Corporate Litigation Study... The shareholder register of the company's litigation rules records disputes.

Foreword A dispute over the record of the register of shareholders is a dispute arising from the failure to make timely changes to the register of shareholders after the transfer of shares or the error of the record of the register of shareholders due to various other reasons, which in turn leads to the inability of shareholders to claim their rights on the basis of the records in the register of shareholders. In practice, disputes recorded in the register of shareholders are often litigated together with disputes over the confirmation of shareholders' qualifications and disputes over requests to change the registration of the company. By combing the relevant laws, supplemented by monographs and typical cases, this paper tries to clarify the relevant legal provisions and judicial rules for reference. Relevant provisions (I) related laws 1. the People's Republic of China Civil Procedure Law Article 26 Litigation arising from disputes over the establishment of a company, confirmation of shareholder qualifications, distribution of profits, dissolution, etc., shall be under the jurisdiction of the people's court of the place where the company is domiciled. 2. Companies Act of the People's Republic of China Article 23 The establishment of a limited liability company shall meet the following conditions: (1) The number of shareholders meets the quorum; the (II) has the amount of capital contributions subscribed by all shareholders in accordance with the company's articles of association; the (III) shareholders jointly formulate the company's articles of association; the (IV) has a company name, Establish an organization that meets the requirements of a limited liability company; (V) have a company's domicile. Article 24 A limited liability company shall be established by not more than 50 shareholders. Article 25 The articles of association of a limited liability company shall specify the following matters: (1) the name and domicile of the company; the business scope of the (II) company; the registered capital of the (III) company; the name or name of the (IV) shareholder; the mode, amount and time of capital contribution of the (V) shareholder; the organization of the (VI) company and its method of formation, powers and rules of procedure; the legal representative of the (VII) company; (VIII) other matters deemed necessary by the shareholders' meeting. The shareholders shall sign and seal the articles of association. Article 32 A limited liability company shall keep a register of shareholders, which shall record the following matters: (1) the name or names and domicile of the shareholders; the amount of capital contribution of the (II) shareholders; (III) the number of the certificate of capital contribution. Shareholders recorded in the register of shareholders may claim to exercise their rights in accordance with the register of shareholders. The company shall register the names of the shareholders with the company registration authority; if the registration items are changed, the change registration shall be carried out. If the registration is not registered or the registration is changed, it shall not be used against a third party. (II) relevant judicial interpretation 1. (III) of the Provisions of the Supreme People's Court on Several Issues concerning the Application of the the People's Republic of China Company Law Article 22 If there is a dispute between the parties over the ownership of equity, and one party requests the people's court to confirm that it enjoys the equity, it shall prove one of the following facts: (1) it has contributed or subscribed to the company in accordance with the law, and does not violate the mandatory provisions of laws and regulations; the (II) has been transferred or inherited the company's equity in other forms, and does not violate the mandatory provisions of laws and regulations. Article 23 After the parties have fulfilled their capital contribution obligations or acquired equity in accordance with the law, the company has not issued a capital contribution certificate in accordance with the provisions of Articles 31 and 32 of the Company Law, recorded it in the register of shareholders and registered with the company registration authority. If the parties request the company to perform the above obligations, the people's court shall support it. 2. Interpretation of the Supreme People's Court on the Application of the the People's Republic of China Civil Procedure Law Article 3 The domicile of a citizen refers to the place where the citizen's household registration is located, and the domicile of a legal person or other organization refers to the place where the main office of the legal person or other organization is located. If the location of the principal office of a legal person or other organization cannot be determined, the place of registration or registration of the legal person or other organization shall be the place of domicile. Article 22 Jurisdiction shall be determined in accordance with the provisions of Article 26 of the Civil Procedure Law for lawsuits arising from disputes over records in the register of shareholders, requests for changes in company registration, shareholders' right to know, company resolutions, company mergers, company division, company capital reduction, company capital increase, etc. Provisions issued by regional courts in (III) 1. (I) of the Higher People's Court of Shanghai Municipality on Several Issues Concerning the Trial of Cases Involving Company Disputes If the shareholders of a limited liability company transfer their shares to others, they shall obtain the consent of more than half of the shareholders of the company according to the provisions of Article 35 of the Company Law. If the shares are transferred without consent and other shareholders of the company do not approve the shares after the contract is signed, the equity transfer contract shall not be effective for the company, and the transferor shall bear the liability for breach of contract to the transferee, if other shareholders of the company do not approve, the transferor shall not bear the liability for breach of contract. After the equity transfer contract is signed with the consent of other shareholders, the company shall go through the formalities of changing the registration of shareholders, and the transferee shall exercise its rights to the company as a shareholder. If the company fails to go through the relevant formalities, the transferee may bring a right confirmation lawsuit for the defendant and may not claim cancellation of the contract from the transferor. 2. Guidelines of the Guangxi Higher People's Court on Several Issues Concerning the Trial of Company Dispute Cases 19. [The situation where the equity transfer contract clearly stipulates the time point of equity change] Once the equity transfer contract is established and effective, it can bind both parties to the contract. If the parties expressly agree on the point in time of the equity change, generally speaking, the point in time may be the performance of the contract such as the payment of shares or the payment of a certain period of shares, or it may be consistent with the company's confirmation of the transfer of shares, such as the company's change of the register of shareholders and the registration of industrial and commercial changes. If the parties agree that the time point of the change of equity is earlier than the company confirms the transfer of equity, then only a certain transfer of equity effect occurs between the parties to the contract, at which time the specific effect of the equity transferee can obtain includes:(1) the right to request the change procedures. That is, the right to request the company to change the register of shareholders, issue a certificate of capital contribution and register the industrial and commercial change;(2) the right to equity income. That is, a request is made to the equity transferor for payment of the property interest that the transferor has acquired from the company after the point in time at which the interest is transferred. 3. Opinions of Shandong Higher People's Court on Several Issues Concerning the Trial of Company Dispute Cases 41. If the shareholders request the company to issue a certificate of capital contribution, record it in the register of shareholders and the articles of association of the company, and go through the procedures for the change of industrial and commercial registration, the company refuses to do so, and the people's court shall support the shareholder's lawsuit requesting the company to perform its obligations. Related Articles 1. Zhang Shuanggen: "On the Determination of Shareholder Qualification of Limited Liability Company-Centered on the Construction of the Shareholder Register System" The shareholder register system refers to the situation in which there is a dispute over whether the subject recorded in the shareholder register is a true shareholder. Such disputes are in the category of litigation and belong to the confirmation of shareholder qualification. As mentioned above, in the internal operation of the company, shareholder qualification is a prerequisite for shareholders to claim their rights and the operation of the corporate governance structure, to a large extent belongs to the scope of the company's program, so based on the above principle, can be solved by using the formal shareholder roster standard. However, in the dispute over shareholder qualification, shareholder qualification is the core and focus of the dispute, and what is questioned is precisely the record of the shareholder roster, so at this time the consideration is the probative force of the evidence cited by the parties. However, there are no more than two kinds of disputes: either the evidence presented by the doubters is not sufficient to prove that there is an error in the record of the register of shareholders, the record of the register of shareholders is still maintained; or the evidence has proved that there is an error in the record of the register of shareholders, the record of the register of shareholders is overturned, thus initiating the correction procedure of the register of shareholders and correcting the error. 