In September 2017, King & Wood Mallesons (KWM) helped Shenzhen Great Walle Asset Management Co., Ltd. ("Great Walle") win its dispute with Liu Jianqiu (the "plaintiff") and the third party Shenzhen Century Plaza Hotel Co., Ltd. (Stock Code: SZ00033, "Century Plaza") over the validity of legality and legal consequences of Great Walle's takeover action (the "Case"). Shenzhen Futian District People's Court rejected all claims of the plaintiff, including invalidation of Great Walle's shareholding, enforcement of share reduction, and no exercise of shareholders' rights including the rights to vote, propose and nominate. The court also partially supported Great Walle's counter-claim that required the plaintiff to compensate for legal fees. Eventually, the plaintiff accepted the judgment and did not appeal, which allowed the Case to enter into force. It is the first valid judgment regarding entity identification of legality and legal consequences of listed company's takeover action in China.
The Case was a typical dispute over a listed company's board resolution restricting shareholder's rights. It attracted attention from the industry, media, and even the China Securities Regulatory Commission and stock exchanges, for the defendant Great Walle is one of the most prominent manager and investor of M&A funds in China with extensive influence in the industry. The subject matters of the trial are the legality of buyer's takeover and disclosure and legal consequences, and the dispute focus lies on determining whether the buyer performed its duty of information disclosure, whether the buyer's shareholding was valid and whether there was any legal ground for restricting the buyer's exercise of its shareholder's right, etc. The KWM team accurately grasped the focus of the controversy, carefully sorted out the facts and evidence, and conducted in-depth research and feasibility studies. Ultimately, the court completely adopted KWM's opinions. Moreover, the KWM team's innovative idea "restricting shareholder's voting right is an administrative regulatory measure of administrative organs, and not within the People's Courts' jurisdiction over civil case" was upheld by the Futian People's Court. It helped clarify the boundary of legal behavior between anti-takeover and controlling right contest, a significant precedent for such disputes in the future.
In recent years, with the value of listed companies boosting, project opportunities such as controlling right contest of listed companies are increasingly emerging. With extensive experience and innovative ideas, KWM has represented plenty of such cases for clients, fully protecting their rights and attaining optimal results.
The KWM team was led by partner Gao Feng, supported by senior associate Song Siyu. Partners Wang Lixin and Xiao Lan also provided supports to the project.
