Database Case: Shanghai Company v. Shanghai Equity Investment Center et al., with Ye Moumou as Third Party
The court characterized the repurchase obligation arising after failure of the VAM arrangement as a conditional internal equity transfer rather than an ordinary transfer to an outside third party, and therefore held that statutory shareholder pre-emption rules did not apply. Where the original shareholders jointly undertook an irrevocable joint-liability obligation, the investor could enforce joint repurchase liability against them.
Holding
The court characterized the repurchase obligation arising after failure of the VAM arrangement as a conditional internal equity transfer rather than an ordinary transfer to an outside third party, and therefore held that statutory shareholder pre-emption rules did not apply. Where the original shareholders jointly undertook an irrevocable joint-liability obligation, the investor could enforce joint repurchase liability against them.