2. Xu Hao: Discussion on the Relationship between Equity Transfer of Company Law and Shareholder Qualification-Based on Judgment No. 0011 of Wan Min Er Zhong Zi (2009) After the transfer of shares occurs, the transferee of shares notifies the company of the fact of the transfer of shares, and the company is obliged to change the register of shareholders and the industrial and commercial registration. The register of shareholders has the effect of confrontation, and the shareholders recorded in the register of shareholders may claim to exercise the rights of shareholders in accordance with the register of shareholders. 3. Song Limei: Study on the Register of Shareholders of Limited Liability Companies in China The register of shareholders, as a statutory and necessary book of a limited liability company (hereinafter referred to as a "limited liability company"), is an internal document of the company. The shareholder register system plays a very important role in the field of corporate law system. In the case of a company, the company may determine the members of the company through the register of shareholders and maintain the status of a limited company as an independent legal person, and in the case of shareholders, shareholders may claim shareholders' rights by virtue of the presumptive role of the register of shareholders. Summary of Litigation [plaintiff]: shareholder Defendant: Company Third person: Other interested parties [jurisdiction]: under the jurisdiction of the people's court of the company's domicile [Claim]]: 1. Order the defendant to record the name and address of the plaintiff, the amount of capital contribution and the number of the capital contribution certificate in the register of shareholders and to register the name of the plaintiff (shareholder) with the company registration authority; 2. The costs of litigation in this case shall be borne by the defendant. Related Cases and Judgment Rules [Case 1: Chen Weixian and Guangxi Zhuang Autonomous Region Guigang Food Co., Ltd. Register of Shareholders Record Dispute No. (2019) Gui 0802 Minchu No. 447]] The People's Court of Gangbei District, Guigang City, Guangxi Zhuang Autonomous Region held that: Article 32 of the Company Law stipulates that a limited liability company shall keep a register of shareholders, which shall record the following matters: (1) the name or domicile of the shareholders; the amount of capital contribution of the (II) shareholders; (III) the number of the capital contribution certificate; shareholders who record the register of shareholders may claim to exercise their rights in accordance with the register of shareholders. The company shall register the names of the shareholders with the company registration authority; if the registration items are changed, the change registration shall be carried out. If the registration is not registered or the registration is changed, it shall not be used against a third party. This case is a food company in the government-led restructuring, due to the confirmation of the company's shareholder qualifications and disputes. In this case, in order to confirm the shareholder qualification of the limited liability company, in addition to the relevant provisions of the company law, it is also necessary to comprehensively consider the relevant policies and regulations of government departments on the restructuring of state-owned enterprises. According to the approval of Guigang Municipal People's Government, Chen Weixian subscribed for 3000 yuan of state-owned assets of Guigang Food Corporation. After Guigang Food Corporation was restructured and renamed as a food company, Chen Weixian should be recognized as the actual investor and shareholder of the food company. As the law stipulates that the registered shareholders of a limited liability company are less than 50 and the provisions of food companies, only those with a capital contribution of more than 30000 yuan are registered as shareholders of the company. When the food company was established, the actual funder reached 286, Chen Weixian's capital contribution was 3000 yuan, according to the internal regulations of the food company, Chen Weixian failed to register as a nominal shareholder of the food company, but the food company should record Chen Weixian as a shareholder of the company in the register of shareholders. According to the industrial and commercial registration information, the nominal shareholders registered by the food company are Ning Yuanming and Guigang Bandung Building Materials Trading Co., Ltd. In the case of no more than 50 nominal shareholders, the food company shall apply to the industrial and commercial registration department for registration of Chen Weixian as a shareholder of the company. Therefore, Chen Weixian's request is supported. [Summary of the Referee]]: In the process of restructuring a state-owned enterprise into a limited company, it should be affirmed that the shareholders who contribute less have the status of actual investors. In the event that the number of shareholders of a limited liability company exceeds the quorum, the shareholder representatives may be elected on the basis of the autonomy of the company, but the relevant information of other shareholders who are not representatives of shareholders shall still be fully recorded in the internal register of shareholders. Where the number of shareholders of a limited liability company does not exceed a quorum, the claim of other shareholders who are not representatives of shareholders to register their names with the company registration authority should be supported. [Case 2: Changchun Friendship Store Co., Ltd. and Chi Yang and Zhang Xifang's Shareholder Register Record Dispute No. (2017) Ji 0104 Min Chu No. 4108]] The People's Court of Chaoyang District, Changchun City, Jilin Province held: 1. The original shareholders of Changchun Friendship Department Store Co., Ltd. were 166. When the company was changed from a joint-stock cooperative company to a limited company, a general meeting of shareholders should be held in accordance with the provisions of the Company Law, but the defendant failed to show the resolution of the general meeting of shareholders, and the change in the form of the company was flawed. During the period, although the majority of shareholders entrusted 11 shareholders' representatives to hold the shares on their behalf, and the board of directors of the company decided to handle the remaining shareholders who did not sign the power of attorney as holding on behalf of the decision, but in the case of the two plaintiffs without the consent of the majority of shareholders or in the name of the board of directors, the shareholders who did not have the intention to be anonymous cannot be changed into anonymous shareholders. Afterwards, the board of the two plaintiffs, therefore, the decision made by the board of directors on behalf of the plaintiff is invalid, and Changchun Friendship Store Co., Ltd. shall restore the shareholder qualification of the two plaintiffs. 2. Because there is no share holding agreement between the two plaintiffs and the share holder Yang Chunguang, Changchun Friendship Store Co., Ltd. claims to apply the provisions of Article 24, paragraph 2, of the "Interpretation III of the Company Law", and other shareholders of the existing company do not agree. For the reason, the shareholder qualification of the two plaintiffs is not recognized. Since the shareholders of the present limited company knew from the beginning that the two plaintiffs were the actual contributors of the company, in the absence of a proxy agreement, the actual contributors should enjoy the status of shareholders in accordance with the law, and the defendant's justification could not be established. [Summary of the Referee]]: 1. When the company is restructured, the general meeting of shareholders shall be held in accordance with the relevant provisions of the Company Law. If the general meeting of shareholders is not held, there are procedural defects in the change of the form of the company. 2. Without the knowledge or consent of the shareholders, a shareholder who has no hidden will cannot be forced to become a hidden shareholder with the consent of a majority of other shareholders or in the name of the board of directors. 3. There is no agreement on the holding of shares between the shareholders and the holders of shares, and the actual contributors shall enjoy the status of shareholders in accordance with the law. In the absence of a valid proxy agreement and in the case that the shareholders of an existing limited company know from the beginning that a shareholder is the actual investor of the company, they shall not, in accordance with the provisions of Article 24, paragraph 2, of the Judicial Interpretation III of the Company Law, on the grounds that other shareholders of the existing company do not agree, do not recognize their shareholder qualifications. [Case 3: Shanghai Lintongyan Li Guohao Civil Engineering Consulting Co., Ltd. and Tongji Engineering Group Co., Ltd. recorded dispute case No. (2018) Shanghai 02 Minzong No. 82]] The court of first instance, Shanghai Chongming District Court, held that Lin Li Company recognized that the company had a register of shareholders and issued a certificate of capital contribution to the four shareholders registered in industry and commerce. The equity transfer contractual relationship between Tongji Engineering Company and Tongji Innovation Company is legal and valid. Tongji Engineering Company has acquired 30% of the shares of Lin Li Company originally held by Tongji Innovation Company through bidding for a fee, and has paid off all the shares transfer funds, which has replaced Tongji Innovation Company as a shareholder of Lin Li Company. According to the law, a limited liability company shall issue a certificate of capital contribution to its shareholders, which shall state the name of the company, the date of establishment, the registered capital of the company, the name or name of the shareholder, the amount of capital contribution paid and the date of capital contribution, the number of the capital contribution certificate and the date of issuance. The company shall keep a register of shareholders, recording the names and domiciles of the shareholders, the amount of capital contribution of the shareholders and the number of the certificate of capital contribution. The company shall register the names of the shareholders with the company registration authority, and shall register the change in the registration matters. Now Tongji Engineering Company requires Lin Li Company to record Tongji Engineering Company in the register of shareholders and handle the application for change registration, which is in line with the law and supported by the court of first instance. Lin Li company once to equity transferor Tongji Chuang

