Perspective | Civil and Commercial Lawyers Should Emphasize the Regulations of Economic Law in Handling Civil and Commercial Cases - Taking the (2023) Yue 0391 Min Chu 10000 Shareholder Right to Know Dispute Case as an Example
Published:
2024-12-31
As of April 26, 2024, there are 302 valid laws in our country, categorized by legal departments, including 1 Constitution, 52 laws related to the Constitution, 24 civil and commercial laws, 97 administrative laws, 85 economic laws, 28 social laws, 4 criminal laws, and 11 procedural laws for litigation and non-litigation. The economic law department generally refers to a legal department that conducts overall, systematic, comprehensive, and integrated adjustments of socialist market economic relations. Laws such as the "Deed Tax Law," "Corporate Income Tax Law," "Accounting Law," "Asset Evaluation Law," "Budget Law," and "E-commerce Law" all belong to the economic law department. The 85 economic laws and their related regulations, rules, and normative documents constitute a vast legal system, forming the legal sources for the majority of market economic relations and compliance in economic activities. In practice, civil and commercial lawyers rarely handle civil and commercial cases while also considering the relevant economic laws and their regulations, rules, and normative documents. However, in the case of the People's Court of Qianhai Cooperation Zone, Shenzhen (2023) Yue 0391 Min Chu 10000, regarding the shareholder's right to know dispute involving Jiang and a certain company in Shenzhen, the application of economic law department laws and regulations addressed issues in civil and commercial cases.
As of April 26, 2024, there are 302 valid laws in our country, categorized by legal departments, including 1 Constitution, 52 laws related to the Constitution, 24 civil and commercial laws, 97 administrative laws, 85 economic laws, 28 social laws, 4 criminal laws, and 11 procedural laws for litigation and non-litigation.
The economic law department generally refers to a legal department that conducts overall, systematic, comprehensive, and integrated adjustments of socialist market economic relations. Laws such as the "Deed Tax Law", "Corporate Income Tax Law", "Accounting Law", "Asset Evaluation Law", "Budget Law", and "E-commerce Law" all belong to the economic law department.
The 85 economic laws and their related regulations, rules, and normative documents constitute a vast legal system, establishing the legal sources for the compliance of the majority of market economic relations and economic activities.
In practice, civil and commercial lawyers handling civil and commercial cases rarely consider the relevant economic laws and their regulations, rules, and normative documents.
However, in the case of the People's Court of Qianhai Cooperation Zone, Shenzhen (2023) Yue 0391 Min Chu 10000, regarding the shareholder's right to know dispute involving Jiang Moukang and Ai Mou (Shenzhen) Company, economic law department laws and regulations were applied to resolve the civil and commercial case.
Basic case facts
Shareholder Jiang Moukang requests: 1. The company provide financial accounting reports from its establishment (July 12, 2015) to the actual provision date for review and copying; 2. Provide accounting books (including general ledger, detailed ledger, journal, and other auxiliary books) and accounting vouchers (including original vouchers and bookkeeping vouchers) from its establishment (July 12, 2015) to the actual provision date for review; 3. Provide the self-examination audit reports from 2016 to 2022 for review and copying.
Defendant company's defense points: The defendant agrees to provide materials for the plaintiff to review under the court's supervision but does not agree to allow the plaintiff to take away or copy the materials. An audit firm can be entrusted by the court to conduct an audit of the company's entire financial situation and produce an audit report.
Court's viewpoint
1. Regarding the review and copying of the company's financial accounting reports. Article 33, Paragraph 1 of the Company Law of the People's Republic of China states: "Shareholders have the right to review and copy the company's articles of association, minutes of shareholders' meetings, resolutions of the board of directors, resolutions of the board of supervisors, and financial accounting reports." In this case, the plaintiff, as a shareholder of Ai Mou (Shenzhen) Company, has the legal right to understand and grasp the company's operational status and financial information. The plaintiff's request to review and copy the financial accounting reports of Ai Mou (Shenzhen) Company has factual and legal basis, and this court supports it.
2. Regarding the review and copying of the company's annual audit report. Article 37 of the Regulations on Financial Accounting Reports of Enterprises states: "If the financial accounting report must be audited by a certified public accountant, the enterprise shall provide the audit report issued by the certified public accountant and their accounting firm along with the financial accounting report." According to the above provisions, in situations where financial accounting reports should be provided, the audit report should also be provided.
3. Regarding the scope of shareholders' right to review accounting books. Article 9 of the Accounting Law of the People's Republic of China states: "All units must conduct accounting based on actual economic business events, prepare accounting vouchers, register accounting books, and compile financial accounting reports." Article 14, Paragraph 1 states: "Accounting vouchers include original vouchers and bookkeeping vouchers." Article 15, Paragraph 1 states: "Accounting books must be registered based on reviewed accounting vouchers and comply with relevant laws, administrative regulations, and the national unified accounting system. Accounting books include general ledgers, detailed ledgers, journals, and other auxiliary books." From the above legal provisions, it can be seen that accounting books include general ledgers, detailed ledgers, journals, and other auxiliary books, and accounting vouchers are the basis for preparing accounting books. Since accounting vouchers include original vouchers and bookkeeping vouchers, if shareholders are not allowed to review the company's original vouchers, they will find it difficult to truly understand the company's actual situation, and the shareholders' right to know has not been practically realized. From the perspective of realizing shareholders' right to know, shareholders have the right to review the company's original vouchers.
Summary
Shareholder right to know dispute cases are relatively familiar to the public and are commonly handled by lawyers in civil and commercial litigation. There has always been controversy over whether shareholders have the right to review the company's original accounting vouchers. The focus of the dispute lies in the Company Law revised in 2018, which only stipulates that "shareholders have the right to review and copy the company's articles of association, minutes of shareholders' meetings, resolutions of the board of directors, resolutions of the board of supervisors, and financial accounting reports." There is no conclusion on what constitutes a financial accounting report and whether it should include the company's original accounting vouchers. Although the revision of the new Company Law resolves the issue of whether shareholders have the right to review the company's original vouchers, the new Company Law will be implemented on July 1, 2024, while the judgment in this case was made in January 2024. The court accurately applied the laws and regulations of the economic law department, such as the Accounting Law and the Regulations on Financial Accounting Reports of Enterprises, in this case, supplementing the legal basis for the trial of shareholder right to know disputes before the new Company Law takes effect.
In addition, this case provides new agency ideas for lawyers handling civil and commercial cases closely related to the economic law department, such as financial transaction disputes, state-owned equity transaction disputes, public resource transaction disputes, and digital asset transaction disputes.
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