Copyright 2016 by Stanford University

B&R CasesTM

一带一路案例TM

Sino-Environment Technology Group Limited, Singapore

v.

Thumb Env-Tech Group (Fujian) Co., Ltd.

A Dispute over a Shareholder Capital Contribution

B&R Typical Case 1

(Released by the Supreme People’s Court on July 7, 2015)

CHINA GUIDING CASES PROJECT

November 16, 2016 Edition∗

∗

The citation of this translation of the Typical Case is:《新加坡中华环保科技集团有限公司与大拇指环

保科技集团（福建）有限公司股东出资纠纷案》(Sino-Environment Technology Group Limited, Singapore v.

Thumb Env-Tech Group (Fujian) Co., Ltd., A Dispute over a Shareholder Capital Contribution), STANFORD LAW

SCHOOL CHINA GUIDING CASES PROJECT, B&R CasesTM

, Typical Case 1 (TC1), Nov. 16, 2016 Edition,

http://cgc.law.stanford.edu/belt-and-road/b-and-r-cases/typical-case-1. For the original version of this case, see 人

民法院为“一带一路”建设提供司法服务和保障的典型案例 (Typical Cases Concerning Judicial Services and

Safeguards Provided by the People’s Courts for the “Belt and Road” Construction),《最高人民法院网》

(WWW.COURT.GOV.CN), July 7, 2015, http://www.court.gov.cn/zixun-xiangqing-14897.html.

This document was primarily prepared by Sean Webb and Dr. Mei Gechlik; it was finalized by Dimitri

Phillips and Dr. Mei Gechlik. We thank Jacklyn Fang and Wenjie Ou for their research assistance. Minor editing,

such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings, was

done to make the piece more comprehensible to readers; all footnotes, unless otherwise noted, have been added by

the China Guiding Cases Project. The following text is otherwise a direct translation of the original text released by

the Supreme People’s Court.

B&R CasesTM

is a serial publication of the China Guiding Cases Project that provides full-text versions and

high-quality English translations of court cases in China that are related to the country’s Belt and Road Initiative.

2016.11.16 Edition

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2

Impartial and Highly Efficient Judiciary Equal Protection of the Legal Rights and

Interests of Chinese and Foreign Investors

I. Basic Facts of the Case

Thumb Company1 was a wholly foreign-owned enterprise of Singapore Environment

Company2 established in China. On June 30, 2008, Thumb Company [received] approval to

increase its registered capital to RMB 380 million. On April 27, 2012, on the grounds that

Singapore Environment Company had not paid the capital contribution to the full amount,

Thumb Company brought suit, requesting that Singapore Environment Company be ordered to

perform its obligation to contribute the capital by paying a capital increase of RMB 45 million.

In the first-instance [judgment], the Higher People’s Court of Fujian Province opined:3

Singapore Environment Company did not perform its statutory obligation as a shareholder to pay

its capital contribution to the full amount, infringing upon the right of Thumb Company, as a

legal person, to property.4

Thumb Company had the right to demand that Singapore

Environment Company perform [its] obligation to contribute the capital [by paying the

remaining amount] to top up [its] capital contribution. On this basis, [the court] ordered

Singapore Environment Company to pay Thumb Company a capital contribution of RMB 45

million. Singapore Environment Company appealed to the Supreme People’s Court.

1 The original text reads “大拇指公司” and is translated here as “Thumb Company”. In the case name, this

party is referred to as “大拇指环保科技集团（福建）有限公司”, which is translated here as “Thumb Env-Tech

Group (Fujian) Co., Ltd.” in accordance with the name found in a prominent source of information on companies

worldwide. See Company Overview of Thumb Env-Tech Group (Fujian) Co., Ltd., CAPITAL IQ,

http://www.bloomberg.com/Research/stocks/private/snapshot.asp?privcapid=34284533. 2 The original text reads “新加坡环保公司” and is translated here as “Singapore Environment Company”.

In the case name, this party is referred to as “新加坡中华环保科技集团有限公司”, which is translated here as

“Sino-Environment Technology Group Limited, Singapore”, with “Sino-Environment Technology Group Limited”

in accordance with the name found in a news article published on the Supreme People’s Court’s website. See薛勇

秀 (XUE Yongxiu), 回顾：最高法院审理一起涉外股东出资纠纷案 (Review: The Supreme Court Handles a

Dispute over Foreign-Related Shareholder’s Capital Contribution), 《 中 国 法 院 网 》

(WWW.CHINACOURT.ORG), June 11, 2014, http://www.chinacourt.org/article/detail/2014/06/id/1313064.shtml. 3 As reported by the second-instance ruling of this case, this judgment is（2013）闽民初字第 43号民事判

决 (“(2013) Min Min Chu Zi No. 43 Civil Judgment”), rendered on December 18, 2013. See（2014）民四终字第

20号民事裁定 (“(2014) Min Si Zhong Zi No. 20 Civil Ruling”), rendered on June 11, 2014, full text available on

the China Guiding Cases Project’s website, at http://cgc.law.stanford.edu/judgments/spc-2014-min-si-zhong-zi-20-

civil-ruling [hereinafter Ruling]. 4 The term “法人财产权” is translated here as “right of […], as a legal person, to property”. According to

Article 3, Paragraph 1 of the Company Law of the People’s Republic of China, “[a] company is an enterprise legal

person, which has independent property of a legal person and enjoys, as a legal person, the right to property.” (“公司

是企业法人，有独立的法人财产，享有法人财产权。”). See《中华人民共和国公司法》(Company Law of the

People’s Republic of China), passed and issued on Dec. 29, 1992, effective as of July 1, 1994, amended three times,

most recently on Dec. 28, 2013, effective as of Mar. 1, 2014, http://www.csrc.gov.cn/shenzhen/xxfw/tzzsyd/ssgs/zh

/zhxx/201409/t20140918_260530.htm.

