Gazette Case: Founder Share Transfer Restrictions and Share Custody

Gazette Case: Zhang Guiping v. Wang Hua

Where founders' shares in a joint-stock company remain subject to statutory transfer restrictions, courts should distinguish a transitional custody or management arrangement from a completed prohibited transfer by examining the contract terms and the parties' performance. The existence of interim management or custody terms alone does not automatically render the related share transfer agreement invalid.

Holding

Where founders' shares in a joint-stock company remain subject to statutory transfer restrictions, courts should distinguish a transitional custody or management arrangement from a completed prohibited transfer by examining the contract terms and the parties' performance. The existence of interim management or custody terms alone does not automatically render the related share transfer agreement invalid.

Issues

founder-share transfer restrictionsshare custody arrangementvalidity of the share transfer contract