2024.06.26
Recently, JunHe obtained a non-prosecution decision for a client in a suspected embezzlement case. The case involved a corporate control contest and JunHe successfully safeguarded the client’s legitimate rights and interests.
This case occurred during a corporate control contest between a majority and a minority shareholder. The minority shareholder successively filed civil lawsuits over the confirmation of the shareholder’s qualification, the dissolution of the company, the shareholder’s right to information, and the confirmation of the validity of the company resolutions. After a claim for the dissolution of the company was dismissed by the court of first instance and the court of second instance, the minority shareholder reported to the public security organ on the grounds that the majority shareholder (the executive director) took advantage of their position to embezzle hundreds of millions of RMB’s worth of company property. The public security organ placed the case on file for investigation and took the coercive measure of criminal detention against the majority shareholder. Later, the public security organ changed the coercive measure to bail. After investigation, the case was transferred to the procuratorate for review and prosecution.
JunHe’s team represented the majority shareholder in a series of civil lawsuits arising from the corporate control contest. After being investigated, the majority shareholder (the executive director) entrusted JunHe’s team to act as defense counsel. JunHe’s team reviewed thousands of pages of case files within a very short time period, comprehensively sorted out the case merits, communicated with the prosecutors, made detailed defense submissions to the procuratorate to clarify and analyze the nature, purpose and whereabouts of the money involved in the case, and argued that the majority shareholder did not take advantage of their position to illegally embezzle the company’s property. They put forward that the existing evidence could not support the finding that the majority shareholder committed embezzlement. In the end, the procuratorate accepted the defense submissions of JunHe’s team and made a non-prosecution decision.
There has been an increasing number of criminal-civil cross cases in recent years. In particular, in corporate control contests, shareholders adopt measures such as auditing or lodging right-to-information related lawsuits to obtain the financial accounts and other information of a company and make use of the judgments and evidence obtained in civil lawsuits. They undertake criminal actions to put the counterparty in a disadvantageous position, pose strong psychological pressure on the counterparty and force the counterparty to make compromises and concessions, thereby obtaining the equity or control of the company. This was a typical criminal-civil cross case. The handling of criminal-civil cross cases involves both procedural and substantive dimensions. The key to defining and distinguishing a criminal-civil cross case is whether the specific behavior suspected of a criminal offense constituents a criminal offense. The difficulty in handling criminal-civil cross cases lies in whether the specific behaviors suspected of a criminal offense are civilly legal and whether they can be a cause to preclude or prevent the establishment of the criminal offense, based on the principle of unity of legal order. JunHe’s team has rich practical experience in the area of criminal-civil cross dispute resolution and clarifies the boundaries between criminal offenses and economic disputes from complicated case facts. To safeguard the legitimate rights and interests of the client to the greatest extent, encourage civil transactions, maintain transaction security, and by choosing fair and effective ideas and mechanisms, JunHe’s team provides clients with the best dispute resolution solutions. In this case, JunHe’s team fully demonstrated its diligent and responsible work attitude, solid legal background and good communication skills, winning high recognition and praise from the client.
Partner XIAN, Yifan (Evan) and counsel LIAO, Chong led JunHe’s team in this case and counsel LIAO, Chong primarily undertook the work.
