Chinese company law Henry

I. Summary of shareholder’s litigation right II. Relevant case III. Regulations involved IV. Conclusion

Summary Shareholder direct litigation Shareholder indirect litigation I. Brief introduction 1. Introduction The litigation by shareholder for protecting his own interest directly The litigation by shareholder for protecting the whole company’s interest directly

II. Case 大力 is an Apple limited liability company’s president of the board and general manager. In his term of office, he directed the company’s accountant to lend money to Microsoft which is invested by his son for many times. With regard to this conduct, 幸福, who has 0.5% share of Apple is not happy and wanted Apple to sue Microsoft to get back money. But, the Apple wouldn’t like to do it. So, 幸福 used the shareholder indirect litigation right to bring action against Microsoft. 1.Did 幸福 do it right according to the law? 2.What if 幸福 can sue Microsoft, what is the claim? Get money back for himself or the company?

Article 150 Where any director, supervisor or senior manager violates laws, administrative regulations or the articles of association during the course of performing his duties, if any loss is caused to the company, he shall make compensation. III. Regulations involved

Article 152 Where a director or senior manager is under the circumstance as stated in Article 150 of this Law, the shareholder(s) of the limited liability company or joint stock limited company separately or jointly holding 1% or more of the total shares of the company may require the board of supervisors or the supervisor of the limited liability company with no board of supervisors in writing to file a lawsuit in the people's court. If the supervisor is under the circumstance as stated in Article 150 of this Law, the aforesaid shareholder(s) may require the board of directors or the acting director of the limited liability company with no board of directors to in writing lodge a lawsuit in the people's court.

III. Regulations involved If the board of supervisors, or supervisor of a limited liability company with no board of supervisors, or the board of directors or the acting director refuses to lodge a lawsuit after it (he) receives a written request as mentioned in the preceding paragraph, or if it or he fails to file a lawsuit within 30 days after it receives the request, or if, in an emergency, the failure to lodge a lawsuit immediately will cause unrecoverable damages to the interests of the company, the shareholder(s) as listed in the preceding paragraph may, on their own behalf, directly lodge a lawsuit in the people's court.

III. Regulations involved Subject: Limited liability company’s any shareholder Stock limited company, 180 days consistently holding equal to or more than 1% shares of the company Pre-suit demand: the board of supervisors (or supervisor of a limited liability company with no board of supervisors, or the board of directors or the acting director) refuse to lodge a lawsuit after he receives a written request or he fails to file a lawsuit within 30 days after it receives the request, or, if in an emergency, he fails to lodge a lawsuit immediately 1.Did 幸福 do it right according to the law? 2.What if 幸福 can sue Microsoft, what is the claim? Get money back for himself or the company?

IV. conclusion Shareholders have many kinds of rights in company law, we must study it very carefully so as to make a clear distinguish between them especially pay attention to the situation like ： when 、 where 、 in what pre-suit condition can the specific power be took advantage of.

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