Basic Elements of Actions to Set Aside the Resolution of Corporate Bodies in China

Abstract

The revision of the Company Law in 2023 significantly reformed the Chinese regime governing defective resolutions. This article first traces the legal development of the law on defective resolutions in China. It then outlines the basic elements of the regime for defects in resolutions. Developed by Holger Fleischer, these basic elements include the two- or three-track system of grounds for rescission and nullity, the question whether the regime for defective resolutions is limited to resolutions of the general meeting or whether other organs of the company are also included, attribution of the right to rescind to the shareholders, review of the legality or purpose of a resolution, the right to rescind as an individual right, an action for rescission as an action brought by a functionary, the time limit for bringing an action for rescission, the retroactive effect of the action for rescission, and the binding effects of the judgment. A subsequent section goes into more detail on the reasons for invalidity and non-formation of resolutions, as well as grounds for rescission of resolutions in China, before drawing a conclusion.