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5 In relation to the Company Law of China, explain the major rights of a shareholder of a limited liability company.
(10 marks)
6 In relation to the Enterprise Bankruptcy Law of China:
(a) state the various circumstances under which a creditors’ meeting shall be held; (4 marks)
(b) state the major functions and duties of the creditors’ committee. (6 marks)
(10 marks)
7 In relation to corporate behaviour and legal liabilities:
(a) explain the term controlling shareholder under the Company Law of China; (3 marks)
(b) explain how the creditors may take legal action against the shareholder of a company for abusing the
independent legal entity, and the doctrine of law for such legal action; (3 marks)
(c) explain the civil liabilities of the controlling shareholder for the damage of the company through affiliate
trading. (4 marks)
(10 marks)
8 Yado Steel Co Ltd (Yado Steel) entered into a loan agreement with Industry Bank to borrow RMB 20 million yuan for
its expansion programme. Yado Steel provided its office building as property mortgaged for the debt, and made the
registration as required. Mr Ding, one of the shareholders of Yado Steel, placed a guarantee letter of general liability
in favour of Industry Bank.
Due to poor performance, Yado Steel failed to repay the debt when it came to maturity. Meanwhile, Industry Bank,
under a restructuring plan, transferred the credit of RMB 20 million yuan together with the right of pledge to Oriental
Assets Management Co (OAM). It also made a written notice to Yado Steel and Mr Ding, but failed to transfer the right
of mortgage to OAM. On the contrary, Industry Bank concluded an agreement with Yado Steel before it went bankrupt,
and settled other debts owed by the latter through the sale of the office building as mortgaged for the loan. Having
found this fact, OAM, as a transferee of the credit, requested the court to order Mr Ding to bear its guarantor’s liability
for the debt. Mr Ding asserted that he was a pledger with a general liability and would be responsible for the debt
only if the things mortgaged could not satisfy the debt.
Required:
Answer the following questions in accordance with the relevant provisions of the Property Law and the Contract
Law, and give your reasons for your answer:
(a) State whether the defence of Mr Ding should be supported by the court. (6 marks)
(b) State what was the cause of this dispute between OAM and Industry Bank. (4 marks)
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