Case 1: Supreme People's Court, (2013) MinerZhuzi No. 42, Equity transfer dispute between Chen Fashu and Yunnan Hongta Group Co., LTD. The Supreme People's Court held that the "Share Transfer Agreement" involved in the case is a contract subject to approval procedures according to law, and it can only take effect after being approved by the Ministry of Finance. However, since China Tobacco Corporation, the superior competent department of Hongta Co., Ltd. does not agree to this equity transfer, the approval procedure has ended, and the "Share Transfer Agreement" has been determined that it cannot be approved by the competent authorities, it should be deemed as an invalid contract according to law. Because the Share Transfer Agreement is not effective, Chen Fashu's claim that Hongta Co., Ltd. should continue to perform the Share Transfer Agreement and bear the liability for breach of contract lacks contractual basis and is not supported by the court. After the Share Transfer Agreement does not take effect, the parties shall undertake the obligation to return the acquired property to the other party, so Hongta Co., Ltd. shall return the money already received to Chen Fashu and pay the corresponding interest, the interest standard shall be calculated according to the loan interest rate of the bank in the same period in accordance with the principle of fairness.

If approval is not obtained or it is impossible to obtain approval again due to the circumstances of the case, the equity transfer agreement shall be determined to be invalid. After the share transfer agreement is found to be invalid, the equity transferee cannot obtain the equity to be transferred according to the agreement, and the parties shall return the acquired property to the other party in accordance with the provisions of Article 157 of the Civil Code.

Case 2: Supreme People's Court, (2014) Minti Zi No. 22, Dispute over right transfer between Xuzhou Huayuan Investment Co., Ltd. and Lingshi Quanzhou Rabbit Development Co., LTD., and Lingshi Changtaiyuan Mineral Products Development Co., LTD. The Supreme Court held that the focus of the case was the validity of the equity transfer agreement signed between the Rabbit Company and Changtaiyuan Company. After the expiration of the Equity Transfer Balance Payment Agreement on August 30, 2006 and August 30, 2007, the Rabbit Company signed the Equity Transfer Agreement with Changtaiyuan Company on September 28, 2007 without paying the corresponding amount to Huayuan Company. The 20% equity of Tiexin Company held by it was transferred to Changtaiyuan Company for 8 million yuan. Because the equity transfer price was significantly lower than the 87.5 million yuan of the other 25% equity held by the Rabbit Company to the Poly Company on the same day, there was no evidence to prove that the above 8 million yuan equity transfer money was actually collected by the Rabbit company or used to offset the corresponding debt. Moreover, in the year of equity transfer, the owner's equity of Rabbit industry company changed from 9573029.88 yuan at the beginning of the year to 9630342.71 yuan at the end of the year, which can also indicate that the solvency of the company was affected after the transfer of equity at a low price. Therefore, the above equity transfer behavior obviously damages the interests of creditors of the rabbit industry company. The actions of Changtaiyuan Company and its legal representative Xing Yanzhen in sealing and signing the resolutions of the shareholders' meeting of Tiexin Company on September 28, 2007 in respect of the above two equity transfers indicate that Changtaiyuan Company knew that the price at which it transferred the 20% equity of Tiexin Company from Rabbit Company was significantly low. Moreover, Li Lanquan, the legal representative of Rabbit Company when it signed the Equity Transfer Agreement with Changtaiyuan Company, was also a shareholder holding 20% of Changtaiyuan Company. Therefore, in the case that the Rabbit company has not provided evidence to prove that the equity transfer between the Rabbit company and Changtaiyuan Company is legitimate and reasonable, the claim that the equity transfer Agreement between the Rabbit company and Changtaiyuan Company is malicious collusion to damage its interests and therefore should be invalid should be supported. The court finds that the equity transfer agreement signed between the Rabbit Company and Changtaiyuan Company is invalid.

