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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.
After the original shareholder sells the equity, can they still challenge unlawful resolutions made during their tenure?
Yes. For a resolution ‘adopted while you held shareholder status,’ a former shareholder still has the right to bring a voidable action even after transferring the equity, as long as it is within the time limit. However, actions for ‘not formed/void’ resolutions have broader standing requirements, and interested parties may also assert them. Further Reading The Company Never Distributes Dividends…
Read the answer ›I discovered the resolution is unlawful, but two years have already passed—can I still sue?
It depends on the type. If it is a ‘void resolution’ (content violating mandatory law) or ‘not formed’ (no meeting was held at all), there is generally no time limit and you may still sue. But if it is ‘voidable’ (procedural defect or violation of the articles of association), the 60-day period has lapsed and the court will dismiss it.…
Read the answer ›How are natural appreciation and active appreciation distinguished, and is there a clear statutory provision?
Articles 1062 and 1063 of the PRC Civil Code distinguish the scope of marital property from that of separate property: ‘investment income’ belongs to the marital estate, while ‘premarital property’ belongs to the individual. The distinction between ‘natural appreciation’ and ‘active appreciation’ is a refined judicial interpretation of the concept of ‘investment income’ in practice—derived from the adjudicative views of…
Read the answer ›股权放进信托,公司控制权就安全了吗?
首页 › 股权放进信托,公司控制权就安全了吗? 信托解决的是法律结构问题,控制权还取决于架构设计:信托内表决权由谁行使(受托人/保护人)、信托持有的是直接股权还是有限合伙份额、章程对信托受让股权有无限制。设计不当的信托会把控制权交给受托人,引入新的风险。
Read the answer ›When a shareholder dies, who inherits the shares and who exercises the voting rights?
Under Article 90 of the new Company Law, upon the death of a natural person shareholder the lawful heirs may inherit shareholder status unless the articles of association provide otherwise. Where heirs are minors or there are several heirs, voting rights are usually exercised by a legal representative or a representative chosen by the co-owners, with dividends and exit resolved…
Read the answer ›After the Civil Code, is a notarized will still necessary?
Valuable but not mandatory. The notarized will remains the most challenge-resistant form—the notary keeps a complete file on capacity, intent, and form—merely no longer superior to others. For high-value equity, notarization or lawyer witness plus video remains a cost-effective anti-challenge configuration.
Read the answer ›If the nominal shareholder secretly sells the equity, can I get it back?
If the third party acquired it in good faith (unaware of the nominee arrangement, paying a reasonable price, and having it registered), the equity generally cannot be recovered, and you can only claim damages from the nominal shareholder. If the third party knowingly acquired it despite awareness of the nominee arrangement, you may assert that the transfer is void. As…
Read the answer ›In a divorce equity appraisal, which day is the valuation reference date? Is there a law?
There is no unified statutory reference date. The mainstream judicial practice uses the date the divorce lawsuit is filed; where separation is long and finances already separate, the separation date may apply; where the parties agree, their agreement governs. A party advocating a different date must prove that point’s objectivity and fairness.
Read the answer ›Father made two conflicting wills—which one governs?
The last one governs (Civil Code Art. 1142(3)), regardless of whether it is notarized or holographic. But if the last is proven forged or invalid, it reverts to the prior. Note “revocation by conduct”: later selling or gifting the equity is deemed revocation of the relevant content.
Read the answer ›Does a clause saying "heirs may not inherit the equity" make the articles too heartless—and unenforceable?
Not heartless, and the law does recognize it—but only if payment is made. What is excluded is the “shareholder qualification” (the personal-association interest); the heir still receives fair consideration for the equity. What the courts reject is only a clause that “neither lets them in nor pays them—or pays merely nominal consideration.”
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