2021-12-09

Lawyer Yao Li of Dezhou Institute participated in the training course on improving the comprehensive ability of lawyers in the province to participate in resolving and acting for law-related complaint letters and visits.

In order to give full play to the positive role of lawyers in safeguarding the legitimate rights and interests of the masses, resolving contradictions and disputes, and promoting social harmony and stability, from December 6 to 8, the Department of Justice of Shandong Province held a training course on improving the comprehensive ability of lawyers from all over the province to participate in resolving and acting for law-related letters and visits in Xinhang Building, Jinan City. Yao Li, partner of Shandong Zhongcheng Qingtai (Dezhou) Law Firm, was selected by Dezhou Judicial Bureau to participate in the training. The training takes the form of topic lectures, special seminars, case studies and other teaching forms, focusing on five major topics, including lawyer practice risk prevention and control and administrative punishment, conflict resolution practice, civil code guarantee practice, criminal trial practice, judicial reform hotspots and criminal litigation follow-up, to enhance the legal awareness, legal literacy and practice ability of lawyers on duty involved in law and litigation. Lawyer Yao Li said that through this training, he exchanged and learned with outstanding law-related and litigation-related petition lawyers from all over the province, broadened his thinking, strengthened his confidence and confidence in doing a good job in law-related and litigation-related petition work, and will continue to give full play to his enthusiasm and initiative in the future, do a good job in law-related petition work, and make positive contributions to the construction of Safe Dezhou.

2021-12-09

Lawyer Deng Pu held a publicity lecture on "Constitution Learning and Investment Risk Prevention" for Shandong High-speed Investment Development Co., Ltd.

In order to further popularize the knowledge of the Constitution, guide people from all walks of life to form a good fashion of carrying forward the spirit of the Constitution and safeguarding the authority of the Constitution, vigorously carry forward the spirit of the socialist rule of law, and further enhance the legal awareness of the whole people, on the afternoon of December 7, Deng Pu, a lawyer from Zhongcheng Qingtai (Jinan) Law firm, gave a publicity lecture on "Constitution Learning and Investment risk Prevention" for Shandong High Speed Investment Development Co., Ltd. Lawyer Deng Pu first preached the status of the Constitution, the main content of the Constitution, and the thought and significance of the 2018 Constitution Amendment, and then combined with the business model of Shandong High-speed Investment Development Co., Ltd., explained the legal risk prevention and the need to focus on the investment process. The problem was highly praised by Shandong High-speed Investment Development Co., Ltd.

2021-12-09

Viewpoint... A brief analysis of the responsibility of law firms in the securities market -- take the "Five Foreign Bonds Case" as an example.