Case 3: Supreme People's Court, (2014) MinerZhuzi No. 121, Equity transfer dispute between Shi Jinghua and Xinjiang Xinyou Energy Investment Co., LTD., and Qitai Fukai Mining Development Co., LTD. The Supreme Court held that the focus of the second instance of the case was: first, the validity of the Equity Transfer Agreement and the Supplementary Agreement. The case is a lawsuit of equity transfer dispute brought by Shi Jinghua and Xinyou Company due to disputes over the performance of the Supplementary Agreement in the process of equity transfer of Fukai Company. The issue of Shi Jinghua's false investment claimed by Xinyou Company belongs to the shareholder investment dispute, which is not the same legal relationship with the case and does not belong to the trial scope of the case. Even if the fact of Shi Jinghua's false investment claimed by Xinyou Company is true, it does not necessarily lead to the invalidation of the Equity Transfer Agreement signed by both parties. The acquisition of shareholders' equity is relatively independent, as long as the shareholders are listed in the company's articles of association, the register of shareholders or through industrial and commercial registration, without legal rights removal procedures, that is, they have the qualification of shareholders and enjoy the rights of shareholders, and therefore have the right to dispose of equity. According to the facts ascertained by the court of first instance, the Equity Transfer Agreement is the true intention of both parties, and its content does not harm the interests of the state and others, nor does it violate the mandatory provisions of laws and administrative regulations. The court of first instance determined that it is a valid contract and is not improper, and the court shall uphold it.

Supreme People's Court, (2016) Supreme Law Minzai 75 Case. The Supreme Court held that the focus of dispute in the case was the validity of the Property rights Transfer Agreement signed by the two parties. According to the facts of the first and second trials and the retrial of the court, Fuye Company and Wang Zhongchang and Fu Weixin signed the Property Rights Transfer Agreement on July 15, 2008, which is the true intention of both parties, and the first and second trial judgment found that the agreement is not entitled to dispose of according to the content of the transfer of property rights involved in the Fuye company, and found that the agreement is invalid. The High Court held that Article 597 of the Civil Code provides that if a person with no power to dispose of another person's property acquires the right to dispose after ratification by the right holder or a person without power to conclude a contract, the contract is valid. Article 3 of the Interpretation of the Supreme People's Court on Issues relating to the Application of Law in the Trial of Sales Contract Disputes provides that if a party claims that the contract is invalid on the grounds that the seller has no ownership or right to dispose of the subject matter at the time of signing the contract, the people's court will not support it. Where the ownership of the subject matter cannot be transferred because the seller has not acquired the ownership or the right to dispose of it, and the buyer demands the seller to bear the liability for breach of contract or to terminate the contract and claims damages, the people's court shall support it." According to the foregoing provisions, a contract without the right to dispose of is not necessarily invalid, as long as such a contract is the true intention of both parties, the creditor's right act of the sales contract is valid, but the real right act of the seller transferring the ownership of the subject matter to the buyer is in a state of undetermined effectiveness, and the real right act takes effect when the right holder ratifies or obtains the right to dispose afterwards. In this case, although Fuye Company did not acquire the ownership of the state-owned assets involved in the agreement, Wang Zhongchang and Fu Weixin already knew when they signed the contract that Fuye Company only transferred the equity and assets of the grain reserve in the way of "agreement (expectation)", and it was also clear in the agreement on the transfer method that Wang Zhongchang and Fu Weixin should legally obtain them by directly participating in the auction. Therefore, the agreement is the true intention of both parties, and there is no invalid contract as stipulated by law. The Property rights Transfer Agreement involved in this case has been effective at the time of signing, and the courts of first and second instance have found the agreement invalid because they have no right to dispose of it, which is an error of applicable law and should be corrected.

As a special type of contract, equity transfer contract also has disputes that are easy to produce in general contracts, such as contract validity disputes, contract performance disputes, contract cancellation disputes, contract termination disputes, etc. We will analyze it for enterprises one after another. Hillhouse Law Firm will give full play to its professional advantages and effectively help enterprises prevent relevant legal risks; We will also provide enterprises with more forms and more abundant legal service projects according to the development of the industry and the actual situation of enterprises, and guide enterprises to make scientific decisions and standardize development.