Database Case 6 on Foreign-Law Ascertainment: Fujian Environmental Company v. Technology Group Shareholder Contribution Dispute
The Supreme People's Court distinguished the internal and external effects of changing the legal representative. In disputes involving third parties outside the company, the registered legal representative has public-notice effect. In internal disputes between the company and its sole shareholder over appointment and removal, however, a valid shareholder appointment decision controls and changes the legal representative's status within the company. Because the sole shareholder had effectively replaced the legal representative and the newly appointed representative clearly opposed the suit, the original filing did not reflect the company's true intent and had to be dismissed.
Holding
The Supreme People's Court distinguished the internal and external effects of changing the legal representative. In disputes involving third parties outside the company, the registered legal representative has public-notice effect. In internal disputes between the company and its sole shareholder over appointment and removal, however, a valid shareholder appointment decision controls and changes the legal representative's status within the company. Because the sole shareholder had effectively replaced the legal representative and the newly appointed representative clearly opposed the suit, the original filing did not reflect the company's true intent and had to be dismissed.