Gazette Case: Beijing Xin'ate Group Co., Ltd. v. China Huarong Asset Management Co.
The lawful exercise of another shareholder's pre-emption right in a limited liability company does not automatically invalidate the share transfer contract between the transferor and the outside transferee. Courts should distinguish the validity of the contract from the effectiveness of the share transfer itself, and where the contract remains valid, the transferee may still claim damages for non-performance.
Holding
The lawful exercise of another shareholder's pre-emption right in a limited liability company does not automatically invalidate the share transfer contract between the transferor and the outside transferee. Courts should distinguish the validity of the contract from the effectiveness of the share transfer itself, and where the contract remains valid, the transferee may still claim damages for non-performance.