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II. Results of the Adjudication

On June 11, 2014, the Supreme People’s Court handled the case in an open trial and then

announced the ruling. The Supreme People’s Court handled the second-instance [of the case]

and opined:5 According to Article 14, Paragraph 1 of the Law of the People’s Republic of China

on the Application of Laws to Foreign-Related Civil Relations,6 the law of China

7 should be

applied to such matters as those concerning the capital contribution obligations between a

foreign-invested enterprise in China and its foreign investor. The law of the place of registration

of the foreign investor should be applied in such matters as those concerning the capacity for

civil rights and the capacity for civil acts of the foreign investor’s judicial manager and liquidator.

According to provisions in Singapore’s Companies Act, during the period of judicial

management, the authority and responsibilities that the directors of the company obtain on the

basis of the Companies Act and the company’s articles of association should be exercised and

performed by the judicial manager.8

Therefore, the resolution made by the judicial manager of Singapore Environment

Company concerning changes to the directors of Thumb Company and the appointment and

dismissal of [Thumb Company’s] statutory representative was valid. Because the board of

directors of Thumb Company did not carry out the resolution of [Singapore] Environment

Company, which was the only shareholder, it created a situation in which the statutory

representative registered with the industrial and commercial [authorities] and the statutory

representative appointed by the shareholder were not the same, leading to a dispute. According

to the provisions of the Company Law of the People’s Republic of China,9 the [registration of the]

statutory representative with the industrial and commercial [authorities] has the effect of showing

externally [that the representative has the authority to represent the company], [and] if an

external dispute involving a party outside the company arises [in connection with] the authority

to represent the company, the registration with the industrial and commercial [authorities] should

govern. However, with respect to an internal dispute between a company and its shareholders

that arises because of the appointment and dismissal of the statutory representative, a valid

5 See Ruling, supra note 3.

6 《中华人民共和国涉外民事关系法律适用法》 (Law of the People’s Republic of China on the

Application of Laws to Foreign-Related Civil Relations), passed and issued on Oct. 28, 2010, effective as of Apr. 1,

2011, http://www.npc.gov.cn/npc/xinwen/2010-10/28/content_1602433.htm. Article 14, Paragraph 1 provides that

“[t]he law of the place of registration is applied in matters such as those concerning the capacity for civil rights, the

capacity for civil acts, the organizational institutions, and the rights and obligations of shareholders of a legal person

and its branch.” (“法人及其分支机构的民事权利能力、民事行为能力、组织机构、股东权利义务等事项，适

用登记地法律。”) 7 The original text reads “我国” (“my/our country”) and is translated throughout this Typical Case as

“China”. 8 Companies Act, Chapter 50, The Statutes of the Republic of Singapore, Revised Edition 2006, Part VIIIA,

http://statutes.agc.gov.sg/aol/download/0/0/pdf/binaryFile/pdfFile.pdf?CompId:579244a5-83c6-46cc-8563-

e01eee5ff6a8. 9 See《中华人民共和国公司法》(Company Law of the People’s Republic of China), supra note 4.

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resolution of the shareholders’ meeting concerning appointment and dismissal should govern and

produce the legal effect of changing the statutory representative within the company. The

initiation of the suit in this case could not represent Thumb Company’s real intent, [and therefore

the court] ruled to revoke the original judgment and reject Thumb Company’s suit.

III. Typical Significance

This case has important significance for the equal protection of the legal rights and

interests of Chinese and foreign investors, the safeguarding of shareholders’ rights to select

managers, and the optimization of the rule-of-law environment for foreign investment. It has

been recognized as one of the major cases of the Supreme People’s Court since [the court’s]

establishment 65 years ago.10

This case clarifies the rules for determining the capacity for civil

rights and the capacity for civil acts of judicial managers and liquidators of foreign companies

within the territory of China, clearly defines the rules for distinguishing disputes concerning a

company’s right of representation, and strengthens foreign businesses’ confidence in investing in

China. In addition, this case is the first case in which the Supreme People’s Court invited

foreign diplomats inside China and media outlets outside China to attend the trial and announced

the ruling immediately after the trial. This highlights the image of China’s impartial and highly

efficient judiciary.

10

See 林子杉、王俏 (LIN Zishan and WANG Qiao), 65 年，那些被记住的案件 (65 Years, Those

Remembered Cases), 《人民法院报》(PEOPLE’S COURT DAILY), Nov. 24, 2014, http://rmfyb.chinacourt.org/paper

/html/2014-11/24/content_90829.htm and http://rmfyb.chinacourt.org/paper/html/2014-11/24/content_90828.htm.