1. Introduction In 2015, Wuyang Construction Group Co., Ltd. (hereinafter referred to as Wuyang Construction) issued a bond of 1.36 billion yuan to the public, which was materially defaulted due to its failure to pay the principal and interest as scheduled. After investigation by the CSRC, Wuyang Construction has false records in the issuance application documents. After the investor claims to the issuer and the intermediary to pursue its liability. In September 2021, the Zhejiang Provincial High Court made a final judgment on the case, rejecting the appeals of various intermediary agencies, and ruled that all intermediary agencies in this case were jointly and severally liable. Among them, the court held that Shanghai Jintiancheng Law Firm issued a legal opinion for the bond issue, did not work diligently and dutifully, there was a certain fault, and decided that Jintiancheng Law Institute should be responsible for 5% of the scope of joint and several liability. This case is the first case of the application of the representative litigation system in the field of securities in China, and it is also the first time that a law firm has been included in the scope of joint and several liability, thus causing a lot of waves in the industry. 2. case analysis 1. Inadequacy of the reasoning part of the court decision In the first instance judgment of this case, the Hangzhou Intermediate Court's reasoning part of the responsibility of Jintiancheng Law Firm is as follows: Under the circumstances that Dagong International's 2015 Corporate Bond Credit Rating Report has prompted Wuyang Construction Holding Subsidiary to sell investment real estate, Jintiancheng Law Firm has not paid attention to the verification of the major contract and the major asset changes involved, has not conducted due diligence on the ownership of real estate, and has not found the legal risks to Wuyang Construction's solvency caused by the relatively high reduction of major assets. Therefore, Jintiancheng Law Firm has not worked diligently and is at fault. It is not difficult to see that the court believes that the law firm's fault lies in the failure to find that Wuyang Construction has a relatively high proportion of significant asset reductions, but what is the basis for this fault? What is the scope of the law firm's due investigation? Is the law firm capable of having an obligation to investigate asset changes? Is there a causal relationship between the law firm's fault and the bond default? The court did not elaborate further. In fact, the law firm does not have much power to conduct a comprehensive investigation of the issuer in the process of issuing bonds. In other words, as an intermediary, the due diligence ability and authority of law firms are completely different from those of administrative agencies. It is undoubtedly a harsh criticism to impose requirements on intermediary agencies with the verification ability of administrative agencies and exchanges as a general standard. It would be far-fetched for the court to decide that the firm was liable on this point alone, especially since it is estimated that Jintiancheng's liability is about 500 times as much as the service fee it charges. 2. Intersection of commercial and legal risks The supervision of the securities market by law firms is mainly reflected in the control of legal risks, but the rating report in this case shows that the company sells investment properties. It is questionable whether this should be included in the scope of legal risk review. The sale of real estate in exchange for the purchase of a house is a price exchange, even if the final reduction of assets, is also a normal business risk faced by the company, such a decision may be based on the future development of the company's various considerations, if the regulatory authorities only engage in the results of the determination of violations, it is not a cause of suspicion. The law's regulation of commercial risk is more procedural than substantive, which also requires the law to focus on the static ownership of assets rather than dynamic asset changes in the reality of the investigation, in fact, lawyers do not have the ability to fully estimate and predict the risk of the commercial field. Of course, commercial risk and legal risk are by no means distinct, and the outcome of the case also suggests that legal practitioners should pay attention to the investigation of such two related situations. 3. Law Firm Liability Boundaries 1. The basis for the joint and several liability of the law firm. According to Article 163 of the Securities Law, if the documents produced or issued by a securities service institution contain false records, misleading statements or material omissions, causing losses to others, it shall be jointly and severally liable with the principal, except where it can prove that it is not at fault. It follows that this is a presumption of fault liability, the problem is how to determine the fault of the law firm, and the determination of whether there is fault involves the law's obligations in the securities market. The Securities Law does not clearly stipulate this. According to Article 14 of the "Administrative Measures for Law Firms Engaging in Securities Legal Business" (hereinafter referred to as the "Administrative Measures") issued by the Ministry of Justice and the China Securities Regulatory Commission, when lawyers issue legal opinions, they are related to the law. The business matters of China shall perform the special duty of care of legal professionals, and perform the general duty of care of ordinary people for other business matters. This provision distinguishes between two different types of duty of care. Article 15 of the Administrative Measures stipulates that documents directly obtained by lawyers from state agencies, organizations with the function of managing public affairs, accounting firms, asset appraisal agencies, credit rating agencies, and notary agencies may be used as the basis for issuing legal opinions, but Lawyers shall perform the duty of care stipulated in Article 14 of these Measures and explain them. The question about this article is to what extent of the duty of care does the law firm review the materials issued by other intermediaries? What is the difference between the special duty of care and the general duty of care? These are not clearly defined, which gives the court more room for discretion. 2. Understanding within the framework of existing rules The process of issuing legal opinions by law firms often involves the review of a large number of materials issued by other institutions, so when these materials are falsely recorded, is the law firm necessarily liable? The answer is no. The court in this case also did not point out that the law firm should bear full responsibility for the untruthfulness of the materials, but the key lies in whether the law firm is diligent and conscientious in the investigation process, that is, whether it has fulfilled the relevant duty of care. Therefore, according to Article 14 of the Administrative Measures, it is particularly important to distinguish between legal and non-legal matters. The author believes that in the absence of clear legal rules and guidelines, the "Rules for the Reporting of Information Disclosure of Publicly Issued Securities Companies" No. 12 issued by the China Securities Regulatory Commission has certain reference value. The specification makes more detailed provisions on the contents of legal opinions and lawyers' work reports, which is an important basis for clarifying lawyers' duty of care in the securities market. In practical work, it is worth noting that matters that meet the duty of special attention should be shown through a clear carrier, and in the process of making legal opinions, attention should be paid to the process of collecting and fixing relevant evidence. keep relevant examination records and working papers, in order to reduce the risk of liability. 3. A brief outlook for the future of the responsibility of intermediaries. Accurate data-based trial mode is the general trend of judicial reform in the future, and it is no exception in the highly digital securities market. The author thinks that the judicial organ can at least consider the responsibility determination in the following aspects: first, distinguish the size of the fault according to subjective factors, such as intentional, knowing that it should be known and laissez faire or gross negligence, general and minor negligence; second, it pays attention to the argument of causality, focusing on the extent to which the behavior of intermediary institutions leads to the final loss of investors; finally, the unity of power and responsibility, liability should be adapted to the fees charged by the intermediary. 4. epilogue After the implementation of the new "Securities Law", my country's protection of the rights of small and medium investors in the securities market has reached a new level, but judicial practice has also brought doubts about the excessive crackdown on intermediaries and "overcorrection. As legal workers, we should clearly understand the risks of the work of lawyers in the securities market, improve the level of understanding of relevant laws and regulations, and constantly promote the development and improvement of various systems in China's securities market.

