Name : 高阳 Num.: 511329016019

Mr. Ye、Mr.Jiang and Mrs.Zhu (Jiang’s mother in-law) joint contribution to set up the Lide co., LTD. in Apr 18th of 2010, and a stake of 33%、27%、40% respectively. The article appointed that the company director for the valves and valve accessories production and sales, the shareholders have the right to know the company’s operating and financial conditions, and the supervisors have the right to check the company’s financial. Mr. Jiang was appointed the executive director and general manager, Mr. Ye was appointed the supervisor.

I have now had an opportunity to research the law on this point and I can provide you with the following advice.
To represent the facts of the case, Mr. Ye conflicted with the management in the process of the business management in Sep. 2011. Mr. Ye reported to the public security organ that Jiang gang up with the accountant deficit the public founds. The public security organ asked for any related evidence, then Ye made request to consult the accounting books of the company. But the company refused, so Ye appealed to the court.
There are series of stipulations in the Company Law of China. Article 33 says that “Every shareholder may request to review the accounting books of the company. Where a shareholder requests to review the accounting books of the company, it shall submit a written request, which shall state his motives. If the company, has the legitimate reason to believe that the shareholder’s requests to review the accounting books has an improper motive and may impair the legitimate interests of the company, it may reject the request of the shareholder to review the books and shall, within in 15 days after the shareholder submits a written request, give the shareholder a written reply, which shall include an explanation. If the company rejects the request of any shareholder to review the accounting books, the shareholder may plead a people’s court to demand the company to open the books for his review.”
Though there are no specific definitions of the word “explanation”, generally, it always follow these rules:1) if the article appoints that the company should deliver the financial and accounting book to the shareholders periodically, when the shareholders perform their rights, it’s reasonable, the company should provide the material in time. 2) Lawsuits and disputes should not be the reason that the company refuse to provide the materials. 3) All the shareholders who have the right to know the pecuniary condition could perform their books of the access rights, the company should not refuse for the reason that the shareholders may disturb the operation of the company.
The article of Lide co,.LTD. appointed that shareholders have the right to know the operating and financial conditions, and the supervisor has the right to inspect the finance conditions. So Ye who’s the shareholder and also the supervisor of this company ask to consult the accounting books of the company is reasonably.
There has no prohibition of business strife between shareholders and the company in the Company Law of China. As long as the shareholders’ actions do not constitute a malicious competition, they have the right to supervise and be informed. Though Ye’s wife incorporated with the company which managed the same projects with Lide co., Lide co. have not proved that Ye had improper purpose to check the accounts, and it may damage the interests of the company. Above all, Ye have no confliction of interest with Lide co., so competitive industry relations cannot be the determining factor of the shareholders’ rights to be informed.
Shareholders’ rights to be informed are an important way to realize the supervision and maintain the shareholders’ own interests, especially the minority shareholders. Based on the above reasons, Ye may be supported by the court.