I. Case Summary

In inheritance of shares, the继承人 (heir) and other shareholders or interested parties often take advantage of the shareholders' meeting as a platform to try to obtain rights for themselves through resolutions while restricting or even剥夺 (剥夺) the rights of others: for example, other shareholders may convene a shareholders' meeting to pass resolutions excluding the heir from inheriting the shareholder's qualifications or restricting the exercise of their shareholder rights. The lawyer of Dao Hua Tang Yun Hong will help you learn how to maintain your legitimate rights and interests in the inheritance of shares and obtain the shares you should receive through the following case.

The plaintiff Yu Mo 1 and Yu Mo 2 are the heirs of Chen Mo, who originally held 8.75% of the shares in Wuhan City's certain department store. Wuhan City's certain department store (hereinafter referred to as Wuhan City's certain department store) was originally a state-owned enterprise and was restructured into a cooperative joint stock enterprise in 2001, with a total capital of 160,000 yuan, all of which were individual shares of employees. In October 2008, Chen Mo passed away, and according to his will, the shares were inherited by Yu Mo 1 and Yu Mo 2.

On January 14, 2012, Wuhan City's certain department store held another shareholders' meeting, adjusting Chen Mo's shares to 6.75% according to the amended articles of association, and Yu Mo 1 and Yu Mo 2 did not attend or sign the meeting.

September 20, 2018, a department store in Wuhan City held a shareholders' meeting to intend to cease the operation of the Gutian Department Store, cancel the business license, and dissolve the shareholder relationship between Yu某1 and Yu某2, etc. Yu某1 signed an opinion requesting the disclosure of the accounts and disagreed with the dissolution of the shareholder status. Subsequently, disputes arose between the parties over issues such as equity shares and the sale of office space, and Yu某1 and Yu某2 filed a lawsuit with the court, requesting the invalidation of the shareholders' meeting resolution, confirmation of their holding of 8.75% of the shares, and the right to inspect the relevant property sale accounts.

II. Judgment Results

The court ruled: Confirm the invalidity of the shareholders' meeting resolution; confirm that Yu某1 and Yu某2 jointly hold 8.75% of the shares in the department store in Wuhan City; the department store is required to provide the relevant property sale accounts for inspection within a specified period.

III. Dowa Analysis

Dowa Law Firm - Director of the Dowa Marriage and Family Law Team, Chief Lawyer Tang Yunhong, with many years of successful experience in inheritance litigation, puts forward the following questions, and provides solutions and plans:

1. What are the standards for recognizing the effectiveness of shareholders' meetings resolutions?

The effectiveness of the shareholders' meeting resolution must be considered from both procedural and content aspects:

1. Procedurally, according to Article 41 of the Company Law of the People's Republic of China, shareholders' meetings should be notified to all shareholders at least fifteen days before the meeting. In this case, Wuhan City's certain department store held two shareholders' meetings without notifying Yu Mou 1 and Yu Mou 2 15 days in advance, which violated the statutory procedures;

2. Content-wise, shareholders' meeting resolutions may not violate the provisions of laws and administrative regulations. In the shareholders' meeting resolution of January 14, 2012, Wuhan City's certain department store, based on the amended articles of association, directly剥夺了陈某的部分股权 without making any compensation, infringing upon the legitimate property rights of the heirs and violating the provisions of the Property Law of the People's Republic of China regarding the protection of citizens' legitimate property. Therefore, the content of the resolution is invalid.

At the same time, Article 4 of the "Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China" provides that if the procedural or voting method of a meeting has only minor defects and does not have a substantial impact on the resolution, the court shall not support the request for revocation. However, in this case, the shareholders' meeting failed to notify the shareholders 15 days in advance, which is not a minor defect and has a substantial impact on the shareholders' exercise of rights, therefore, the provisions of this clause cannot be applied.

2. What are the rules for determining the shareholding ratio in the inheritance of shareholder qualifications?

According to Article 12 of the Articles of Association formulated by a certain department store in Wuhan City on June 2001, the shares held by employees are allowed to be inherited within the enterprise. After Chen died, Yu 1 and Yu 2 legally inherited the shares in accordance with his will, which is in accordance with the provisions of the Articles of Association. The shareholders' meeting resolution made by the certain department store in Wuhan City on January 14, 2012, due to its invalidity, cannot change the shareholding ratio, so Yu 1 and Yu 2 should jointly hold 8.75% of the shares.

Four, Legal Index

1. The Company Law of the People's Republic of China

Article 22: The resolutions of the shareholders' meeting or general meeting of shareholders, or the board of directors, which violate laws or administrative regulations, are invalid. If the procedures for convening the meeting of the shareholders' meeting or general meeting of shareholders, or the board of directors, or the voting methods violate laws or administrative regulations or the articles of association of the company, or if the resolution content violates the articles of association of the company, the shareholders may request the people's court to revoke the resolution within sixty days from the date of the resolution.

Article 33 Shareholders have the right to inspect and copy the company's articles of association, the minutes of the shareholders' meetings, the resolutions of the board of directors' meetings, the resolutions of the board of supervisors' meetings, and the financial and accounting reports. Shareholders may request to inspect the company's accounting books. If a shareholder requests to inspect the company's accounting books, they shall submit a written request to the company, stating the purpose. If the company has reasonable grounds to believe that the shareholder's inspection of the accounting books is for an improper purpose and may harm the legitimate interests of the company, it may refuse to provide access and shall provide a written reply to the shareholder within fifteen days from the date of the shareholder's written request, stating the reasons. If the company refuses to provide access, the shareholder may request the People's Court to order the company to provide access.

Article 41 Notice shall be given to all shareholders at least fifteen days before the shareholders' meeting is held; however, this shall not apply if the company's articles of association provide otherwise or if all shareholders have made other agreements. The shareholders' meeting shall make minutes of the decisions on the matters discussed, and shareholders present at the meeting shall sign the minutes.

Article 75 After the death of a natural person shareholder, their legal heirs may inherit the shareholder's qualifications; however, this shall not apply if the company's articles of association provide otherwise.

2. The Supreme People's Court's Interpretation on Several Issues Concerning the Application of the Company Law of the People's Republic of China (Provisions IV)

Article 7: Shareholders who, according to the provisions of Article 33 or Article 97 of the Company Law or the company's articles of association, file a lawsuit to request the examination or copying of specific documents and materials of the company, the people's court shall accept the lawsuit in accordance with the law. If the company has evidence to prove that the plaintiff specified in the preceding paragraph does not have the qualification of a company shareholder at the time of filing the lawsuit, the people's court shall reject the lawsuit, except where the plaintiff has preliminary evidence to prove that their legitimate rights and interests were damaged during the holding period, and requests to examine or copy the specific documents and materials of the company during the holding period in accordance with the law.