Gazette Case: Mianyang Hongri Industrial Co., Ltd. and Jiang Yang v. Mianyang High-Tech Zone Kechuang Industrial Co., Ltd.
When a limited liability company increases capital, existing shareholders enjoy a statutory pre-emptive right to subscribe for the new capital in proportion to their interests. Even if the capital increase itself is validly approved, the portion of the resolution and the related subscription agreement that directly installs a third party as subscriber without honoring that pre-emptive right are invalid, and the original shareholders may seek restoration of their subscription priority.
Holding
When a limited liability company increases capital, existing shareholders enjoy a statutory pre-emptive right to subscribe for the new capital in proportion to their interests. Even if the capital increase itself is validly approved, the portion of the resolution and the related subscription agreement that directly installs a third party as subscriber without honoring that pre-emptive right are invalid, and the original shareholders may seek restoration of their subscription priority.