On June 27, 2016, the legal representative registered by the defendant Hengfu Company at the time of establishment was plaintiff Lin Moumou. On October 10, 2019, when Hengfu Company changed the relevant registered matters, the registered legal representative and executive director were Lin Moumou. On December 17, 2019, Lin was detained on suspicion of a crime. On August 11, 2022, the Intermediate People's Court issued a final ruling, confirming that Lin had committed the crime of money laundering and sentenced him to three years' imprisonment (from December 17, 2019 to December 16, 2022).
Lin Moumou filed a lawsuit with the court of first instance to request: 1. Order the defendant to go to the registration authority to complete the registration matters with plaintiff Lin Moumou as the defendant's legal representative and executive director; 2. All legal costs in this case shall be borne by the defendant.
The court of first instance held that this case was a dispute over a request to change the company's registration. Article 13 of the Company Law of the People's Republic of China stipulates: "The legal representative of a company shall be the chairman of the board, executive director or manager in accordance with the provisions of the articles of association, and shall be registered according to law. If the legal representative of the company is changed, the change registration shall be completed. The second paragraph of Article 43 of the Company Law of the People's Republic of China stipulates: "The resolution of the shareholders' meeting to amend the articles of association, increase or decrease the registered capital, as well as the resolution of the merger, division, dissolution or change of the form of the company, must be passed by the shareholders representing more than two-thirds of the voting rights." "It can be seen from the above that the registration of a change of company is within the scope of internal autonomy of the company. However, the defendant neglected to change the legal representative and executive director, and the plaintiff had no other remedy channels, and the existence of the plaintiff's status as the legal representative and executive director was bound to affect his work and life. In order to maintain the socialist economic order and safeguard the legitimate rights and interests of the parties, it is not improper to grant judicial remedies to the plaintiff. According to the first paragraphs (2) and 3 of Article 146 of the Company Law of the People's Republic of China and Article 12 (2) of the Regulations of the People's Republic of China on the Registration and Administration of Market Entities, those who are sentenced to criminal punishment for corruption, bribery, embezzlement of property, misappropriation of property or undermining the order of the socialist market economy, and the term of execution has not exceeded five years, or if they have been deprived of political rights due to a crime, and the period of execution has not exceeded five years, and they shall not serve as the legal representative of a company or a non-corporate enterprise legal person, and shall not serve as a director or supervisor of the company, senior management; If the above circumstances occur during the term of office of directors, supervisors and senior management, the company shall dismiss them from their posts.
While serving as the legal representative and executive director of the defendant, the plaintiff was released less than five years after the completion of his sentence for allegedly committing the crime of money laundering in the crime of undermining the order of the socialist market economy. Therefore, the plaintiff's continued role as the defendant's legal representative did not comply with the law, and the defendant should remove the plaintiff from the position of executive director according to law. In summary, the court of first instance upheld plaintiff Lin's claim.
First instance judgment: The defendant Yinhu Real Estate Development Co., Ltd. shall go to the relevant registration authority within 30 days from the effective date of this judgment to complete the registration matters of removing plaintiff Lin Moumou as its legal representative and executive director.
After the first-instance judgment, the defendant Yinhu Real Estate Development Co., Ltd. appealed.
The second instance held that, combined with the appellant's grounds for appeal, the focus of the dispute in the second instance of this case was: before the shareholders' meeting resolved to elect a new legal representative and executive director, the appellee directly sued whether the company registration requesting the removal of its legal representative and executive director was in accordance with the law.
The second instance held that a person who is prohibited from serving as a director, supervisor or senior management of a company under any of the following circumstances stipulated in item 2 of the first paragraph of Article 146 of the Company Law of the People's Republic of China shall not serve as a director, supervisor or senior management of a company: for corruption, bribery, embezzlement of property, misappropriation of property or disruption of the order of the socialist market economy, and he has been sentenced to a criminal punishment with a term of execution of less than five years, or deprived of political rights due to a crime, and the term of execution has not exceeded five years. This provision is mandatory of the law, directors, supervisors and senior management personnel manage and supervise the operation of the company's property, should have a high degree of integrity, and those who use illegal means to seek personal benefits should be restricted from serving as directors, supervisors and senior management of the company, and if it is found that the relevant personnel do not meet the qualifications for the post during the period of holding the position, the company shall revoke their positions and re-elect them.
On August 11, 2022, the Intermediate People's Court made a final ruling, confirming that the appellee had committed the crime of money laundering and sentenced him to three years' imprisonment. Until March 24, 2023, the court of first instance filed and accepted the dispute involved, and the appellant was reluctant to take the initiative to perform its responsibilities for more than half a year. Now objectively the appellee has lost control of the appellant, but still has to bear the various risks that may be brought about by the appellant's legal representative and executive director, and the appellant does not take the initiative to perform its duties in accordance with the law, and the appellee can directly file a lawsuit with the people's court to require the appellant to erase the company registration matters of its legal representative and executive director. The appellant's appeal request had no factual and legal basis, and the second instance did not support it according to law.
Second-instance judgment: dismissed the appeal and affirmed the original judgment.