Recently, a case of capital evasion by a state-owned enterprise represented by Mr. Lin Lin of King&Capital Law Firm has successfully obtained the result of the second trial, and the court of the second trial not only adopted all the views of the agent, but also quoted the agent's opinion directly in the judgment. The unremitting efforts of the attorney not only prevented the state-owned enterprise from significant economic losses, but also successfully resolved the potential litigation risks of other investment projects of the state-owned enterprise.

I. Background of the case: procedural defects caused the state-owned enterprise to lose at first instance

A subsidiary of a large state-owned enterprise (the principal) was sued by a creditor for a contractual dispute. The creditor had paid millions of dollars to the principal, so the creditor listed the principal as a defendant on the grounds of “shareholders' absconding from capital contributions” and demanded that the principal assume supplementary liability for damages. The court of first instance found that the principal had evaded capital contribution and the principal lost the case at first instance.

According to the background restoration, the principal had reached a framework agreement with the major shareholders of the subsidiary on the phased acquisition of equity, but the major shareholders did not pay the principal directly for the acquisition of equity, but paid by other subjects to the subsidiary, and then paid by the subsidiary to the principal. It is because the parties to the transaction procedure compliance awareness is weak, the risk is not enough to predict the transaction documents there are more vague, ambiguous, missing, coupled with the major shareholders are not fully paid contributions, resulting in the objective appearance, the source of the money, the use of doubt, for the case has left a hidden danger.

Second, in the face of danger: in order to block the adverse demonstration effect of the backwaters of war

The client has invested tens of billions of dollars in the mode of equity investment nationwide, and the possibility of similar procedural defects in other projects could not be ruled out. If the case could not be overturned in the second trial, in addition to causing significant economic losses to the client, it would also cause adverse demonstration effects to other projects due to the determination of “evasion of capital contribution”, and even lead to more litigation risks. Litigation risk.

The client was well aware of the low rate of second-instance reversal of judgment in civil cases, and therefore attached great importance to the second-instance commission. After several rounds, through the recommendation of its higher unit, contact our Lin Lin lawyers, pre-communication is over, immediately decided to appoint Lin to represent the second trial of this case.

This case has limited evidence material, and the client for the second trial has great expectations, although undertaking this case means that will bear a huge pressure, but Lin lawyer chose to take the risk, backwater.

Third, the way to break the game: two-pronged attack on the loopholes of the first trial judgment

Although the client repeatedly confirmed that there is no additional evidence in this case, but after accepting the commission, Mr. Lin still rushed to the location of the state-owned enterprises, all the archived documents to search and check. In all the forensic work has been completed, and confirmed that the major shareholders and other key personnel in the state of missing, Mr. Lin determined the second trial strategy:

Strategy 1: Deconstruct the logical contradictions of the first trial, reconstruct the focus of the dispute

Lin lawyers analyze the first trial judgment, found that the factual findings and the application of the law are serious logical contradictions, it is difficult to self-consistent. For this reason, decided to “the other spear, attack the other shield”, in arguing that the first trial judgment on the basis of the existence of fundamental contradictions, refining the case the real core of the dispute: the subsidiary to the principal to pay the source of funds - from subsidiaries or major shareholders. And combined with the elements of capital evasion, to further determine the following focus of controversy: first, the shareholders “passive collection” whether in line with the “formal elements” of capital evasion; second, the company to the shareholders to pay the company's rights and interests of the company, whether in line with the “substantive elements” of capital evasion. Secondly, whether the payment to the shareholders in this case led to the damage of the company's rights and interests, and whether it conformed to the “substantive elements” of capital withdrawal.

Strategy 2: Closed-loop argumentation, jurisprudence progression, subvert the basis of the determination of capital flight

1. Source of funds

By reorganizing the evidence in the case, forming a chain of interlocking and mutually corroborating evidence, proving that the payment made by the subsidiary to the principal was not the property of the subsidiary, and denying the possibility of capital evasion from the root.

2. Breaking down the constituent elements one by one

Citing the provisions of capital evasion, it is clear that the determination of capital evasion requires both “formal elements” and “substantive elements”, and further explains that both the formal and substantive elements of this case do not comply with.

3. Upgrading of Judicial Decision Rules

We further collected and provided similar precedents from the Supreme People's Court to advocate the consensus of our decision, and argued that it was a mistake in the application of law for the first trial to attribute responsibility based only on the flow of funds.

Case Result: Winning in the Second Instance and Rewriting the Fate of the Enterprise

In the end, the court of second instance adopted all of our views, and found that the client did not constitute capital evasion, and revoked all of the judgment of the first instance on the client's responsibility, and the client highly valued the work of Lin. Although the case has been completed, Mr. Lin still put forward some suggestions for the client to avoid the risk of other projects in the future, based on his long experience in the field of commercial legal services.

The settlement of a case is not the ultimate goal, but to help the enterprise to solve the potential risks is also the significance of the lawyer's work.

Conclusion

The reversal of this case is not only for the gain or loss of a judgment, but also for the judicial justice of the origin of business transactions, and the precise cutting of procedural defects and the quality of the evaded capital. Reconstructing the factual logic in the evidence quagmire, striking at the loopholes in the judgment with the edge of jurisprudence, the lawyer's professional pursuit may be here - to become a walker who opens the way with professionalism and conviction.