[Direct answer]In the Beijing area, major shareholders suppress minority shareholders, and there are mainly four relief paths. Firstly, if the shareholder's rights are abused and cause damage, the shareholder may claim compensation liability in accordance with Article 21 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024). Secondly, if the content of the resolution is illegal, the shareholder may request to confirm its invalidity. If the convening procedures or voting methods are illegal or violate the articles of association, the shareholder may request to revoke the resolution within 60 days from the date of the resolution, and if the resolution lacks the establishment requirements, the shareholder may request to confirm its invalidity. Thirdly, if the company meets the statutory conditions, the shareholder may request the company to repurchase the equity at a reasonable price. If the controlling shareholder abuses the shareholder's rights and seriously damages the interests of the company or other shareholders, other shareholders may directly request the repurchase. Fourthly, if the directors, supervisors, senior managers or others infringe the company's interests, eligible shareholders may initiate a shareholder representative lawsuit after completing the preliminary procedures. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

The majority shareholders who hold more than half of the shares control the shareholders' meeting and the board of directors. When it's time for dividends, they fail to distribute them for years in a row, and the minority shareholders suspect that the profits are being hidden. They transfer benefits to themselves through related-party transactions and high salaries. They refuse to convene shareholders' meetings, or let the meetings proceed without discussing anything by being absent or abstaining from voting. They increase capital and expand shares in a targeted manner to dilute the minority shareholders' equity. They kick the minority shareholders out of the management team and stop paying their salaries. They refuse to provide financial information on the grounds of improper auditing purposes. The majority voting rule is a basic principle of corporate governance, but the law also sets red lines for minority shareholders: the exercise of rights must not be abused, and the procedures and content must not be illegal. The minority shareholders' rights protection is not to negate the majority voting rule, but to bring the over-the-line behaviors back to the track of the rule of law. For more information, please refer to the relevant rules.Business and contract dispute services for enterprises.

II. Key points of contention

The disputes in such cases focus on five aspects. First, the boundaries between the abuse of shareholder rights and the majority rule of capital: resolutions that violate laws and administrative regulations are invalid; resolutions with illegal or irregular convening procedures and voting methods, or resolutions that violate the articles of association, can be revoked; resolutions formed without valid meetings and voting are not binding; although judicial review of business judgments is generally not allowed, exceptions apply to resolutions with procedural and substantive flaws. Second, the time limits for litigation against defective resolutions: revocation litigation is subject to a 60-day preclusion period, which starts from the date the resolution is made; litigation for invalidity and non-binding resolutions are not subject to this time limit. Third, the threshold for shareholder representative litigation: shareholders of limited liability companies do not need to meet requirements for shareholding ratio and duration; shareholders of joint-stock companies must hold at least 1% of the shares for more than 180 consecutive days, either individually or collectively, and must first request the board of supervisors or the board of directors to initiate litigation in writing. If the request is rejected or no litigation is initiated within 30 days, or if the situation is urgent, litigation may be initiated. Fourth, the conditions for repurchase requests: continuous non-distribution of profits for five consecutive years, transfer of major assets in mergers and divisions, and amendment of the articles of association to maintain the company's existence when the statutory grounds for dissolution arise, all require voting against the resolution; if the controlling shareholder seriously damages the interests of other shareholders through abuse of shareholder rights, other shareholders may request repurchase without needing to vote against the resolution, with a 60-day agreement period and a subsequent 90-day litigation period. Fifth, the burden of proof for damages: the scope of losses, causality, and degree of fault must be proven item by item. In the judicial practice of Beijing, courts tend to conduct a more meticulous review of procedural flaws and substantive rights in resolutions.

III. Professional analysis by Henglue Law Firm

When facing a stronger opponent, accurately identifying the nature of the case, strictly adhering to time limits, and destroying the opponent's evidence chain are common methods used by the weaker party in negotiations. A case handled by Attorney Xie Chao Li can serve as a case in point: The People's Government of Qianjin Town, A County sued A County Shuguang Metal Products Factory, claiming that the factory had failed to pay the rent of 11.56 mu of land located in QB Group of Qianjin Community since 2007, amounting to 153,000 yuan, along with overdue interest. Based on the fact that the factory was a sole proprietorship enterprise, the plaintiff demanded that the investor, Liu **, bear joint and several liability for the payment. The two defendants jointly entrusted Attorney Xie Chao Li to defend the case. Attorney Xie built his defense from three perspectives: First, regarding the nature of the agreement, the case involved an administrative agreement signed by the government for local investment promotion, which contained administrative promises and policy incentives, rather than a civil lease between equal parties, and therefore did not fall within the scope of civil litigation. Second, regarding the merits of the case, the parties had long agreed on a long-term rent-free support policy, which had been implemented by multiple town leaders for nearly 20 years. The plaintiff had never issued a written reminder for payment, and even if there was a rental agreement, the statute of limitations for litigation had long passed. Third, regarding the evidence, the plaintiff's submitted copy of the contract was not recognized as authentic, and other evidence could not corroborate each other, so the plaintiff should bear the burden of failing to provide evidence. In the end, the court ruled to dismiss all the plaintiff's claims, and the plaintiff was ordered to bear the litigation costs. This case was handled by Beijing Henglu Law Firm.Zhi Chao LiThe attorney (practice license number: 11101202311629788, subject to the certificate issued by the judicial administrative authority) acts as the agent. The approach to this case is to shift to shareholder suppression disputes: first, distinguish whether it is a resolution defect, infringement compensation, or a repurchase lawsuit, then focus on hard deadlines such as 60 days, 90 days, and 180 days, and consolidate evidence item by item.

