Viewpoint... The determination of the executive partner of the limited partner's derivative litigation to exercise the right.

Published:

2022-07-08

In a limited partnership, because the limited partner does not participate in the execution of the partnership affairs, once the executive partner abuses the management power and neglects to perform his duties, the partnership will inevitably face the risk of damage to the rights and interests, and thus infringe the interests of other limited partners. There is not no remedy for the limited partner in the event that the partnership's interests are impaired by the executive partner's delay in performing his duties. Article 68 of the Partnership Act provides for a derivative litigation system for limited partners, which gives limited partners the right to sue in their own name on the basis of the interests of the partnership in the absence of the executive partner. But what is the standard for determining "slack in the exercise of rights" and slack in the exercise of rights? In view of the fact that there is no clear legal provision and no uniform standard in judicial practice, there is some controversy over the determination of the executive partner's slack in the exercise of rights in practice. Overview of 1. Limited Partner Derivative Litigation 1. Legal basis Article 68 of the Partnership Act provides that "a partner may not represent a limited partnership without performing partnership affairs. The following acts of the limited partner shall not be regarded as the execution of partnership affairs:&hellip;&hellip; (VII) the executive partner is negligent in exercising his rights, he shall be urged to exercise his rights or to file a lawsuit in his own name for the benefit of the enterprise&hellip;" This clause clarifies in law that the limited partner can file a derivative lawsuit, that is, the limited partner has the right to file a lawsuit in his own name based on the interests of the partnership. From this, it can be seen that the derivative litigation of limited partners should include the following elements:(1) the subject of the lawsuit: the limited partner (in his own name);(2) the premise of filing the lawsuit: the executive partner is idle in exercising his rights, and the interests of the partnership are damaged;(3) the purpose of filing the lawsuit is to safeguard the rights and interests of the partnership;(4) the subject of litigation interests belongs to the partnership (non limited partner). 2. Case Thinking According to the concept of "limited partner derivative litigation" and combined with the legal opinions previously issued to the consultant on the issue of limited partner derivative litigation, the author believes that whether the limited partner has the right to bring derivative litigation should be combined with the specific dispute matters, the subject matter of the litigation and so on to make a comprehensive judgment. For example, a limited partnership enterprise provides a loan to company B for a period of 2 years (January 1, 2021-December 31, 2022). company B provides mortgage guarantee for the debt with the real estate under its name. in December 2021, the executive partner of a limited partnership enterprise rescinds the mortgage guarantee measures provided by company B without internal decision. In response to the above, the consultant consults whether it, as a limited partner, can bring a derivative action. On this issue, we put forward the following opinions: 1.A Limited Partnership's claim to Company B has not expired, and before the maturity of the claim, the interests of A Limited Partnership have not yet incurred a definite loss of interest as a result of the lifting of the security measures, so it is not possible to bring a derivative action at this stage. 