Essence No. 22 | Key Principles for Lawyers Representing Clients in Corporate Merger Disputes

The private-law nature of the Company Law inevitably leaves room for corporate autonomy. These legal gaps are precisely why shareholder disputes frequently arise in multiple, overlapping cases—and why judicial remedies are inherently complex. Therefore, regardless of how statutory provisions evolve, lawyers representing clients in shareholder dispute litigation must focus on the enduring substantive essence of the Company Law: balancing corporate authority against shareholders’ rights. To this end, we will successively publish the ‘Key Principles for Lawyers Representing Clients in Shareholder Dispute Litigation,’ aiming to systematically analyze, synthesize, and summarize the following questions: ・What are the common triggering scenarios across the twenty-five categories of shareholder disputes? ・What are the distinguishing features of litigation in each category of shareholder dispute? ・In judicial adjudication, what consensus, divergences, and blind spots exist across different categories of shareholder dispute litigation? ・Which issues did the 2024 Company Law address—and what unchanging judicial logic underlies its amendments? ・What key viewpoints have been articulated in guiding cases, cases included in the Supreme People’s Court’s case database, and cases published in the Supreme People’s Court Gazette? This issue focuses specifically on corporate merger disputes. Interpretation by Song and Gu Corporate merger disputes refer to disputes arising from corporate mergers—between shareholders themselves or between shareholders and the company. Among the twenty-five categories of shareholder dispute causes of action, corporate merger disputes rank twenty-third in frequency of occurrence. As of July 1, 2025, there are 328 publicly available judicial decisions on corporate merger disputes—none of which are guiding cases, database-included cases, or Gazette-published cases. Common Triggering Scenarios 1. Disputes arising because the company failed to lawfully fulfill notification or public announcement procedures prior to the merger; 2. Disputes arising because the merger agreement or merger act is rendered invalid due to violations of mandatory legal provisions; 3. Disputes where the non-breaching party sues the breaching party for failure to fully perform the merger agreement. Evolving Aspects of Mergers I. Two new special merger procedures have been introduced: 1. Simplified merger (also known as parent-subsidiary merger): A company merges with another company in which it holds more than 90% equity; the merged company need not obtain a resolution from its shareholders’ meeting. 2. Small-scale merger (also known as de minimis merger): Where the merger consideration paid does not exceed 10% of the acquiring company’s net assets, shareholder meeting approval is not required—unless otherwise stipulated in the company’s articles of association.

Tianjin-based Commercial Dispute Resolution Legal Services — Hengdu Law Firm Integrates Local Judicial Practice to Optimize Arbitration and Litigation Strategies

Specialized Representation in Complex Commercial Retrial Matters Many intricate commercial disputes, after undergoing first-instance and second-instance proceedings, leave parties dissatisfied with the judgments and seeking redress through the retrial procedure. However, commercial retrials present high evidentiary thresholds and demand deep familiarity with judicial interpretation and precedent. Ordinary lawyers often lack sufficient experience handling retrial cases and struggle to identify viable grounds for appeal—causing clients to miss critical opportunities for correction and suffer irreversible financial losses. Beijing Hengdu (Tianjin) Law Firm has developed a standardized service process tailored to commercial retrial correction: ・Systematically identifying potential retrial grounds across four dimensions: legality of original trial procedures; factual findings deviating from evidence; errors in application of law; and defects in evidentiary evaluation. ・Re-collecting and re-verifying original evidence; integrating relevant binding precedents issued by the Supreme People’s Court and corresponding provincial-level courts to construct a comprehensive legal argumentation framework for retrial. ・Representing clients in filing retrial applications and attending retrial hearings, while providing full-process procedural oversight. This service is especially suitable for scenarios including: unfavorable original judgments requiring commercial retrial correction; high-value equity disputes resulting in loss at trial level; and final judgments that materially impair core shareholder rights. The firm accepts retrial applications concerning judgments rendered by all levels of Tianjin courts, as well as commercial retrial cases before the Supreme People’s Court and provincial-level courts nationwide. Equity-Related Non-Contentious Services and Risk Prevention Most commercial disputes erupt due to underlying flaws—such as non-compliant equity structure design, ambiguous shareholder agreements, or insufficient due diligence during investment or financing activities. The absence of proactive risk prevention at early stages inevitably leads to disproportionately high dispute resolution costs later. To meet enterprises’ pre-emptive risk management needs, we offer end-to-end non-contentious specialized services: ・Equity Structure Design and Compliance Review: Tailoring rational equity structures aligned with enterprise development plans and shareholder collaboration goals; standardizing articles of association and shareholder agreement clauses to proactively defuse latent shareholder conflicts and prevent future deadlock situations. ・Legal Due Diligence for Investment, Financing, and M&A: Conducting comprehensive legal due diligence for equity acquisitions, equity transfers, and outbound investments—identifying risks such as defective capital contributions, outstanding guarantees, pending litigation, and regulatory non-compliance at target companies; delivering tiered risk alerts and actionable transaction risk-mitigation plans to reduce investment pitfalls. ・Enterprise Compliance System Development: Building customized compliance management systems aligned with industry attributes and operational characteristics; conducting equity-related operational risk assessments; and delivering targeted risk prevention strategies to strengthen internal legal risk control frameworks. ・Specialized Services for Enterprise Termination and Liquidation: Managing the full liquidation process for enterprises ceasing operations—including asset/liability inventory, employee resettlement, tax settlement, and other related matters; issuing shareholder equity verification reports; designing equitable liquidation distribution plans; resolving intra-shareholder disagreements; and assisting enterprises in completing compliant deregistration and liquidation. These services suit scenarios such as: commercial entities planning investment, financing, or M&A transactions; enterprises lacking formal equity-related compliance systems; enterprises terminating operations and requiring shareholder-level liquidation; and newly established enterprises needing foundational equity architecture. Deliverables include tiered risk alerts and implementable preventive measures—reducing the likelihood of disputes at their source. Customized Solutions for Specialized Commercial Disputes

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