Scenario: the board of an FDI company resolves to sell a factory at 60% of market value to the chairman’s side company. A minority shareholder sues and the court voids the resolution under Article 153(4). But the factory already changed hands, money moved, and the side company mortgaged it to a bank. How is this wreckage handled?
The court kills the resolution — but deals don’t vanish
Article 153(4) of the 2020 Law on Enterprises (in force as of 19/10/2026) lets any shareholder (no minimum holding) ask a court to suspend or void a board resolution/decision contrary to law, GMS resolutions, or the charter, causing company loss. A progressive step versus the 2014 Law.
But the voidance decision only “kills” the resolution — transactions executed under it don’t auto-disappear. They’re handled under civil law on void transactions.
Handling principles: restitution — damages — good-faith protection
- Restitution: Article 131, 2015 Civil Code — void civil transactions mean parties return what they received. The company reclaims the factory, returns the money. The principle is simple; “returning” a bank-mortgaged factory is not.
- Damages: the at-fault party compensates. Board members who voted for the unlawful resolution bear joint liability for company damages (Article 165(2), 2020 Law on Enterprises) — the 40% value gap is quantifiable loss.
- Good-faith third parties: a bank taking the mortgage without knowing/should-have-known of the underlying defect is protected as a good-faith third party (Article 133, Civil Code). The company can’t just “tear up” the good-faith bank’s mortgage — it must pursue the transferee.
The company’s practical path
- Step 1 — Inventory: list every transaction executed under the voided resolution: which can be unwound, which can’t, which third parties are involved.
- Step 2 — Negotiate: press the transferee for voluntary return/cancellation — faster and cheaper than suing, especially where they also fear potential criminal exposure.
- Step 3 — Sue: file for transaction voidance and damages against approving board members and beneficiaries.
- Step 4 — Stop the bleeding: simultaneously seek interim urgent measures (transfer bans, asset seizure) when filing the voidance suit — don’t wait for judgment; by then assets have “traveled” three times over.
Frequently asked questions
Who may seek voidance of a board resolution?
Any shareholder, no minimum holding — under Article 153(4) of the 2020 Law on Enterprises, where the resolution breaches law/GMS resolutions/the charter and harms the company.
Do executed deals auto-fail when the resolution is voided?
No. They’re handled under void-transaction law: restitution and damages (Article 131, 2015 Civil Code), possibly requiring a separate voidance suit.
Can mortgaged-to-a-good-faith-bank assets be reclaimed?
Hard. Good-faith third parties are protected (Article 133, Civil Code). The company should claim damages from the transferee and approving board members instead of attacking the bank’s mortgage.
How to stop asset dissipation during the suit?
Seek interim urgent measures (transfer bans, seizure, freezing) when filing — a parallel step, never deferred until judgment.
This article has been quality-reviewed by the FLAW AI Legal Council Content prepared by the AI Legal Council of FLAT Law Firm for general reference only; it has not been reviewed by a human lawyer for your specific situation.