A minority shareholder generally has four exit routes: (1) requesting the company to repurchase the shares where statutory grounds exist — five consecutive profitable years without dividend distribution, merger or division or transfer of principal assets, expiry of the business term, and similar; (2) transferring the shares to other shareholders or to a third party, subject to the other shareholders’…

Shareholders may inspect and copy the articles of association, shareholders’ meeting minutes, board and supervisory board resolutions and financial accounting reports, and may request access to the accounting books and vouchers in writing. If the company refuses without proper justification, the shareholder may bring a court action to compel disclosure. Where the circumstances are serious, the shareholder may also claim…

Nominee shareholding agreements are in principle valid under the Company Law, and the contractual relationship between the actual investor and the nominal shareholder is protected by law. That said, for a hidden shareholder to be registered as a shareholder of record, the consent of more than half of the other shareholders is required, and the arrangement may not be used…

The compensation amount is governed by the agreement, most commonly structured as “share repurchase plus a fixed return” or “cash compensation”. An important caveat: a VAM entered into with the company itself may be held invalid because it harms the company and its creditors, whereas one entered into with shareholders or the actual controller (the founder) is generally enforceable. The…

Repurchase rights are typically agreed in the investment agreement. Common triggers include: failure to complete a qualified IPO within the agreed period, missed performance targets, material breach, the founder’s departure, or breach of non-compete obligations. Once triggered, the investor may require the company or the founder to repurchase the shares at the agreed price, which usually includes a fixed annualised…

Yes. Upon the death of a natural-person shareholder, his or her lawful heir may, as a general principle, inherit the shareholder status, except where the articles of association provide otherwise. Therefore, agreeing in advance in the articles that ‘equity shall not be inheritable’ or setting conditions for inheritance constitutes a valid risk-isolation arrangement.

Where a shareholder transfers equity to a person other than a shareholder, it shall notify the other shareholders in writing; the other shareholders enjoy a right of first refusal (ROFR) on equivalent terms (price, method of payment, etc.), and failure to reply within 30 days of receiving the written notice is deemed consent to the transfer. Where two or more…

A shareholder of a one-person limited liability company faces a heightened risk of bearing joint and several liability for the company’s debts. The key to prevention lies in strictly separating personal property from corporate property, maintaining standardized accounting with annual audits, and avoiding any commingling of personal and corporate accounts, so as to demonstrate that the shareholder’s property is independent…

For directors and senior management, a statutory non-compete obligation exists inherently—after leaving office they may not operate, on their own account or for another, a business competing with that of the company they served. For ordinary shareholders, a non-compete arrangement must be separately agreed through a shareholders’ agreement or an equity incentive plan, and is usually coupled with reasonable compensation;…

A shareholder who withdraws capital shall, within the principal and interest of the withdrawn capital, bear supplementary compensatory liability for the portion of the company’s debts that cannot be satisfied; other shareholders, directors, senior management, or actual controllers who assisted the withdrawal bear joint and several liability. The company registration authority may impose a fine, and, where the circumstances are…