ISSUING AUTHORITY:

Pudong Primary People's Court, Shanghai

DATE OF ISSUANCE:

September 21, 2022

On September 21, the Pudong Primary People’s Court released seven typical commercial cases involving foreign and foreign-invested enterprises.

This batch of typical commercial cases mainly involves issues such as identification of extraterritorial law, judicial assistance, understanding and application of CISG, and determination of the validity of the restriction clauses on equity transfer. In one of the cases, in a dispute over a request for change of company registration, a Sino-foreign joint venture established by the parties in accordance with the Sino-foreign Joint Venture Law stipulated in its articles of association that the unanimous consent of the directors of the board and the "right to follow the sale" were required for the external transfer of shareholders' equity, which was more stringent than the mandatory provisions of the PRC Company Law. The court clarified that although there are certain special characteristics of Sino-foreign joint ventures, they should nevertheless comply with the relevant provisions of the Company Law instead of being contrary to it, and accordingly found that the restrictions of the articles of association of the company in question were not applicable.

Reference:

上海浦东法院发布涉外、涉外商投资企业商事审判白皮书及典型案例