2021-12-08

Viewpoint | A brief description of the design and advantages and disadvantages of the "poison pill plan"

Equity dilution anti-acquisition measures, or poison pill plan, refers to a company in the event of a hostile acquisition, through the issuance of new shares to increase the cost of the acquirer, or increase the risk of dilution of the shares held by the original shareholders of the acquirer after the successful acquisition, to resist the acquisition of a defensive measure. The poison pill plan has the characteristics of immediacy, pertinence and diversity. Since the start of Martin Lipton in 1982, the design has become the most popular anti-takeover measure for listed companies in the United States. In 2005, in the face of Shanda's acquisition, Sina introduced the poison pill plan as a powerful tool into China for the first time. This article will introduce the design ideas and advantages and disadvantages of several common poison pill programs. Prerequisites for the application of the 1. poison pill program The (I) poison pill program needs to be supported by the authorized capital system. The authorized capital system refers to the establishment of the company, although the total amount of registered capital should be determined in the articles of association, but the promoter only needs to subscribe for part of the shares, the company can be formally established, the rest of the shares, authorized the board of directors according to the company's production and operation situation and the securities market market at any time to issue the company's capital system. Although after the revision of the Company Law in 2013, China fully applied the payment system and played down the decisive role of the three principles of capital, it still adopted the statutory capital system. As a result, domestically listed companies are unable to adopt the poison pill program, while companies listed in common law countries and regions have no such concerns. (II) POISON PILLS PLAN REQUIRES CIRCULATION OF WARRANTIES A warrant is a call option issued by a company limited by shares to subscribe to its shares. It gives the holder the right to purchase certain shares of the issuing company at a pre-agreed price within a certain period of time. The types of securities stipulated in China's Securities Law are enumerated and do not allow the circulation of warrants. However, in the Hong Kong and US stock markets, such securities are quite popular. (III) poison pill program is an extension of boardroom centrism Board centralism means that the board of directors is at the core of corporate governance. In the design of the poison pill program, the board of directors is required to evaluate, make decisions and make corresponding plans and measures on the acquirer's offer in a timely manner. On the other hand, this is also an integral requirement of the authorized capital system. General Design Idea of 2. Poison Pill Program (I) valgus poison pill 1. Distribution of subscription rights The company distributes a special stock subscription right to common shareholders on a one-to-one basis. The subscription right is essentially a contract between the company and its shareholders. The Subscription Rights shall not be exercised until the conditions of activation have been met. Once activated, the subscription right can be separated from the common stock, and the acquirer must acquire the common stock and the special share subscription right separately, making it more difficult to acquire. 2. Activation Conditions There are two activation conditions for subscription rights. First, the acquisition direction of a certain proportion of the holders of shares issued a takeover offer, at this time the activation is designed to warn the acquirer, to prevent the acquisition effect. Second, without the consent of the acquired company institutions or individuals to achieve a certain percentage of the acquired company's shareholding, at this time the hostile takeover has begun, the company will take more drastic measures. 3. Content of subscription rights As a result of the merger, the surviving company will inherit all the rights and obligations of the acquired company, including, naturally, the company's contractual obligations to its shareholders. Therefore, after the activation condition is fulfilled, the holder of each special stock subscription right has the right to purchase the common stock of the surviving company one to two. The exercise price, which is only half of the market price of the stock, is clearly attractive to subscription rights holders. In this way, after the completion of the acquisition, the proportion of shares held by the original acquirer shareholders in the surviving company will be greatly diluted, which is the "toxicity" of the poison pill. And it is precisely because the plan allows the acquirer's shareholders to buy the acquirer's stock that it is known as an outward-turning poison pill. 4. Redemption clause The poison pill program designed two different redemption clauses for two different activation conditions. If the poison pill is activated because of the first condition, the company has the right to redeem the subscription right at a low price before the right is exercised. However, if the poison pill program is activated for the second reason, it can no longer be redeemed. This clause is aimed at a two-tier tender offer (I. e., the acquirer promises to acquire a certain percentage of the shares at a high price and then the remaining shares at a low price) to prevent the acquirer from controlling the board of directors with its shareholding ratio and then making a second round of acquisitions. (II) varus poison pill The design idea of the inverted poison pill is roughly the same as that of the inverted poison pill. The main difference is the content of the subscription right and the extension of the foreclosure right. Once the inverted poison pill is activated, shareholders of the acquired company other than the acquirer can purchase the target company's own stock at half price. At this point the acquirer's stake in the target company is greatly diluted, thereby increasing the cost of the acquisition and even losing the possibility of seizing control. The inward-turning poison pill often generally provides for foreclosure. Since the acquirer did not yet have control of the acquired company when the inverted poison pill took effect, the influence on the board of directors was not deep enough. So the board has the flexibility to respond to the takeover offer. There was a third generation of the poison pill program, but it was not recognized by the Delaware courts. Therefore, most of the current listed companies are using a combination of outward and inward poison pill plan, that is, when the acquirer occupies a certain proportion of the company's shares, the acquired shareholders have the right to exercise the inward-turning poison pill, after the completion of the acquisition, the right to exercise the outward-turning poison pill. Advantages and Disadvantages of the 3. Poison Pill Program The poison pill program first has the advantage of immediacy. In the U.S. corporate law system of authorized capital, the board of directors is able to make and implement a plan based on the actual situation immediately after the acquirer initiates the acquisition, and in the absence of a hostile takeover, the preparation of the plan is not harmful to the company's equity structure. Secondly, as the redemption clause can be flexibly used after the optimization of the poison pill plan, the board of directors has more room for negotiation with the acquirer, which is more conducive to fighting for the interests of the company, shareholders and even themselves. Finally, the poison pill program poses a very significant threat to the acquirer relative to other anti-takeover measures. In the absence of a lawsuit to deny the poison pill program itself, most acquirers are repulsed by the poison pill program. At the same time, there is a downside to the poison pill program. Once the poison pill plan is implemented, it will have a huge impact on the equity structure of both companies. Since the companies implementing the poison pill plan are basically listed companies, major changes in the shareholding structure will cause severe fluctuations in the company's market value, which will undoubtedly harm the interests of shareholders, especially public investors. It is precisely because of this that many countries and regions are cautious about the poison pill program. In addition to the support of the United States, Japan chose to approve it after several iterations. Britain and Singapore banned the poison pill program in principle, but left room. Hong Kong law, which has the same origin, has a rather ambiguous attitude towards this. Chow Tai Fook's New World Development successfully resisted the malicious acquisition of the Naughty Child Fund through the poison pill program. Of course, the existence of the poison pill program is itself a deterrent to the acquirer without having to put it into practice. In practice, it is rare to see the activated poison pill plan, and the cases of "toxicity" completely distributed and the two sides breaking the net are even rarer. 4. epilogue The poison pill program, one of the most powerful tools in anti-takeover measures, has been hugely popular and controversial. For companies interested in cross-border mergers and acquisitions or overseas listings, the poison pill program is a weapon they must master and deal. At present, China's listed sectors, only allow the same shares of different rights of the board, with the application of the first generation of priority poison pill space. However, with the establishment of the Science and Technology Innovation Board and the Beijing Stock Exchange, and the successive amendments to the Securities Law and the Company Law, the increasingly relaxed business environment is bound to require increasingly diversified anti-acquisition tools. With the principle of foresight and prevention, domestic enterprises should also be aware of anti-acquisition tools such as poison pill programs.

