Reference Case: Qiang Jingyan v. Cao Wubo
The Supreme People's Court accepted that a target company may validly provide a joint-liability guarantee for the controller's repurchase obligation, and stressed that such a guarantee should not be collapsed into a direct VAM payment obligation by the company itself. The analysis turns instead on whether the investor exercised reasonable formal review and whether the guarantee had a sufficient authorization and corporate-benefit basis.
Holding
The Supreme People's Court accepted that a target company may validly provide a joint-liability guarantee for the controller's repurchase obligation, and stressed that such a guarantee should not be collapsed into a direct VAM payment obligation by the company itself. The analysis turns instead on whether the investor exercised reasonable formal review and whether the guarantee had a sufficient authorization and corporate-benefit basis.