Gansu Julidong Metalworking Co., Ltd. v. Qingyang Taiyi Thermal Power Co., Ltd. and Li Xinjun (Surplus Distribution)
The Court found that the executive director’s diversion of post-acquisition proceeds to entities controlled by the manager to the exclusion of the company’s statutory distribution obligations caused concrete loss to shareholders and the company. The case confirms that tracing the funds and benefit chains through controlled entities is critical in company-interest damage claims against directors and managers.
Holding
The Court found that the executive director’s diversion of post-acquisition proceeds to entities controlled by the manager to the exclusion of the company’s statutory distribution obligations caused concrete loss to shareholders and the company. The case confirms that tracing the funds and benefit chains through controlled entities is critical in company-interest damage claims against directors and managers.