2021-12-08

If the insurance company fails to inquire about the relevant situation of the insured, the insured shall not have the obligation to inform.

[brief case]] Zu took out personal insurance with an insurance company, and later Zu was diagnosed with "right breast cancer" and was rejected from an insurance company, so he filed a lawsuit. An insurance company argued that Zu did not fulfill the obligation of truthful notification when he was insured. He deliberately concealed that he had suffered from diabetes, solid liver nodules, abnormal liver function and other diseases, and confirmed the major diseases listed in the contract during the waiting period. According to the insurance contract, the insurance company has the right not to pay the insurance premium. After review, the "Health Notice" in the "Insurance Contract" signed by an insurance company and Zu did not mention the inquiries about gestational diabetes, solid liver nodules, and abnormal liver function, and an insurance company did not provide evidence to prove it When applying for insurance, he explained to Zu that the "diabetes" included gestational diabetes, and did not ask Zu whether he had abnormal liver function or solid liver nodules. The People's Court held that the insurance company did not provide evidence to prove that it had asked Zu whether he had suffered from gestational diabetes, abnormal liver function, and solid liver nodules when applying for insurance. Therefore, Zu did not ask questions that the insurance company did not ask. There is no obligation to inform, and the insurance company should pay insurance money to Zu. focus of controversy] Whether Zu has fulfilled the obligation of truthful notification at the time of insurance, and whether the insurance company should bear the responsibility of paying the insurance premium. The court of first instance held that] The Court considers that this case is a dispute over a life insurance contract. The insurance contract signed by Zu and an insurance company is the true intention of both parties. The content does not violate the prohibitive provisions of laws and regulations. It is a valid contract. Both parties should strictly perform their respective obligations in accordance with the contract. The focus of the dispute in this case is: whether an insurance company should pay 350000 yuan to Zu. In this dispute, first of all, an insurance company claimed that Zu did not fulfill the obligation to tell the truth. In combination with Zumou's medical history of "liver nodules" and the requirements of "Health Notification", Zumou has truthfully replied. An insurance company did not submit evidence that Zu had diabetes when he was insured. Secondly, an insurance company claims that Zu has developed symptoms related to the major illness agreed upon in the insurance contract during the waiting period of the insurance contract. According to the existing evidence, Zu found a right breast nodule on October 20, 2019, and underwent medical treatment and examination in November 2019, and was finally diagnosed with breast cancer after re-examination and treatment in March 2020. Although the time of Zu's first visit is within the waiting period of the insurance contract, it belongs to normal examination and treatment. The symptoms of the examination result are the same or similar to the early symptoms of breast cancer. Patients with the above symptoms are only likely to be diagnosed with breast cancer and other cancer diseases, but it is not inevitable. It can not be determined that Zu has breast cancer during this period. Zumou was diagnosed with the first illness for more than the waiting period for the insurance contract. The circumstances of this case are in line with the relevant provisions of the major disease insurance in the insurance contract involved in the case. "The insured shall be diagnosed by a Junior College doctor in a medical institution designated or approved by the company for non-accidental reasons within 180 days from the effective date of the contract." One or more major diseases listed "is obviously inconsistent. The relevant defense of an insurance company lacks factual basis and is not supported by this court. Third, an insurance company argued that Zu should report the deterioration of his health to him during the waiting period of the insurance contract in accordance with Article 52 of the the People's Republic of China Insurance Law. This clause is in response to the provisions of the property insurance contract on the "obligation to notify of increased risk", and the insurance contract in question is a life insurance contract. An insurance company invoking this provision to claim exemption is an error in the application of the law, which is not adopted by the Court in accordance with the law. In summary, the Court does not support the relevant defenses of an insurance company. The court of second instance held that] The Court held that the case was a dispute over a life insurance contract. According to Article 323 of the Interpretation of the Supreme People's Court on the Application of the the People's Republic of China Civil Procedure Law, the people's court of second instance shall hear the appeal request of the party concerned. If the party concerned fails to appeal, the case shall not be heard. Combined with the arguments of both parties, the focus of the dispute in the second instance of this case is: whether the 1. Zu has fulfilled the obligation of truthful notification when applying for insurance; whether the 2. Zu has been diagnosed with breast cancer during the waiting period of the insurance contract. With regard to the first focus of the dispute, the question of whether Zu had fulfilled his obligation to tell the truth when he was insured. Article 16, paragraph 1, of the the People's Republic of China Insurance Law stipulates: "If an insurance contract is concluded and the insurer inquires about the subject matter of the insurance or the relevant situation of the insured, the applicant shall truthfully inform it." Paragraph 1 of Article 6 of the Interpretation (II) of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Insurance Law stipulates: "The obligation of the policyholder to inform is limited to the scope and content of the insurer's inquiry. If the parties dispute the scope and content of the inquiry, the insurer shall bear the burden of proof." According to the provisions of the above-mentioned laws and judicial interpretations, the current law of our country adopts the mode of inquiry and notification, that is, the insurer asks about the subject matter of the insurance or the relevant situation of the insured, and the policyholder truthfully informs the questions asked, and the scope of the policyholder's notification is limited to the questions asked by the insurer. In this case, an insurance company claimed that Zu did not truthfully inform gestational diabetes, abnormal liver function and solid liver nodules at the time of insurance. Therefore, an insurance company should prove that it has asked Zu whether he has or has suffered from the above three diseases at the time of insurance. Only on the premise of an insurance company's inquiry, Zu has the corresponding obligation to