 is not time-barred—discovery at or after divorce allows a reduced or re-division claim.
Read the answer ›May the company refuse a successor shareholder's request to inspect the old books from the period when his father held the shares, on the ground that “those are the old shareholder's-era books”?
Generally no. Shareholder qualification is comprehensively succeeded from the moment of inheritance; case practice widely supports a successor shareholder’s inspection of company materials from the period during which the decedent held the shares. The company may defend only on whether the request satisfied the prior procedure and whether the purpose was proper; it cannot refuse by period demarcation.
Read the answer ›How does a nominee (beneficial) shareholder establish status and become registered?
Under Article 22 of the Third Judicial Interpretation on the Company Law the claimant must prove lawful subscription or payment of capital, or acquisition by transfer or succession without breaching mandatory provisions. Article 24 provides that a nominee arrangement is valid absent statutory grounds of invalidity, and a nominee cannot rely on the register to deny the beneficial owner’s rights.…
Read the answer ›After the child comes of age, can he overturn decisions made for him during guardianship?
Yes, he may assert. Where a guardian ultra vires disposed (e.g., low-price transfer, signing an unfavorable VAM), the child after adulthood may, on grounds of unauthorized agency or infringement of the ward’s interests, petition to confirm the act void or claim damages; the limitation period runs from when he knew or should have known, and a minor’s infringed limitation protection…
Read the answer ›Can the veteran shareholders amend the articles to prohibit the successor from entering the board?
Not a blanket prohibition. Director election by the shareholders’ meeting is a statutory mechanism; the articles may refine nomination and election procedures (e.g., qualifications, nomination thresholds) but may not strip the successor’s right of nomination and eligibility—such common-benefit content, if stripped, renders the clause invalid as a substantive deprivation of statutory shareholder rights.
Read the answer ›Which Shenzhen court hears equity disputes involving Hong Kong, Macao, Taiwan or foreign parties?
Under the current position of the Guangdong High People’s Court, first-instance foreign-related and Hong Kong / Macao / Taiwan commercial cases in Shenzhen below RMB 50 million are centrally heard by the Qianhai Cooperation Zone People’s Court; cases of RMB 50 million or more are heard by the Shenzhen Intermediate People’s Court. Assess whether the case has foreign-related elements before…
Read the answer ›The transferee says “I didn't know they were divorcing”—how do I prove he knew?
Close kinship is an important factor presuming knowledge. You can also prove: close contact between transferee and transferor (communications); the transferee’s understanding of the company (meetings, signed documents); no actual consideration paid (bank records show no payment); and the transferee exercising no shareholder rights after the transfer (no meetings, no dividends, no decisions). All point to “cooperating in the transfer”…
Read the answer ›My spouse gratuitously transferred the equity to his parents—can I revoke it?
Yes. Under Civil Code Art. 538, a creditor may revoke a gratuitous transfer that affects claim realization, and transferee knowledge is not required. Gratuitous transfer to close relatives such as parents is the most typical malicious-transfer scenario with a high revocation success rate. Mind the one-year period from when you knew or should have known.
Read the answer ›How low is a “manifestly unreasonable low price”?
In practice courts reference “transfer price below 70% of market price.” The equity “market price” is usually determined by net-asset valuation. If the net-asset value of the equity is RMB 1 million, a transfer below RMB 700,000 may be deemed a “manifestly unreasonable low price.” The lower the price, the more likely the finding.
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