[Direct answer]In the Beijing area, it is generally necessary to first request the company's governing body to initiate litigation in writing. Shareholder representative litigation, also known as shareholder derivative litigation, refers to a lawsuit initiated by shareholders who meet legal conditions in their own name and for the company's interests when the company's interests are infringed and the company is negligent or refuses to pursue legal action. According to the Company Law, if a director or senior manager violates laws, administrative regulations, or the company's articles of association in the performance of their duties and causes losses to the company, shareholders of limited liability companies or shareholders of joint-stock companies who hold more than 1% of the company's shares for more than 180 consecutive days, either individually or collectively, may request the board of supervisors or, in the absence of a board of supervisors, the supervisor to initiate litigation in the people's court in writing; if the board of supervisors or the supervisor refuses to initiate litigation after receiving the request, or fails to initiate litigation within 30 days from the date of receipt of the request, or if the situation is urgent and failure to initiate litigation immediately will cause irreparable damage to the company's interests, the shareholders may initiate litigation directly in their own name. The same applies to situations where requests are made to the board of directors or the executive director. Therefore, shareholder representative litigation generally requires the fulfillment of the preliminary procedure of written request.

I. Problem Background and Typical Scenarios

The company's major shareholders, directors, or executives harm the company's interests through related-party transactions, misappropriation of funds, and other means, while the company's management is closely related to the infringers and is reluctant to pursue legal action. Small and medium-sized shareholders are unable to directly protect their rights when they see the company being damaged. Shareholder representative litigation provides a remedy channel for shareholders, but initiating such litigation has specific preliminary procedures and eligibility requirements. If one does not understand the rules, it is easy to have the lawsuit dismissed.

II. Key points of dispute

1. The manner and timeframe of fulfilling the preliminary procedures. 2. The qualification requirements for the plaintiff shareholders. 3. The circumstances under which the preliminary procedures may be waived. 4. The ownership of litigation benefits and the allocation of legal costs.

III. Professional analysis by Henglue Lawyers

The first layer: Applicable circumstances: If directors, supervisors, or senior managers violate regulations in the performance of their duties and cause losses to the company, or if others infringe upon the company's legitimate rights and interests and cause losses, qualified shareholders may initiate representative litigation, and the litigation benefits shall belong to the company. The second layer: Preliminary procedures: Shareholders shall first request in writing the supervisory board or the supervisor (if no supervisory board is established), or the board of directors or the executive director, to file a lawsuit with the people's court; the request shall be in writing and clearly state the infringement facts and the requested matters. The third layer: Exemption circumstances: If the supervisory board or the supervisor, the board of directors or the executive director refuses to sue after receiving the request, or fails to file a lawsuit within 30 days from the date of receipt of the request, or if the situation is urgent and failure to sue immediately will cause irreparable damage to the company's interests, the shareholders may directly initiate litigation without waiting for the completion of the preliminary procedures. The fourth layer: Attribution and expenses: The litigation benefits obtained in a successful representative lawsuit shall belong to the company, and the reasonable expenses incurred by the plaintiff shareholders for this purpose may be requested to be borne by the company. Henglue Tip: Before initiating representative litigation, shareholders should pay attention to collecting evidence of damage to the company's interests and standardize the completion of the preliminary procedures to avoid procedural flaws affecting the litigation process. At the same time, the evidence of damage to the company's interests should be as complete as possible, including records of infringement acts, the amount of losses, and materials of causality, so as to facilitate the court's determination and support of compensation requests.

IV. Practical suggestions and legal basis

The first step is to verify whether you meet the qualification requirements to file a shareholder representative lawsuit. The second step is to request the board of supervisors or supervisors, the board of directors or executive directors to file a lawsuit in writing, and keep the delivery certificates. The third step is to wait until the statutory time limit expires or confirm the existence of exemption circumstances, and then file a lawsuit in your own name. The fourth step is to claim compensation for the company's losses from the infringer in the lawsuit and request the company to bear the reasonable expenses incurred by you. The main legal basis: the provisions on shareholder representative litigation in the Company Law of the People's Republic of China (amended in 2018) and relevant judicial interpretations. The specific application shall be subject to the currently effective provisions.

5. Henglu Law Firm's Reminder

Three key points regarding shareholder representative litigation: Generally, a written request must first be submitted to the supervisory board or board of directors to initiate litigation; if the request is rejected, or if no litigation is initiated within 30 days, or in urgent situations, litigation may be initiated directly; and the benefits of the successful litigation shall belong to the company. For cases involving corporate commercial disputes and shareholder rights protection, litigation may be initiated through the following channels:Business and contract disputes in enterprisesFor services involving corporate governance and general legal matters, we can provide a comprehensive solution that integrates the two aspects.Intellectual property and corporate lawFor cases involving compensation claims and enforcement, you may refer to the following provisions:Creditor's rights and debts, and enforcementFor any questions or difficult situations, please feel free to consult us.Special servicesTeam.

VI. Frequently Asked Questions

Q1: What is a shareholder representative lawsuit?

When the company's interests are damaged and the company fails to pursue legal action, eligible shareholders may file a lawsuit on behalf of the company's interests in their own name. If the lawsuit is successful, the benefits will belong to the company.

Q2: What is the pre-procedure?

Generally, it is necessary to first request the supervisory board or supervisors, the board of directors or executive directors in writing to file a lawsuit with the people's court, clarify the facts of infringement and the request items, and keep the proof of service.

Q3: Who can propose it?

Shareholders of limited liability companies, as well as shareholders of joint stock limited companies who have individually or collectively held more than one percent of the shares for more than 180 consecutive days, may file a lawsuit if they meet the relevant conditions.

Q4: Under what circumstances can we skip the precondition?

If the requested authority refuses to prosecute, fails to prosecute within 30 days from the date of receipt of the request, or if the situation is urgent and failure to prosecute immediately will cause irreparable damage to the company's interests, the company may directly initiate a lawsuit.

Q5: Who will benefit from the victory in the lawsuit?

The benefits of winning a shareholder representative lawsuit belong to the company. The plaintiff shareholders can request the company to bear the reasonable expenses incurred in the litigation according to law.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

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

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is 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 you encounter disputes, please consult a practicing lawyer in time.