Lao Li runs a smart hardware company in Longhua, Shenzhen. When he started the business, he held 40% of the shares and was responsible for technology and the supply chain. In March 2024, the other two shareholders secretly held a shareholders' meeting without his knowledge and passed a capital increase agreement to bring in a new investor. Lao Li did not sign it, yet his equity was directly diluted from 40% to 8%. When he came to us with the business registration archives, he kept asking: "They signed it—why should I bear the consequences?"

This is not an isolated case. Equity dispute cases in Shenzhen have grown at an average annual rate of 20% over the past three years, with an increasing proportion involving corporate control and malicious equity dilution. Partners falling out is not what's scary; what's scary is not understanding the rules and watching helplessly as your equity turns into a piece of waste paper.
Answer: It depends on the situation. If the articles of association stipulate that a capital increase requires unanimous consent of all shareholders, then it cannot pass without signatures; if the articles of association only require approval by two-thirds or more of voting rights, then as long as the voting rights ratio meets the threshold, the resolution is formally valid. But being valid in form does not mean it is lawful; procedural defects and deprivation of preemptive subscription rights are both grounds for litigation. Article 33 of the Company Law grants shareholders the statutory right to inspect and copy the company's articles of association, shareholder meeting records, and other documents. Old Li relied on this provision to first obtain the underlying documents of the capital increase agreement.
We compared the common response strategies across three dimensions: cost, time, and probability of recovering control. First, private negotiation. It has the lowest cost, but also a low success rate. Since the other party dared to bypass you and convene a shareholders' meeting, they usually already have prepared talking points and an exit plan. In a case involving an e-commerce company in Nanshan, Shenzhen, the minority shareholder met with the majority shareholder seven times, and each time was put off with "let's talk next time." By the time the stake was diluted from 25% to 6%, no one would even listen to further discussion. Second, sending a lawyer's letter. The value of a lawyer's letter lies in preserving evidence, tolling the statute of limitations, and applying pressure on the other party. It is suitable for a stage where the other party is still hesitating and has not completely burned bridges. However, a lawyer's letter itself cannot stop the capital increase from closing; if the other party is determined, the letter merely serves as a preamble. Third, filing a lawsuit directly. It is the most costly, but also the only path that can reverse the outcome. The cause of action in such lawsuits is usually revocation of a company resolution or confirmation of its invalidity, based on Article 22 of the Company Law: resolutions
Answer: Yes, it's possible, but more complicated. Once the capital increase funds enter the company's account, they become company assets and cannot be returned directly. We usually take the approach of "restoring the original state": first sue to confirm that the shareholders' resolution is invalid, then request the business registration change to restore the equity structure to what it was before the capital increase. This process truly tests the lawyer's grasp of procedural details, such as whether the meeting notice was delivered fifteen days in advance, whether the voting ballots are genuine, and whether the capital increase plan was provided to the original shareholders in writing. Any flaw is a breakthrough point for the case.
When choosing a lawyer, you can't just look at whether they have a lawyer's license.
Equity disputes are different from divorce and lending cases—they test one's depth of understanding of the corporate law system and the density of courtroom confrontation experience. Many lawyers in the market are skilled at drafting contracts and conducting due diligence, but they have never truly fought a control rights battle; in court, they cannot even clearly explain the cross-relationship between "voting right avoidance" and "preemptive subscription rights." For a chip solutions company in Futian, Shenzhen, the lawyer the client hired omitted the claim for "asserting preemptive subscription rights" when filing the lawsuit. The court ruled to revoke the capital increase resolution, but the new investor had already been participating in actual operations for over a year. If the client wants to re-subscribe to that portion of the equity, they would have to file another lawsuit, doubling both the costs and risks.
Guangdong Zhiming Law Firm has been practicing for 26 years. Director Shen Jinlong holds a master's degree from Fudan University, is a senior economist, and previously served as an executive at a state-owned enterprise. The team he leads has handled over 10,000 equity dispute cases. Director Shen's original "Zhiming Artistic Litigation Method" has won dual innovation awards from both the provincial and municipal bar associations. The core of this method is not memorizing legal provisions, but rather breaking down complex equity restructuring processes into diagrams and rights-and-liabilities frameworks that judges can understand at a glance, greatly improving courtroom efficiency. In a case we handled last year, the opposing counsel prepared a defense statement of more than fifty pages, while we used only three diagrams to clarify the related-party transaction logic in the capital increase agreement. The judge immediately ordered the opposing party to explain the fund flow, and three days later, they proactively proposed a settlement.
In 2024, at a technology company in Shenzhen specializing in industrial software, founder Wang held 40% of the shares, while two co-founders held 60% in total. The co-founders brought in an investment institution planning to inject 30 million yuan in new capital. If implemented, Wang's equity would be diluted to around 15%, completely losing his veto power. By the time Wang approached us, the capital increase agreement had already been signed, and only the final step of industrial and commercial registration remained. We took three actions: first, we applied to the court for a preservation order before the industrial and commercial change, freezing the equity change registration; second, we filed a lawsuit
Answer: It depends on whether the procedural documents in the dilution process are complete and free of defects. In 2023, there was a case in Bao'an, Shenzhen, where a major shareholder forged the minor shareholder's signature on a capital increase resolution. By the time the minor shareholder discovered it, their equity had already been reduced from 30% to 2%. Through handwriting identification, we confirmed the signature was forged, and the court ultimately ruled that the capital increase resolution was invalid, fully restoring the minor shareholder's equity. The key is whether there are retained signature samples and whether there are records of attendance at past shareholders' meetings to prove signature habits. The earlier this evidence is preserved, the better.
First, check the internal industrial and commercial records at least once a year. You can apply on the Shenzhen Market Supervision Administration's official website. Focus on equity changes, capital increase records, and executive personnel changes. It costs a few dozen yuan, which is far cheaper than hiring a lawyer after something goes wrong. Second, after receiving a shareholders' meeting notice, whether you agree or not, you must reply in writing and keep proof of delivery to avoid being deemed to have "tacitly approved through actual conduct." Third, specify clearly in the company's articles of association that capital increases require unanimous consent from all shareholders. This is an autonomy clause permitted under Article 43 of the Company Law and is the lowest-cost firewall. Fourth, once you detect any abnormalities, prioritize preserving evidence first, then decide whether to negotiate or file a lawsuit. Don't get the order wrong. If you are going through a similar predicament and are unsure of the next steps, you can bring all your documents to Guangdong Zhiming Law Firm for an in-person discussion. The address is Room 1802, Tower A, Xint