inform. About whether gestational diabetes falls within the scope of what should be told truthfully. An insurance company inquires about Zu at the time of insurance through the Health Notice. Among them, the Health Notice asks "Do you have or have suffered from the following diseases or symptoms, or have been examined or treated for the following diseases?... (4) Endocrine or immune system diseases (diabetes mellitus...)". It can be seen that an insurance company only asked whether Zu had or had had diabetes, but did not ask whether Zu had or had had gestational diabetes. An insurance company did not prove that the meaning and type of "diabetes" included gestational diabetes, nor did it prove that the expanded interpretation of "diabetes" included gestational diabetes at the time of the conclusion of the contract. Moreover, in the gestational glucose tolerance test, the index of the 1-hour blood glucose test result in only one prenatal examination slightly exceeded the normal value range, and the 2-hour test result was within the normal value range. The other blood glucose tests conducted by the prenatal examination and the blood glucose test results during the subsequent hospitalization due to illness were all normal. An insurance company had no evidence that Zu had diabetes. Therefore, an insurance company did not ask whether Zu had gestational diabetes when applying for insurance, and Zu did not have the obligation to truthfully inform gestational diabetes. Whether abnormal liver function and liver solid nodules belong to the scope that should be truthfully informed. An insurance company asks through the Health Notice, "Do you have or have ever had the following diseases or symptoms, or have you been examined or treated for the following diseases?... (5) Digestive system diseases (×× virus infection or carrying, liver cirrhosis, severe ××...)". It can be seen that at the time of insurance, an insurance company asked Zu whether he suffered from or had suffered from XXX virus infection or carrying, liver cirrhosis and severe XXX diseases. An insurance company did not ask Zu whether there was any "abnormal liver function" in the examination report, did not explain which liver diseases "abnormal liver function" included, and did not ask Zu whether he had solid liver nodules. Regarding the solid nodules of the liver, Zumou was diagnosed as hepatic hemangioma by examination. Zumou had voluntarily and truthfully informed him that he had suffered from hepatic hemangioma and the diameter of the hemangioma was not more than 5cm. Therefore, because an insurance company did not ask whether Zu had abnormal liver function or solid liver nodules when applying for insurance, Zu did not have the obligation to tell the truth. To sum up, an insurance company did not ask Zu whether he had gestational diabetes or whether he had abnormal liver function or solid liver nodules. Zu did not have the obligation to tell the truth about the questions that the insurance company did not ask. An insurance company claimed that Zu did not fulfill the obligation of truthfully informing when applying for insurance, lacking factual basis and legal basis, and the court did not support it. On the second focus of the dispute, whether Zumou was diagnosed with breast cancer during the waiting period of the insurance contract. The critical illness insurance clause of the insurance contract involved in the case states that the insured shall be diagnosed by a Junior College doctor in a medical institution designated or approved by the company for non-accidental reasons within 180 days from the effective date of the contract. For one or more major diseases, the company shall pay the basic critical illness insurance premium according to the accumulated insurance premium (without interest) paid by the insured in this contract, and this contract shall be terminated at the same time. According to the provisions of the above-mentioned insurance terms, if the insured is diagnosed with a major illness listed in the contract within 180 days of the waiting period, the insurer shall only pay the basic major illness insurance premium in accordance with the amount of the insurance premium paid by the policyholder, and the contract shall be terminated. The first paragraph of Article 64 of the the People's Republic of China Civil Procedure Law stipulates that the parties have the responsibility to provide evidence for their claims. An insurance company claims that Zu was confirmed to have breast cancer within 180 days of the waiting period, and an insurance company bears the burden of proof. The waiting period for the insurance contract involved is 180 days from June 16, 2019 to December 12, 2019. On October 20, 2019, the physical examination showed a right breast nodule. On November 10 and 26, 2019, Zu went to hospital for B- ultrasound examination and was diagnosed as right breast nodule grade BI-RADS3. An insurance company has no proof to prove that the BI-RADS3 level of breast nodules is the standard for the diagnosis of breast cancer. Therefore, the examination conclusion "BI-RADS3 level of right breast nodules" cannot prove that Zu has been diagnosed with breast cancer. An insurance company has no proof that Zu has been diagnosed with breast cancer as of December 12, 2019, and an insurance company claims that Zu was diagnosed with breast cancer during the waiting period, which lacks factual basis. According to the existing evidence, the court of first instance found that Zu had exceeded the waiting period of the insurance contract involved in the case when he was diagnosed with breast cancer. Based on the above analysis, the evidence submitted by an insurance company is not enough to prove that Zu did not fulfill the obligation of truthful notification when applying for insurance, and there is no evidence to prove that Zu was diagnosed with breast cancer during the waiting period. Breast cancer belongs to the scope of claims stipulated in the insurance contract involved in the case, Zu is in the insurance contract waiting for the expiration of the diagnosis of the above-mentioned disease, an insurance company also has no evidence to prove that there is an exemption from insurance liability in this case, so an insurance company should pay Zu a full amount of insurance compensation agreed in the insurance contract. Lawyer Advice] According to the provisions of the Insurance Law and other relevant laws and regulations, the policyholder's obligation to inform is limited to the scope and content of the insurance company's inquiry. For questions that the insurance company has not asked, the policyholder does not have the obligation to inform, and if both parties dispute the scope and content of the inquiry, The insurance company shall bear the burden of proof. Through this case, it is suggested that the insurance company should strictly fulfill the corresponding obligation of inquiry and notification when carrying out insurance business, and make the scope and content of the inquiry as specific and clear as possible to avoid ambiguity.

2021-12-08

Lawyer Li Ruzhi conducted a special lecture on key issues of corporate personality denial for Shandong Energy Heavy Equipment Manufacturing Group Company.

