China -  Chinese law firm

FAQ on the Change of Legal Remedies for Declaratory Action Filed By Undisclosed Investors of Foreign-invested

Q1: What’s the former legal remedy status to protect the actual investors of foreign invested enterprises?


A: In the past(before 2010), the court held the opinion that the declaratory action of  the shareholder of a foreign invested company is depend on the registration of approval certifcate which issued by the competent adminatrative dapartment. If the actual shareholder wanted to become the registrated shareholder, he/she should submit relevant application through administrative procedures.



Q2: What’s the new change on this issue?


A: In August 2010, the Supreme Court issued a judicial interpretation which stated that the court will uphold the actual shareholder’s quest of changing the shareholder of foreign invested enterprise on below 4 conditions:


a.       The actual investors has actually made investment;


b.      The other shareholders( except the nominee shareholder) recognize the shareholder status of the actual incestor;


c.       During the litigation period, the people’s court or the party concerned has obtained the consent of the examination and approval authority for foreign invested enterprises on changing the actual investor into a shareholder.



Q3:Are there any tips for the investors who decides to invest the foreign invested company as actual shareholder?


A: According to the above mentions conditions, the investors should conclude expressly agreement with the nominee shareholder, auctualy fulfill the obligation of investments and keep the solid evidence. At the same time, he or she should obtain the confirmation of its shareholder’s position from other shareholders.



RSS Feeds