[Direct answer]In the Beijing area, it is generally effective, but subject to the mandatory provisions of the Company Law. The company charter is the company's self-regulation norm. On the premise that it does not violate the mandatory provisions of the law and does not harm the interests of the company and its creditors, the charter stipulates that the company may repurchase the shareholders' equity under certain circumstances, which is usually binding on the shareholders. However, if the repurchase subject is the company itself, it must comply with the exceptional circumstances stipulated in Article 162 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024) and perform procedures such as reducing the registered capital in accordance with the law. Otherwise, it may not be able to perform the repurchase due to violating the principle of capital maintenance. If the charter stipulates a repurchase arrangement between shareholders or between controlling shareholders and specific shareholders, it generally does not involve the company's capital, and there is more room for claiming according to the agreement. In addition, the charter shall not deprive shareholders of their statutory rights of information and dividend distribution by means of agreement.

I. Problem background and typical scenarios

To avoid shareholder exit stalemates, many companies include buyback clauses in their articles of association, stipulating that the company or major shareholders will repurchase shares in the event of resignation, breach of contract, or the triggering of specific circumstances. However, when it comes to actual implementation, the company often claims that "the buyback stipulated in the articles of association is illegal". In corporate litigation in the Beijing area, the effectiveness and enforceability of the buyback clauses in the articles of association need to be specifically assessed in light of the mandatory provisions of the Company Law and the principle of capital maintenance.

II. Key points of dispute

First, the effectiveness of the buyback provisions in the articles of association. Second, the differences between company buybacks and shareholder buybacks. Third, the impact of the reduction of registered capital on enforceability. Fourth, whether the articles of association can restrict the basic rights of shareholders.

III. Professional analysis by Henglue Lawyers

First, the legal basis: The articles of association fall within the scope of corporate autonomy. The repurchase arrangements made by shareholders through the articles of association are generally effective between the parties concerned. Whether they can be supported depends on whether they violate mandatory legal provisions and public order and good customs. Second, the distinction of subjects: When a company repurchases its own shares, which involves a reduction of the company's capital, it must comply with statutory circumstances and go through the capital reduction procedure. When a shareholder or controlling shareholder repurchases the shares of a specific shareholder, it belongs to a consideration arrangement between shareholders and generally does not involve the company's capital, so the procedural obstacles are less. Third, enforceability: If the company has not completed the capital reduction and other procedures, the court may not support its direct payment of the repurchase price, but this does not deny the validity of the clause. The company can proceed with the procedures or make other claims. Therefore, the design of the articles of association should consider the feasibility of the procedures and the cost of time in advance. Fourth, rights boundaries and remedies: The articles of association may not disguisedly deprive shareholders of their statutory rights such as the right to information and the right to dividends. The clauses that violate these rights may be invalid. In the event of a dispute, shareholders can claim repurchase according to the articles of association and agreements, and pay attention to whether the conditions for repurchase have been met. In the equity transfer disputes handled by our lawyers, the effectiveness of the agreement was confirmed by the effective judgment, and defenses such as holding shares on behalf of others failed to negate the effectiveness of the agreement. It is pointed out that the determination of the effectiveness of the agreement and the articles of association clauses needs to return to the law and evidence themselves. Relevant disputes can be resolved throughBusiness and contract disputes in enterprisesOverall handling of the service.

IV. Practical suggestions and legal basis

The first step is to review the provisions of the repurchase clause in the articles of association and distinguish between company repurchases and shareholder repurchases. The second step is to verify whether clear triggering conditions, price determination methods, and implementation procedures have been set. The third step, in the case of company repurchases, is to assess the feasibility of the capital reduction process and the arrangements for creditor protection. The fourth step is to assert claims promptly after the repurchase conditions are met, fix evidence, and apply for preservation measures. The fifth step is to avoid disguised deprivation of shareholders' statutory rights when formulating the articles of association, ensuring that the provisions are legal and enforceable. Main legal basis: Articles 162, 89, and 224 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024); Articles 153, 509, and 577 of the Civil Code of the People's Republic of China; Specific applications shall be subject to the currently effective provisions.

5. Henglue Law Firm's Advice

There are three key points in the bylaws regarding share buybacks: the bylaws are generally effective, but the company's buyback must comply with legal requirements and go through a capital reduction process; shareholders' buyback arrangements can usually be enforced; and the bylaws should not disguisedly deprive shareholders of their statutory rights. For corporate commercial and contract disputes, you can seek resolution through legal channels.Business and contract disputes in enterprisesThe service provides a comprehensive solution, which can be combined with disputes over equity and investmentSpecial servicesThe plates, which involve execution and creditor recovery, can be referred to for reference.Creditor's rights and debts, and enforcementFor inquiries about intellectual property and general legal services, please contact the relevant departments.Intellectual property and corporate lawTeam.

VI. Frequently Asked Questions

Q1: Is it valid to repurchase equity as stipulated in the articles of association?

It is generally effective as long as it does not violate mandatory legal provisions or harm the interests of the company and its creditors. Whether it can be actually implemented still depends on whether it complies with the relevant procedures of the Company Law.

Q2: Are there any differences between corporate buybacks and shareholder buybacks?

Yes. A company's buyback involves the company's capital and must comply with legal requirements and follow the reduction of registered capital procedures; a shareholder's buyback is an arrangement between shareholders and generally does not involve the company's capital, making it easier to implement.

Q3: If it's illegal, can't it be enforced to be carried out?

When the company has not completed procedures such as capital reduction, it may not be able to directly pay the repurchase price, but the validity of the terms is not thereby negated. The company can proceed with the procedures or make separate claims once the conditions are met.

Q4: Can the articles of association restrict shareholders' rights?

It is prohibited to deprive shareholders of their statutory rights to information, dividends, and other basic rights in disguised form. Any provisions that violate these rights may be deemed invalid.

Q5: What should I pay attention to when proposing a buyback?

Prove that the repurchase conditions have been fulfilled, fix the evidence, and claim in a timely manner. If necessary, apply for property preservation; at the same time, evaluate the feasibility and time cost of procedures such as capital reduction.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Corporate commercial legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is provided for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in a timely manner.