Judicial recognition of corporate resolution validity | China

The new Company Law contains no clear provision allowing parties to seek confirmation of a corporate resolution’s validity, stipulating only that eligible entities may initiate proceedings to have a resolution ruled invalid, void or revoked. This gap has given rise to sustained debate in legal theory and practice. In its exposure draft of Provisions on Several Issues Concerning the Application of the Company Law issued on 30 September 2025, the Supreme People’s Court proposes, in article 9, a response to the controversy, lending significance to the expected final version.

Crux of debate

The central contention concerns the existence of a proper interest of action for seeking validation of a company resolution – namely, whether there is a need and a tangible purpose for the courts to entertain such claims.

The affirmative position maintains that, as the Company Law does not negate the justiciability of such claims, parties should be allowed to rely on general law for relief. The courts have a duty to hear claims that seek to confirm a resolution’s validity, provided they meet the general criteria for civil litigation and possess a distinct cause of action. This view is reflected in cases such as Hu 02 Min Zhong No. 7660 (2022) (a selected guiding case), Ji Min Zhong No. 493 (2022), Chuan Min Shen No. 511 (2018), Hu 01 Min Zhong No. 5482 (2016) and San Zhong Min (Shang) Zhong Zi No. 10163 (2015).

The opposing position holds that a corporate resolution is effective from the moment it is passed, and that its validity can only be challenged on specific statutory grounds. These grounds, as stipulated by the Company Law and related judicial interpretations, include claims filed by shareholders, directors or supervisors to have the resolution declared invalid, revokable or void. If no such action is initiated, the resolution is considered undisputed, thereby lacking both the need and practical purpose for judicial intervention via a civil suit. This view is reflected in cases such as Zui Gao Fa Min Zai No. 335 (2019), Yu Min Zhong No. 1186 (2021), Zhe 11 Min Zhong No. 264 (2018) and Er Zhong Min (Shang) Zhong Zi No. 06748 (2015).

Article 9.1 of the exposure draft provides: “Where a court has made a judgment confirming a company resolution’s validity and a shareholder separately sues to set aside that resolution, the court shall accept the suit in accordance with the law; any defence based on the earlier judgment confirming validity shall not be supported. (Alternatively, the court shall not entertain claims filed by shareholders, directors, supervisors or comparable parties seeking to have a corporate resolution declared valid.)” Articles 9.3 and 9.4 even place “confirmation of validity” on equal footing with “declaration of invalidity, nullity or rescission”. While the Supreme People’s Court has not yet finalised its stance, the drafting logic and arrangement of clauses appear to favour acknowledging the justiciability of actions to affirm a resolution’s validity.

Justiciability under defined conditions

The alternative clause within article 9.1 of the exposure draft, which imposes a blanket prohibition on claims seeking to validate company resolutions, is inappropriate.

The smooth running of a company rests on validly made and implemented resolutions. Intense internal conflict can turn the general meeting and board into battlegrounds, making resolutions contentious. Should dissenters stall operations by neither complying with a resolution nor mounting a legal challenge, whether proponents have a proper interest of action to seek its validation must be determined case by case.

The Beijing No.2 Intermediate Court, in its July 2024 guide on company resolution disputes, stated clearly that claims seeking validation of a corporate resolution require individual examination. Courts must determine whether a genuine justiciable issue exists and decide – on that basis – either to hear the case or to reject it as legally inadmissible.

A view expressed in the minutes of the 16th Judges’ Conference of the Supreme People’s Court’s Second Circuit Court offers further guidance: while confirming a resolution’s validity typically does not present an interest of action, judicial scrutiny may be warranted if specific criteria are met. These include: (1) a demonstrable, imminent threat to rights if the resolution’s status remains unconfirmed; (2) full utilisation and failure of all internal corporate remedies that proves governance breakdown; and (3) the absence of any alternative claim for performance that could achieve the same outcome.

Therefore, courts should recognise the justiciability of claims seeking validation of a resolution in specific situations, thereby protecting litigation rights and achieving substantive dispute resolution.

Alternative options

In line with basic civil litigation principles, a declaratory action may be subsumed within a claim for performance when the underlying substantive issue is inextricably linked to the primary remedy.

Thus, if an action solely to confirm a resolution’s validity faces procedural obstacles, the parties may instead bring a claim seeking specific relief, for example, an order to amend a register or surrender company seals. As establishing the resolution’s validity is a prerequisite to granting such relief, the performance claim effectively incorporates the declaratory one, yielding a judgment that implicitly confirms the resolution’s validity.

As illustrated in the case of Yu Min Shen No. 1515 (2020), two shareholders holding a combined 70% stake convened an extraordinary general meeting on their own authority and passed a resolution to reconstitute the board of directors. The new board then met and resolved to appoint a new chairman. When the former chairman refused to comply, the company sued, seeking an order compelling him to co-operate with the required company registration amendments and to return corporate documents. The court, having first established the validity of the resolutions, ruled in the company’s favour on all claims.

A further example is found in the case of Lu 02 Min Zhong No. 10014 (2022). A shareholder filed suit against the company, seeking an order for rectification of the company register. The claim included, as one of its grounds, a request for the court to confirm the validity of the underlying resolution.

The question of whether litigants may apply to the courts to confirm the validity of a company resolution extends beyond civil procedure to touch on fundamental interests such as internal corporate governance, shareholder rights and creditor protection. It remains to be seen how the upcoming judicial interpretation of the new Company Law will address this matter.

Zuo Yuru is a partner and Zhang Huan is an associate at Zhong Lun Law Firm