On April 28^th, the Supreme People’s Court (SPC) released the Regulations for Various Issues Related to the Company Law of the People’s Republic of China (the “Regulations”), specifying rules for legal issues in dispute cases related to protection of shareholder rights.

Main points of the Regulations include: clarifying that reimbursement responsibilities for related party transactions cannot be remitted through legal procedures; specifying release without cause for directors and the corresponding compensation for leaving post; specifying the time limit for completing profit distribution after a decision to distribute profit has been made; and setting up a system for resolving major shareholder conflicts for limited liability companies, highlighting the need for courts to mediate disputes in these cases. This prompts shareholders to negotiate and settle the dispute, allowing the company to resume normal operation, and avoiding the company’s dissolution.

Source: SPC