Recently, Li Ruzhi, deputy director, senior partner and first-class lawyer of Zhongcheng Qingtai Law firm, was invited to give a special lecture on "key issues of corporate personality denial system" for Shandong Energy heavy equipment Manufacturing Group Co., Ltd. and its subsidiaries. More than 20 people, including leaders of the group company and heads of various departments, attended the lecture on the spot, and 12 subsidiaries of the group participated online through video. shandong energy heavy equipment manufacturing group company is the world's top 500 enterprises shandong energy group ownership of secondary units. It has carried out extensive cooperation with advanced enterprises in Poland, Sweden, Germany and other countries, and its overall scale and comprehensive strength are in the forefront of China's coal machinery manufacturing industry. Due to the large number of investment enterprises, strong business relevance, enterprise development and risk control needs, lawyer Li Ruzhi is specially invited to carry out this special lecture. Based on the current situation of enterprise operation and management, lawyer Li Ruzhi takes the Company Law and the Enterprise Bankruptcy Law as the starting point, and combines years of experience in large-scale enterprise management and legal services to explain in detail the legal provisions and possible legal risks such as the independence of corporate personality and denial of personality; and combines the relevant cases of agency and typical judicial cases, professional legal analysis of hot issues such as the mixing of personality of related companies, the denial of legal personality of one-person companies, the transfer of benefits between parent and subsidiary companies, and the substantial mixing of large enterprises. For the group enterprise control, management level and structure, corporate governance, investment management, related relations and irregularities and misconduct and other possible legal and compliance risks to propose solutions, on the use of corporate personality denial system, internal legal control, prevention of risks, external legal rights protection, protection of rights and interests put forward ideas. This lecture received enthusiastic responses from the participants and was highly appraised by the participating leaders. It deepened the group's understanding of the company's legal management, risk prevention, and legal rights protection, and has a strong guiding significance for the company to maintain healthy development.

2021-12-08

Announcement on the Proposed Conversion of Comrade Chen Xiuyu into a Full Party Member of the Communist Party of China

On the basis of listening to the opinions of the party group, party members, and the masses, after review by the branch meeting, Chen Xiuyu's probationary period expired and became a full member of the Communist Party of China after discussion and voting. According to the relevant requirements of the work of recruiting party members, the relevant information is now publicized and subject to the supervision of the masses.

2021-12-07

Zhongcheng Qingtai (Jinan Free Trade Zone) Law Firm Invited to Participate in the Publicity Activities of "National Constitution Day" in Huaiyin District

In order to welcome the eighth National Constitution Day, on the morning of December 4, a large-scale law popularization campaign for the 2021 National Constitution Day in Huaiyin District was solemnly held in Huaiyuan Square, Jingshi Road, Jinan City. At the invitation of the Justice Bureau of Huaiyin District, Jinan City, Zhongcheng Qingtai (Jinan Free Trade Zone) Law Firm appointed six young lawyers, Sun Zilu, Tao Jinhong, Jin Zhengchun, Yang Qinyue, Zhang Wenxin and Jiao Xingjia, to form a delegation to participate in the activity. This "12.4" on-site publicity activity was sponsored by the Huaiyin District Party Committee Propaganda Department, the Huaiyin District Party Committee Office, and the Huaiyin District Judicial Bureau. Huaiyin District Court and other political and legal units, Huaiyin District Market Supervision Bureau and other administrative law enforcement units, Civil Affairs Bureau and other government administrative departments, some sub-district offices, as well as Huaiyin District Legal Aid Center, Huaiyin Notary Office and other units. The theme of this activity is "guided by Xi Jinping's thought of rule of law and unswervingly follow the road of socialist rule of law with Chinese characteristics". At the event site, various legal knowledge display boards and free distribution of publicity materials were placed to preach the constitutional knowledge to the people present. At the same time, representatives of young lawyers provided free legal consultation services to the people present. More than 60 copies of various publicity materials were distributed on the spot, and more than 10 people were consulted by the masses. They were highly praised by the leaders at all levels of the organizers and the people present. Since its establishment, Zhongcheng Qingtai (Jinan Free Trade Zone) Law Firm has followed the process of comprehensively governing the country according to law, actively cooperated with the legal publicity and service work of party committees and governments at all levels, and has always been committed to public welfare legal services, which has been widely praised by all sectors of society. In the new era, we will, as always, adhere to the concept of political establishment, management according to law, and strong quality, have the courage to undertake new missions and tasks, carefully build a team of top lawyers, and do every legal work with heart. Contribute to the construction of the socialist rule of law with high-quality and efficient legal services!

2021-12-06

Zhongcheng Qingtai's "One Village, One Legal Adviser" Lawyer Service Team Went to Zhenglu Town, Shanghe County to Carry out a Publicity Campaign on Constitution Day

In order to establish constitutional awareness, maintain constitutional authority, thoroughly study and implement Xi Jinping's thoughts on the rule of law, and accelerate the construction of the rule of law in the new era, on the morning of December 4, Zhao Kaiyong, a member of the "One Village, One Legal Advisor" service group of Zhongcheng Qingtai, and other lawyers came to the streets of Jiejia Village, Zhenglu Town, to carry out the "Promoting the Spirit of the Constitution and Building a Harmonious Society" Constitution. The Zhongcheng Qingtai Lawyer Service Group vigorously promoted the Constitution and the Civil Code and other laws and regulations related to the vital interests of the villagers by hanging banners, distributing publicity materials, and answering legal consultations, and deepened them through vivid and specific cases. The villagers' understanding of laws and regulations. The lawyer service team professionally and patiently answered questions for the masses, solved legal problems encountered in production and life, and demonstrated Zhongcheng Qingtai's good spirit of serving the society and serving the people's livelihood. In addition to the activity, the lawyer group also visited the association of farmers' professional cooperatives led by the first village level party organization in the city, Jinan Defeng modern agricultural farmers' professional cooperative association, to communicate and exchange the industrial development of the association, fully stimulate the vitality of the collective economy, and the legal risk prevention and control in the operation process, And put forward specific legal suggestions for the problems encountered at present. The work of "one village, one legal adviser" has always been one of the key tasks of the Provincial Department of Justice to serve rural revitalization. In order to better serve the village and help rural revitalization, Zhongcheng Qingtai lawyers will make full use of their professional advantages and combine the actual situation of the village to provide more high-quality and efficient legal services for the local government, enterprises, village committees and villagers.

2021-12-06