Constrained by "nomination": The judicial breakthrough and practical guidelines for removing the registration of supervisors

Preface

A piece of business registration information nearly ruined the career of an employee of a state-owned enterprise.

Wang Yan, a partner of DHHT Law Firm's Shanghai office, successfully represented a case involving the dispute over the cancellation of a director's registration. Party Li was "stuck" in the position of a director of a company that had already ceased operations due to a long-ago employment record. His identity could not be changed. After exhausting internal remedies and the company having no possibility of self-governance, the attorney through litigation obtained the cancellation registration from the industrial and commercial authorities, completely resolving the professional risks.

Based on this case, we will systematically analyze the judicial logic, operational points, and execution breakthroughs of the removal registration of supervisors, in order to provide practical reference experience for handling similar cases.

01

Case Summary: One assignment, years of predicament

In April 2016, Li was appointed as the supervisor of the invested enterprise, Shanghai a certain technology company, by a certain investment management company. His term of office was four years. In June of the same year, Li resigned from the appointing company and the investment management company also agreed that he would no longer serve as the supervisor of the technology company. Subsequently, Li repeatedly negotiated with the technology company through the original appointing company about the change of the supervisor position, but all attempts were delayed, resulting in the supervisor position of Li in the company's business registration never being changed.

Due to the fact that the state-owned enterprise where Li is currently employed strictly controls employees' investment and appointment behaviors, the registration status of this supervisor has had a substantial impact on his normal work. In July 2024, Li sent a notice of supervisor change request to the contract address and business registration address of the technology company, but received no response. It was also discovered that this technology company has not been actually operating for many years and its business license was revoked in March 2022. The internal supervisor change procedure cannot be initiated.

02

Judicial logic: Judicial intervention

In a lawsuit for the removal of a supervisor, the first hurdle to overcome is: Which part does the court have jurisdiction over?

(1) Analysis of Disputed Views

In practice, there are two representative viewpoints:

Viewpoint 1: The appointment and removal of supervisors fall under the legal authority of the company's shareholders' meeting and fall within the scope of internal governance. They should not be included in the scope of civil cases accepted by the court. Therefore, a ruling should be made to refuse to accept the case or to dismiss the lawsuit.

Viewpoint 2: According to Article 77(2) of the Company Law, which states that "if a director resigns during his term of office and results in the number of members of the supervisory board falling below the legal requirement, the original director shall continue to perform his duties until the newly elected director takes office", the plaintiff's claim should be rejected.

(II) Legitimacy of Judicial Intervention

In my opinion, under the principle of company autonomy, judicial intervention in the cancellation of the registration of directors and supervisors must be based on the premise that "company autonomy has failed". In this case, the technology company has had its business license revoked and has been in a state of long-term cessation of operations. The internal decision-making mechanism has completely collapsed, and the election of the supervisor cannot be completed through the shareholders' meeting, constituting a typical case of governance failure. If judicial relief is refused at this time, Li will be trapped in a triple predicament of "his identity cannot be cancelled, he continues to bear legal risks, and his professional rights are damaged". This clearly violates the legislative purpose of the "Company Law" which "regulates the organization and behavior of companies, and protects the legitimate rights and interests of companies, shareholders and creditors".

From the perspective of judicial function, the core of such lawsuits lies in confirming the legal fact that "the identity relationship has ended", thereby correcting the erroneous registration status and not replacing the company's exercise of autonomy. It is worth noting that the Supreme People's Court's (2020) Civil Reconsideration No. 88 ruling has clearly stated: A lawsuit filed by the legal representative due to the company's refusal to handle the change registration belongs to the jurisdiction of the court. The spirit of this ruling should also be applied to disputes regarding the removal of the registration of directors and supervisors. In recent years, the number of judgments supporting the removal of the registration of directors, supervisors, and senior management personnel by courts has been increasing year by year, and the consensus for judicial intervention is gradually forming.

03

Practical Guidance: How to Establish a Feasible Relief Path?

Based on the experience of this case, we have summarized the practical operation of removing a supervisor from the register as "three steps":

Step 1: Exhaust internal remedies before litigation

Legal service of resignation notice

A written "Resignation Notice" should be sent to the company and shareholders, clearly stating the intention to resign and the effective date. The mailingCertificate and the sign-off records should also be fully retained.

2. Promotion of the internal decision-making process

If the company has the operational capability, it should prioritize initiating the change process through the following paths:

A temporary shareholders' meeting may be convened upon the proposal of shareholders holding more than one-tenth of the voting rights, directors accounting for more than one-third of the total, or the board of supervisors (Article 62, Paragraph 2 of the Company Law);

The shareholders' meeting resolution must include both "agreeing to the resignation of the current supervisor" and "electing a new supervisor", to prevent the resignation from being invalid due to the number of supervisors falling below the legal requirement (Article 77, Paragraph 2 of the Company Law).

3. Evidence of the company's failure to fulfill its obligations

Three types of core evidence need to be collected:

·The company's written response refusing to process the change without any valid reason;

·Proof materials indicating that the company has ceased operations or is out of contact (such as proof of business license revocation, records of mail rejection);

Evidence that the shareholders or directors refused to convene or participate in the shareholders' meeting (such as meeting notification receipts, records of absence from the meeting).

The Second Intermediate People's Court of Shanghai clearly stated in the judgment (2024) Huai 02 Civil Appeal Case No. 1343， it was clearly stated： "If the company can solve the issue of change by itself within the organization， any arbitrary intervention by the court will inevitably affect the normal operation of the company. Therefore, only when internal remedies have been exhausted and identity removal still cannot be achieved， can judicial relief be introduced."

Step 2: Key points for presenting evidence during the litigation stage

When filing a lawsuit, a complete chain of evidence must be submitted, including:

Notice of Resignation and Delivery Certificate (proving that the intention to resign has been effectively communicated);

2. Records documenting the urging of the company and shareholders to handle the change (indicating active efforts to resolve the issue internally);

3. Evidence of corporate governance failure (such as cancellation certificates, records showing no response to the convening of the shareholders' meeting);

4. Actual damages resulting from the failure to remove one's identity (such as current unit regulations, proof of career restrictions).

Step 3: Winning the lawsuit does not mean the case is closed. We need to bridge the "last mile" of execution.

(1) Manifestations of the traditional execution predicament

Some market supervision departments, citing the reason of "no new supervisory board member to take over", refused to assist in the execution of the court's judgment to remove the registration, thus creating a deadlock where the judgment has taken effect but cannot be executed.

(2) Solution Paths under the New Regulatory Framework

The new "Company Law" and its supporting regulations in 2024 have provided clear solutions for such disputes:

Article 10 of the new "Company Law" has added an obligation for companies to determine a successor within 30 days after the resignation of the legal representative, laying a substantive foundation for identity-clearing cases.

Article 23 of the "Implementation Measures for Company Registration Administration" (implemented in February 2025) clearly stipulates that after the court issues the assistance execution notice, the registration authority should publicly remove the information through the National Enterprise Credit Information Publicity System, without requiring the precondition of "new personnel being in place".

Regulatory documents in Shanghai, Beijing and other places have further refined the operational rules, requiring the registration authorities to replace the original registration information with the phrase "removed in accordance with the assistance execution notice issued by the court", to ensure the implementation of the judgment.

This means that the enforcement path for removing the registration has clear institutional support, and is no longer trapped in an "unsolvable" situation.