Scope: Mainland China; foreign shareholders and joint venture investors
Your partner controls the company seal and bank access. Board meetings produce no decisions. Financial reports arrive late, and every discussion ends with someone proposing a buyout at a price the other side rejects.
A China shareholder dispute is rarely solved by arguing about the share percentage alone. Legal rights, decision-making rules and practical control need to be examined together.
Reconstruct the governance arrangement
Collect the articles of association, investment agreement, shareholder register, capital contribution records and relevant resolutions. Identify which decisions require which approvals. Then compare the documents with what actually happens inside the business.
Do not assume a side agreement has the same effect as the company’s constitutional documents. Ask counsel which obligations bind the company, which bind individual shareholders and how inconsistencies should be addressed.
Separate access problems from ownership disputes
Prepare a precise list of missing records and unanswered requests. Distinguish financial information, management access and authority to transact. China’s Company Law provides shareholder rights and corporate governance rules, but the availability and exercise of a particular right require a factual review. Official Company Law.
Preserve records lawfully. Do not remove company assets, change passwords or take possession of a seal without advice on your authority and the consequences.
Test whether the proposed exit can close
A buyout needs more than a valuation. Consider funding, transfer restrictions, tax, required approvals and the release of guarantees. Identify who receives operational records, intellectual property materials and control of accounts at completion.
If the price will be paid over time, evaluate the protection available if payments stop. If the company itself is expected to fund the exit, assess that structure separately rather than treating company cash as freely available shareholder money.
Plan for disagreement to continue
A negotiated standstill on specific actions may support a resolution, where appropriate. Otherwise, counsel should compare available claims and remedies against the disruption each may cause. A forced exit is not automatically available simply because the relationship has deteriorated.
Considering a buyout or formal proceedings? Request a consultation with Jinyuan Law Firm using a governance summary and the key agreements. Ask for a rights assessment and a practical comparison of negotiation, exit and litigation options.
General information only. Advice depends on the facts and applicable jurisdiction. Contact does not by itself create a lawyer-client relationship. Local-law advice may be needed outside mainland China.