2. In view of this, it is proposed to send a letter to the executive partner requesting it to perform its duties as an executive partner in accordance with the law and to require the executive partner to actively negotiate with debtor B, which should include a request for new security measures from debtor B. 3. If, after the expiration of the term of the loan claim, the debtor does not pay off the debt and causes the partnership to suffer losses, the executive partner shall first claim the rights and bring a lawsuit against the debtor on behalf of the partnership, and if the executive partner neglects to exercise his rights, the company, as a limited partner, may bring a derivative action. It can be seen that the limited partner's derivative action must meet the statutory requirements, and the determination that the executive partner is negligent in exercising his rights needs to be considered comprehensively according to the specific circumstances of the dispute involved in the partnership. Judicial determination of 2. executive partner's slack in exercising rights Generally speaking, the failure to exercise the right can be understood as the right should be exercised and can be exercised without exercising. In a limited partnership, the general partner is obliged to perform the corresponding duties of the executive partner in accordance with the provisions of the law and the partnership agreement, and to safeguard the legitimate rights and interests of the limited partnership. In practice, the negative inaction of the executive partner occurs from time to time, and in the case of damage to the interests of the partnership or the risk of large losses, it fails to take relevant measures in a timely manner or takes a laissez-faire attitude, resulting in damage to the rights and interests of the limited partnership. According to relevant judicial decisions, the following behaviors of the executive partner may constitute "negligence in exercising rights": 1. Failure to file a lawsuit or arbitrate in time for relevant disputes; 2. Reach a new agreement with the parties involved in the dispute, but do not actively claim the rights agreed in the agreement, or the signing of the agreement itself violates the procedures and the content of the agreement harms the rights and interests of the partnership; 3. Ignore the supervision and suggestions of the limited partners, failure to take measures to assert rights against the relevant parties; 4. The executive partner is out of contact, unable to get in touch with him, and objectively no longer has the ability to perform the affairs of the executive partnership. The following is illustrated by several cases: <案例一>：世欣荣和投资管理股份有限公司与长安国际信托股份有限公司、天津鼎晖股权投资一期基金等合伙协议纠纷 【(2016)最高法民终19号 最高人民法院】   法院认为：世欣荣和公司在认为合伙企业东方高圣的权利被侵犯时，已经就相关问题向东方高圣及执行事务合伙人发函催告，要求东方高圣向人民法院提起民事诉讼，维护东方高圣的民事权利，东方高圣虽予以响应，但未依法提起民事诉讼，世欣荣和公司遂选择以自己的名义提起诉讼并无不妥，符合法律规定。  <案例二>焦建、刘强等与安徽瑞智房地产开发有限公司金融借款合同纠纷【(2016)最高法民终756号 最高人民法院】   法院认为：和信资本公司是否怠于行使权利，需要结合和信资本公司的作为，对案涉委托贷款发放之后的几个不同阶段逐一进行分析和判断。首先，案涉两笔委托贷款到期后不提起诉讼或仲裁，即为怠于行使权利。其次，和信资本公司于2015年1月2日加盖印章的《确认书》不能作为其积极督促还款的证明，和信资本公司未经有限合伙人全体一致同意即轻率地应瑞智公司的要求而进行盖章确认，并未对全体有限合伙人进行告知，且放任瑞智公司与合伙人解艳玲签订《折抵三方协议书》，系违背合伙协议约定的行为，不能作为其积极督促还款的证明。再次，和信资本公司于2015年6月24日签订的《协议书》，并不能否定其怠于行使权利，和信资本公司未经有限合伙人全体一致同意即轻率地应瑞智公司的要求而进行盖章确认，并未对全体有限合伙人进行告知，且放任瑞智公司与合伙人解艳玲签订《折抵三方协议书》，系违背合伙协议约定的行为，不能作为其积极督促还款的证明。  <案例三>：信达投资有限公司与河北融投置业有限公司、兴业银行股份有限公司石家庄分行等借款合同纠纷管辖权异议纠纷【(2016)最高法民辖终94号 最高人民法院】   法院认为:根据《中华人民共和国合伙企业法》第六十八条第二款第七项的规定，有限合伙人有权在“执行事务合伙人怠于行使权利时，督促其行使权利或者为了本企业的利益以自己的名义提起诉讼。”信达公司在融实投资和信瑞基金未能及时主张债权并依法收回贷款的情况下，以自己名义提起本案诉讼符合法律规定。  <案例四>：渤海国际信托股份有限与军民融合海洋防务（大连）产业投资企业（有限合伙）等合同纠纷【（2021）鲁01民初1680号 济南市中级人民法院】   法院认为：云华宝胤公司与渤海信托公司签订的《合伙协议》第二十条第九款约定，当合伙企业的利益受到损害且普通合伙人或执行事务合伙人怠于行使合伙企业的权利时，有限合伙人有权督促其行使权利或为了合伙企业的利益以自己的名义提起诉讼或者仲裁。渤海信托公司提交的2021年9月10日的《清算通知函》证实，富时动力1号资管计划单位净值低于补仓线后，云华宝胤公司作为普通合伙人及执行事务合伙人怠于行使合伙企业权利，未能及时向军民融合投资企业主张权利，渤海信托公司作为有限合伙人以自己的名义提起本案诉讼，要求军民融合投资企业向云华增润合伙企业支付补仓保证金并按照日万分之五支付违约金，符合《合伙协议》及《补仓协议》的约定及法律规定，本院予以支持。  <案例五>: Zhu Yutong and Guangzhou International Procurement Center Co., Ltd., Guangzhou Huanbo Exhibition Co., Ltd., Guangzhou Branch of China CITIC Bank Co., Ltd., Guangzhou Kaide Borui Investment Partnership Private Loan Dispute [(2015) Sui Tian Fa Jin Min Chu Zi No. 5336 Tianhe District People's Court of Guangzhou City, Guangdong Province]] The court held that: in this case, Guangzhou Cade Perry Enterprise entrusted CITIC Bank Guangzhou Branch to provide loans to Guangzhou Guocai Company, but Guangzhou Guocai Company did not return the money after the loan expired, and the plaintiff sent a letter urging general partner Shanghai Qingke Company, the company has been unable to contact. Therefore, the plaintiff, as a limited partner, has the right to file a lawsuit in the name of an individual