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Case | transfer of equity in a medical company, is it a disguised transfer of medical practice licenses and invalid?

author:Zhang Te, equity lawyer at Beijing company
Case | transfer of equity in a medical company, is it a disguised transfer of medical practice licenses and invalid?

The special craftsman lawyer said that the case | transfer the equity of the medical company, which is a disguised transfer of the medical practice license and is invalid? (2021) Jingmin Shen No. 5679

Mr. Ma (the transferor) and Mr. Wang (the transferee) signed the Equity Transfer Agreement for the transfer of 90% of the equity of the target company, Wuwei Medical Beauty Clinic Company, with a transfer price of 4.14 million yuan. Wang paid according to the agreement, and Ma also cooperated with Wang to register Wang as an industrial and commercial shareholder, and the two sides counted and made records of the target company, and then a dispute arose due to the handover.

Wang, as the plaintiff, sued Ma for the invalidity of the equity transfer contract and the return of the equity transfer payment, on the grounds that: "According to Article 23 of the Regulations on the Administration of Medical Institutions, "the Medical Institution Practice License shall not be forged, altered, sold, transferred, or lent", and the equity transfer contract in this case is a disguised transfer of the Medical Institution Practice License, which violates the above provisions, and is also in a legal form to cover up the illegality of the content of its behavior, so the Equity Transfer Agreement in this case is an invalid contract"

Neither the first instance nor the two instances supported Wang's claims, wang applied to the High Court for a retrial, and after the collegial panel of the High Court heard Bohm's application for retrial, the reason being: "The Equity Transfer Agreement does not violate laws and regulations and is legal and valid. The industrial and commercial, taxation and medical institution practice licenses of the target company have all been changed in accordance with the agreement, and the administrative department has not restricted and prohibited them. The court of first instance found that the case was not invalid in violation of the prohibitive provisions of the Regulations on the Administration of Medical Institutions" and was not improper."

This case involves the "transfer" of medical institutions' enforcement licenses, and similar cases, such as (2020) SPC Minshen No. 6072, the collegial panel also held that the Regulations on the Administration of Medical Institutions do not prohibit the transfer of investment rights and interests of medical institutions. In other words, the transfer of equity or the overall transfer of equity in a company qualified by the Regulations on the Administration of Medical Institutions is not contrary to Article 23 of the Regulations on the Administration of Medical Institutions. However, in practice, the transfer of clinics, the cooperation of clinics or outpatient departments, the contracting of departments and the custody of departments or outpatient departments fall within the prohibitive scope of Article 23 of the Regulations on the Administration of Medical Institutions, and are usually considered invalid.

The above examples are for reference only.

Case | transfer of equity in a medical company, is it a disguised transfer of medical practice licenses and invalid?
Case | transfer of equity in a medical company, is it a disguised transfer of medical practice licenses and invalid?

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