[2] Is Li Guoqing's "seizure" of the company seal and Dangdang's declaration of the seal as invalid really effective?

📅 2020-04-27 📂 Zhiming Hot CommentsZhiming Hot Comments [2] 🏷️ #SealInvalidation #Dangdang #LiGuoqing #SealSnatching #PropertyLaw

[3] News on April 27: Regarding yesterday's "seal snatching" incident by Li Guoqing, Li Guoqing spoke out again today, claiming he took over the seal legally—how is that snatching?
 
[4] Li Guoqing claimed that yesterday, he took over the company seal and financial seal with the shareholder resolution and board resolution, and gave a receipt to the original custodian.
 
Meanwhile, Li Guoqing stated that before the new seal management measures are introduced, he will keep the seals himself, tying them to his belt during the day and placing them under his blanket at night, taking full responsibility for their custody during this period.
 
The following is Li Guoqing's response:
 

Regarding the incident where Dangdang founder Li Guoqing broke into the Dangdang office and took the company seals, Dangdang Vice President Kan Min stated that the seals have been reported lost and are being reissued. (Source: Tencent News)
 
Currently, Dangdang has publicly announced that the seals are invalid. Therefore, many believe that Li Guoqing's seizure of the seals is meaningless, as Yu Yu can simply apply for new seals to resolve the issue. However, the matter is not that simple.

What is the purpose of Yu Yu's current actions? What remedies can she pursue?

If Yu Yu opts for administrative remedies, such as applying to the public security authorities for new seals, according to the law, if seals are lost, seized, or stolen, an announcement can be made, followed by an application to the public security authorities for re-engraving. However, in cases of internal management disputes between shareholders or between a chairman and a general manager, public security authorities generally do not process the loss registration for seals, making it difficult to obtain re-engraved seals. Even if new seals are re-engraved, the company may still face a situation where two seals hold equal legal validity.
 
Therefore, Yu Yu may need to seek criminal or civil remedies.Hereby, the author will discuss issues related to disputes over the return of company certificates and seals with you from the perspective of civil remedies.

Definition of disputes over the return of company certificates and seals:

In the course of operation, a company must at least possess certificates and items such as a business license, company seal, and financial seal. For companies operating in special industries, special licenses and permits are also required. Company certificates and seals externally represent the company's will and are the company's representation.
 
Although the company owns the above certificates and seals, generally, for the convenience of internal management, they are often actually held and controlled by different company organs and their personnel. For example, the business license, company seal, financial seal, and legal representative's personal seal may be kept by designated personnel; in smaller companies, they may be directly kept by the legal representative. Additionally, shareholders, directors, managers, and others may also keep or hold company certificates and seals.
 
When relevant company personnel undergo corresponding changes, those who previously had the right to keep or hold company certificates and seals may no longer have such rights, and should return them to the company. If the relevant personnel fail to fulfill the obligation to return company certificates and seals, a dispute over the return of company certificates and seals arises.
 
In addition, in individual cases, a third party outside the company may also illegally occupy the company's certificates and licenses and refuse to return them.
 
In practice, such cases often involve struggles for corporate control within internal governance, such as the Li Guoqing seal dispute.

 
How is the competent court determined in such cases?
 
Lawsuits arising from disputes over the return of company certificates and licenses are, in principle, based on the relevant jurisdictional provisions of the Civil Procedure Law, but comprehensive consideration must be given tothe company's locationand other factors to determine the competent court.

How to file a lawsuit when the company seal is missing?

Since company licenses, seals, and other items are company property, they should be kept by the company according to law. This determines that the plaintiff in a dispute over the return of company licenses and seals should be the company. However, when company licenses and seals (especially the company seal) are already in the possession of others, the company faces the issue of confirming the plaintiff's qualification when filing a lawsuit, such as affixing the company seal on the complaint. In such cases, a lawsuit can be filed through the following methods:
 
1. Legal representative:
If the company seal is missing at the time of filing, the legal representative may sign the complaint on behalf of the company to initiate the lawsuit.
 
