On January 2, 2025, the Supreme People's Court (SPC) released five landmark cases to commemorate the fifth anniversary of the Foreign Investment Law, emphasizing China's commitment to protecting foreign investors' rights and fostering a fair business environment.
The following table summarizes the key categories and main points of each case:
|
Category |
Main Content |
|
Director Misconduct |
The court emphasized that foreign investors in China depend on executives for management, making their due diligence and loyalty vital. In determining a general manager's liability for self-dealing, the court, under the Company Law, extended the scope of the prohibition on self-dealing to cover transactions involving executives' close relatives and controlled companies |
|
Shareholder Information Rights |
This Wuxi case involved a shareholder's right to information. The court applied the laws of different jurisdictions to different legal issues, as the facts required. This case underscores the Chinese Courts' commitment to applying foreign laws fairly, ensuring the protection of foreign investors' rights. |
|
Corporate Dissolution |
A Beijing court, at a German company's request, dissolved a joint venture due to deadlock. The Court emphasized that judicial dissolution is important for protecting shareholder interests when internal governance fails. At the same time, the court provided guidance to the parties, underscoring the importance of considering alternative cooperation models to achieve win-win outcomes. |
|
Return of Business Licenses |
In this case, the original legal representatives of a company refused to comply with shareholder and board resolutions and misused their control over company documents, thereby harming the business. The court applied preservation measures under the Civil Procedure Law and ruled that the revoked business license had to be returned to the foreign investor. |
|
Related-Party Transactions |
This Shandong case involved a dispute over related-party transactions. The court considered the joint venture's operational status and the parties' willingness to continue cooperation. Through mediation, the court successfully facilitated a settlement, resolving the dispute with minimal cost and enabling the joint venture to resume normal operations. |
These decisions underscore China's commitment to providing a stable legal framework for foreign investment and ensuring equitable treatment for foreign enterprises.
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