Reference Case: Hongzhi Industrial Co., Ltd. v. Chen Mengyu, Ding Xiuzhi, and Wuhan Youyi Tekang Food Co., Ltd.
In an equity-transfer dispute, a legal representative's execution of an agreement without internal authorization is, in principle, a question of agency authority rather than the company's civil capacity. Courts should not collapse a legal representative's excess of authority into a lack of corporate capacity. Where the transaction remains subject to statutory approval for effectiveness, courts must also examine the approval regime and the contract terms separately when assessing formation, effectiveness, and performance obligations.
Holding
In an equity-transfer dispute, a legal representative's execution of an agreement without internal authorization is, in principle, a question of agency authority rather than the company's civil capacity. Courts should not collapse a legal representative's excess of authority into a lack of corporate capacity. Where the transaction remains subject to statutory approval for effectiveness, courts must also examine the approval regime and the contract terms separately when assessing formation, effectiveness, and performance obligations.