Can a resolution of a shareholders meeting take effect conditionally?

Mondo Finance Updated on 2024-02-18

According to the relevant provisions of the Company Law of the People's Republic of China, the resolution of the shareholders' meeting can take effect conditionally to a certain extent. In practice, this mechanism provides flexibility for corporate governance and helps to ensure that companies make more rational and efficient decisions in specific situations. Specifically, the effective conditions for the resolution of the shareholders' meeting are mainly divided into the following types:

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Statutory conditions:According to Article 42 of the Company Law, the resolution of the shareholders' meeting shall be passed by the shareholders representing more than two-thirds of the voting rights. This is a statutory condition for the resolution of the shareholders' meeting, and a resolution that does not meet this condition is invalid. The purpose of this provision is to ensure the stability and seriousness of the company's decision-making, and to ensure that the company can fully reflect the wishes of the majority of shareholders in major matters.

The conditions set out in the charter:The articles of association may stipulate the conditions for the resolution of the shareholders' meeting to take effect. For example, the articles of association may stipulate that certain resolutions must be passed by a specific percentage of shareholders or voted on within a specific time. In this case, the resolution of the shareholders' meeting can only take effect after the conditions stipulated in the articles of association are met. This provision gives companies the autonomy to set a more appropriate decision-making mechanism according to their own actual situation.

The terms and conditions of the agreement:Shareholders may enter into an agreement on the effective conditions for the resolution of the shareholders' meeting. The agreement may stipulate that under certain circumstances, the resolution of the shareholders' meeting must meet certain conditions before it can take effect. In this case, the resolution of the shareholders' meeting can only take effect after the conditions agreed in the agreement are met. This provision helps to coordinate the interests of shareholders and ensure that the company can make decisions that benefit all shareholders at critical moments.

The conditions contained in the resolution itself:The resolution of the shareholders' meeting may set its own conditions for taking effect. For example, a resolution stipulates that a certain task must be completed within a certain period of time, or that it will only take effect when a specific event occurs. In this case, the resolution of the shareholders' meeting can only take effect after the conditions agreed in the resolution itself are met. This provision provides more flexibility for companies to make decisions and make timely adjustments in the face of uncertainties.

It should be noted that although the resolution of the shareholders' meeting can be conditionally effective, the conditions must not violate the mandatory provisions of laws and regulations. In addition, the content of the conditions should be clear and specific to facilitate the implementation of the resolutions of the shareholders' meeting. This means that when setting conditions, all parties need to fully consider legality and operability to avoid unnecessary troubles for the company's operations.

In short, the resolution of the shareholders' meeting can take effect conditionally on the premise that it complies with the conditions of laws and regulations, the articles of association and the agreement. This mechanism helps to ensure the effectiveness and flexibility of corporate governance, while requiring all parties to pay attention to legality and operability when specifying conditions. By setting the effective conditions for the resolutions of the shareholders' meeting to take effect, the company can make wise decisions in the face of various challenges and achieve long-term stable development.

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