CHINA Law and Practice Contributed by: Kevin Wang, Global Law Office
Voting Rights Required for Adopting a Resolution by Shareholder Meeting If there is no special provision in the articles of association of the company, all the shareholders shall be notified 15 days before a shareholder meeting is held, and the shareholders shall exer - cise their voting rights at the meeting in propor - tion to their capital contribution. Normally when the shareholders’ meeting makes a resolution, it shall be adopted by shareholders representing more than half of the voting rights. Specially, some resolutions shall be approved by shareholders representing more than two thirds of voting rights: • deciding on the amendment of the articles of association, increases/decreases of regis - tered capital, mergers, divisions, dissolution or changes of the company form; • a publicly traded company purchasing or selling significant assets, or guaranteeing an amount exceeding 30% of the company’s total assets within one year; and • issuing classified shares different from the rights of ordinary shares. There are special voting approaches such as cumulative voting, which can also be used in the shareholders’ meeting according to Chinese Company Law. 5.4 Shareholder Claims Shareholders, on behalf of the company or its wholly owned subsidiaries, can file derivative lawsuits against a company’s directors, offic - ers or others outside the company for the com - pany’s losses. The specific procedure can be seen in 4.8 Consequences and Enforcement of Breach of Directors’ Duties regarding share - holder lawsuits against directors or officers.
laws and the articles of association of the com - pany. The shareholders may make decisions on fundamental issues and elect the main members of the board of directors by exercising their vot - ing rights and thereby control the company. As a common business practice, share repur - chase plays an important role in adjusting the shareholding structure of enterprises and pro - tecting investors’ rights. If both parties agree on the period during which the investor requests the other party to repur - chase, the period should be recognised in accordance with the principle of good faith even though the reasonable expectation is no more than six months since the triggering event for repurchase happens. 5.3 Shareholder Meetings Generally, shareholder meetings are convened by the board of directors and presided over by the chair of the board. • If the board of directors is unable or fails to perform its duty of convening a sharehold - ers’ meeting, the board of supervisors shall convene and preside over the meeting. • If the board of supervisors does not convene and preside over the meeting, the sharehold - ers representing more than one-tenth of the voting rights in a limited liability company, or shareholders who individually or collectively hold more than 10% of the company’s shares for more than 90 consecutive days in a joint stock company may convene and preside over the meeting on their own. However, a decision may be made without con - vening a shareholder meeting if shareholders unanimously agree in writing (all shareholders sign and seal on the resolution documents).
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