IV. Practical suggestions and legal basis

The legal basis includes Article 21 (liability for misuse of shareholder rights), Article 26 (invalidity of resolutions), Article 27 (rescission of resolutions and the 60-day period), Article 28 (non-formation of resolutions), Article 66 (proportion of votes required for adoption), Article 89 (right of dissenting shareholders to request repurchase and repurchase by controlling shareholders abusing their rights), and Article 189 (shareholder representative litigation and shareholding conditions) of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024); and the provisions on parties and adjudication in litigation over defective resolutions in the Interpretation of the Supreme People's Court on Several Issues concerning the Application of the Company Law of the People's Republic of China (IV) (implemented on September 1, 2017). Action list: First, systematically fix evidence, including notices of shareholders' meetings and board of directors, sign-in sheets, resolutions, meeting minutes, financial materials, and contracts for related-party transactions; Second, within 60 days, file a lawsuit to rescind resolutions that violate laws and regulations, or file a lawsuit for their invalidity or non-formation; Third, if the company's interests are damaged, request the supervisory board or board of directors to file a lawsuit in writing. If the request is rejected or no lawsuit is filed within 30 days, file a shareholder representative litigation; Fourth, if the repurchase conditions are met, claim repurchase within the 60-day agreement period and 90-day litigation period after the resolution is made; Fifth, simultaneously claim damages and, if necessary, apply for preservation of evidence and property preservation. For details, please refer to the full text of the Company Law of the People's Republic of China and the Interpretation of the Supreme People's Court on Several Issues concerning the Application of the Company Law of the People's Republic of China (IV).Business and contract dispute resolution services for enterprises.

5. Henglue Law Firm's Advice

For minority shareholders seeking to protect their rights, two things should be avoided at all costs: missing the statute of limitations and losing evidence. The 60-day time limit for revocation suits and the 90-day time limit for repurchase suits are strict deadlines. Once the minutes of meetings and financial ledgers are controlled by major shareholders, it becomes increasingly difficult to obtain evidence afterwards. At the same time, it is necessary to distinguish between normal business judgments and abuse of rights. Focusing the litigation target on provable points such as procedural violations, content violations, and benefit transfer can increase the chances of success. Alternative solutions such as negotiation, mediation, and equity transfer should be pursued in parallel with litigation, which is often more effective than going it alone. When handling similar cases in the Beijing area, it is recommended to engage a lawyer as soon as possible.Beijing Henglue Law FirmProfessional lawyers prioritize path selection and time limit management.

VI. Frequently Asked Questions

Q1: If a major shareholder suppresses a minority shareholder, can the latter win the lawsuit?

It depends on the form of suppression and the evidence. If the content of the resolution is illegal or the procedure is seriously in violation of the law, the possibility of the lawsuit to invalidate or revoke it is higher; if claiming compensation for losses, it is necessary to prove the abuse of rights, the scope of losses and the causality; if requesting repurchase, it must meet one of the statutory circumstances. Simple operating losses and normal business decisions made by majority vote are generally difficult to refute. The results of individual cases are subject to the evidence and the court's determination, and cannot be guaranteed unilaterally.

Q2: What evidence do I need to prepare for defending my rights?

Gather evidence related to the suppression of shareholders' rights: shareholders' meetings, board of directors' notifications and attendance lists, resolution texts, and meeting minutes to prove procedural violations or content violations; financial reports, audit materials, bank transaction records, and related transaction contracts to prove the transfer of benefits and concealment of profits; letters and chat records of communication between shareholders to prove the facts of urging and refusal; industrial and commercial registration files and investment certificates to prove the shareholding ratio and identity. The evidence should be organized according to the timeline.

Q3: How much does it cost to file a lawsuit against shareholder oppression?

For property-related claims, the litigation fees shall be paid in stages according to the amount of the subject matter, with the losing party bearing the costs. For cases involving partial victories, the fees shall be shared proportionally. For cases solely seeking to confirm the validity of resolutions, the fees shall be paid per case. Lawyer's fees are determined through negotiation between the law firm and the client, with common charging methods including fees based on the amount of the subject matter or a fixed fee, without a unified government pricing system. It is recommended to calculate the litigation costs and expected benefits before filing a lawsuit, and to evaluate the potential for settlement or mediation.

Q4: How long do such cases usually take?

The lawsuit against the defects of the resolution shall be concluded within six months in the first-instance ordinary procedure and within three months in the summary procedure; the shareholder representative litigation and the lawsuit for damages are relatively complex, often requiring more than six months, and the period involved in the financial audit shall not be included in the time limit for the trial; the appeal case in the second instance generally takes three months. Note that the lawsuit for revocation must be initiated within 60 days after the resolution is made, and the lawsuit for repurchase must be initiated within 90 days after the resolution is made. Otherwise, the substantive rights may be lost.

Q5: If you find yourself being suppressed, what should you do first?

Four steps to advance: First, send a written notice to request the convening of a shareholders' meeting, review financial materials, and explain related-party transactions, keeping records throughout the process; Second, fix the evidence of resolutions and meeting procedures, evaluate the types of defects in resolutions and the statute of limitations for litigation; Third, if the conditions for repurchase and representative litigation are met, proceed in accordance with the statutory pre-procedure; Fourth, entrust professional lawyers to develop a comprehensive plan, considering the confirmation of the effectiveness of resolutions, claims, repurchases, and exit mechanisms together, to avoid a single path failing.

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

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence to avoid missing the statutory time limit.Business and commercial legal services·Attorney Xie Chao Li·Beijing Henglue 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.