2. New legal representative:
If the legal representative is the defendant or is reluctant to file the lawsuit, the company may replace the legal representative through valid procedures such as a shareholder resolution, and the new legal representative may sign on behalf of the company to file the lawsuit.
 
3、股东:
Under certain conditions, shareholders may also become litigation subjects. The legal basis is Article 151 of the Company Law:

If directors or senior management personnel are in a situation as specified in Article 149 of this Law, shareholders of a limited liability company, or shareholders of a joint stock limited company who individually or collectively hold one percent or more of the company's shares for a continuous period of 180 days or more, may request in writing that the board of supervisors, or the supervisor of a limited liability company without a board of supervisors, file a lawsuit with the people's court; if supervisors are in a situation as specified in Article 149 of this Law, the aforementioned shareholders may request in writing that the board of directors, or the executive director of a limited liability company without a board of directors, file a lawsuit with the people's court.
 
If the board of supervisors, the supervisor of a limited liability company without a board of supervisors, or the board of directors or executive director refuses to file a lawsuit after receiving the written request from the shareholders as specified in the preceding paragraph, or fails to file a lawsuit within 30 days from the date of receiving the request, or if the situation is urgent and failure to file a lawsuit immediately would cause irreparable harm to the company's interests, the shareholders as specified in the preceding paragraph have the right to directly file a lawsuit with the people's court in their own name for the benefit of the company.
 
If others infringe upon the company's lawful rights and interests and cause losses to the company, the shareholders as specified in the first paragraph of this Article may file a lawsuit with the people's court in accordance with the provisions of the preceding two paragraphs.
 
Legal application for disputes over the return of company certificates and seals:
 
According to the Notice of the Supreme People's Court on Issuing the Revised Provisions on the Causes of Civil Cases (2011), the legal basis for handling disputes over the return of company certificates and seals is primarily Article 34 of the Property Law, Article 117 of the General Principles of Civil Law, and Articles 148 and 150 of the Company Law.

Article 34 of the Property Law:
If a person without right occupies a real property or movable property, the right holder may request the return of the original property.

Article 117 of the General Principles of the Civil Law:
If property owned by the state, a collective, or another person is illegally occupied, the property shall be returned; if it cannot be returned, compensation shall be made based on its value. If property owned by the state, a collective, or another person is damaged, it shall be restored to its original condition or compensation shall be made based on its value. If the victim suffers other significant losses as a result, the infringer shall also compensate for those losses.

Article 148 of the Company Law:
Directors and senior management personnel shall not engage in the following acts:
(1) Misappropriating company funds;
(2) Depositing company funds in an account opened under their own name or another individual's name;
(3) Lending company funds to others or providing guarantees with company property without the consent of the shareholders' meeting, general meeting of shareholders, or board of directors, in violation of the company's articles of association;
(4) Entering into contracts or conducting transactions with the company in violation of the company's articles of association or without the consent of the shareholders' meeting or general meeting of shareholders;
(5) Without the consent of the shareholders' meeting or general meeting of shareholders, taking advantage of their position to seek business opportunities belonging to the company for themselves or others, or operating a business of the same type as the company they serve, either on their own or for others;
(6) Accepting commissions from transactions between others and the company and keeping them for themselves;
(7) Disclosing company secrets without authorization;
(8) Other acts that violate the duty of loyalty to the company.
The income obtained by directors or senior management personnel from violating the provisions of the preceding paragraph shall belong to the company.

Article 150 of the Company Law:
If the shareholders' meeting or the general meeting of shareholders requires directors, supervisors, or senior management personnel to attend the meeting, they shall attend and accept shareholders' inquiries.
Directors and senior management personnel shall truthfully provide relevant information and materials to the board of supervisors or the supervisor of a limited liability company without a board of supervisors, and shall not obstruct the board of supervisors or the supervisor from exercising their powers.

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