Fang v. Zhengzhou Siwei Energy Saving Co., Ltd. and Zhengzhou Siwei Grain & Oil Engineering Co., Ltd.
The courts held that the controlling shareholder, who also served as executive director and general manager, used a controlled affiliate to arrange a grossly underpriced onward sale and thereby harmed the company through a related-party transaction. Where the wrongdoer is the director or senior manager himself, the company's supervisor may sue in the company's name and recover the company's lost expected profit.
Holding
The courts held that the controlling shareholder, who also served as executive director and general manager, used a controlled affiliate to arrange a grossly underpriced onward sale and thereby harmed the company through a related-party transaction. Where the wrongdoer is the director or senior manager himself, the company's supervisor may sue in the company's name and recover the company's lost expected profit.