for the benefit of the limited partnership in accordance with the law and the contract when the general partner neglects to recover the claims determined in accordance with the entrusted loan entrustment contract and the RMB entrusted loan loan loan contract. It should be noted that the above-mentioned four cases are only a summary of the above-mentioned existing decisions on the "lazy exercise of rights" behavior, in view of the limitations of the search case, is not enough to fully cover the executive partner's lazy exercise of rights. In specific practice, whether it constitutes "idle exercise of rights" needs to be determined by comprehensive consideration of various factors such as the specific affairs involved in the limited partnership, the subjective and objective behavior of the executive partner and the risk of damage to the rights and interests of the partnership. If a limited partner only files a derivative lawsuit on the grounds of improper behavior of the executive partner, there is a possibility that the court will reject the lawsuit. For example, in the case of equity transfer dispute between (2022) Jingmin Zhongzhong No. 200 Shenzhou High-speed Railway Technology Co., Ltd. and Beijing Huaruan Changqing Investment Partnership (Limited Partnership), the court held that from the perspective of the transaction process, in this case, the circumstances of "slack in the exercise of rights" are not significant. According to the evidence submitted by Shenzhou High-speed Railway Company and Guorun Investment Center, it can be seen that during the sale period and after the expiration of the sale period, Guorun Investment Center has repeatedly sent letters to Huaran Partnership and Wang Guangyu in accordance with the letter requirements of Shenzhou High-speed Railway Company, requiring both parties to complete the repurchase work as soon as possible and assume corresponding responsibilities. After the case was filed, guorun Investment Center has filed a lawsuit against Huasuan Partnership and Wang Guangyu in Haidian Court under the Repurchase Agreement, which is true and valid. The above behavior shows that Guorun Investment Center has taken corresponding measures to safeguard its own rights. Although it has not reached an agreement such as extension and has not filed a lawsuit in the first time, it has indeed claimed its rights through litigation and still has the willingness to actively resolve disputes and safeguard its rights. Shenzhou High-speed Railway Company has not yet achieved the litigation conditions for bringing this case to the court, so it ruled to reject the lawsuit of Shenzhou High-speed Railway Company. 3. epilogue In summary, the executive partner's lack of exercise of rights is the basic premise and substantive elements of the derivative action brought by the limited partner, in practice, the circumstances of the derivative action brought by the limited partner are different, need to be combined with the specific circumstances of the case to make a comprehensive judgment. For the limited partners, the rights and interests of the partnership are closely related to their own investment interests, and the filing of derivative litigation is an important way to safeguard the rights and interests of the partnership and their own interests when the executive partner neglects to perform his duties. In the limited partner derivative litigation system, how to prove that the executive partner is "lazy in exercising his rights" is particularly critical. In order to effectively use the limited partner derivative litigation system to protect the rights and interests of the partnership and the interests of the limited partners, it is recommended that the limited partners make a clear agreement in the partnership agreement on the situation where the executive partner is lazy in exercising his rights, and realize the litigation purpose by setting the clause arrangement for filing derivative litigation in advance. In addition, A limited partner may fix evidence of his or her negligence in exercising his or her rights by, for example, sending a letter to the executive partner to prevent the failure of proof in later litigation. </案例五></案例四></案例三></案例二></案例一>

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