Shareholder Dividend Rights Dispute Case in a Manufacturing Company, Xiamen

Case Summary

Plaintiffs Lin and Huang, shareholders of Xiamen-based manufacturing company 30, hold 30% and 20% stakes respectively. Since its founding in 2020, the company has posted five consecutive years of profitable operations with sufficient after-tax earnings each year. The company has fully allocated both statutory and discretionary reserves, meeting all legal requirements for dividend distribution. However, controlling shareholder and actual controller Wang (holding 50%) has consistently refused to convene a shareholders' meeting to review the dividend proposal or distribute profits to plaintiff shareholders. After multiple unsuccessful negotiations, the plaintiffs filed a lawsuit requesting the court to order the company to distribute after-tax profits totaling 1200 million yuan for the period from 2020 to 2024 according to each shareholder's ownership percentage.

Key Dispute

1.Does the company meet the legal requirements for profit distribution?

2.Do the plaintiff and other shareholders have the right to request profit distribution from the company?

3.Is the company's defense—that development funds must be reserved and no dividends should be distributed at this time—valid?

Case Strategy

1.Fixed company business registration information, plaintiff's shareholder identity proof, financial audit reports for the company from 2020 to 2024, after-tax profit data, records of provident fund withdrawals, and communication logs between both parties as core evidence.

2.Demonstrate that the company has been profitable for five consecutive years, with sufficient after-tax profits and full statutory and discretionary reserve allocations, meeting all conditions under the Company Law for profit distribution.

3.Regarding the company's defense that it must reserve funds for development, we provide evidence showing that the company has already set aside sufficient development capital. Meanwhile, the controlling shareholder has long refused to distribute dividends and abused shareholder rights, thereby infringing upon the legitimate rights and interests of the plaintiff and other minority shareholders.

4.Accurately calculate the distributable profit amount based on the company's after-tax profit and the plaintiff's shareholding percentage.

Processing Result

The court ruled that Defendant Xiamen [Name] Manufacturing Co., Ltd. shall distribute profits of 360 million yuan to Plaintiff Lin and 240 million yuan to Plaintiff Huang within ten days from the effective date of this judgment. The defendant shall bear all litigation and audit costs for this case.

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