Mortgage of Cooperative Joint Venture Assets Without Board Approval

 The Issue

Article 28 of the PRC Sino-foreign Co-operative Joint Venture Law Implementing Rules (IR) requires a two-third quorum for a duly convened board meeting. In addition, Article 29 requires the unanimous approval of all board members present at a duly convened board meeting to mortgage the company's property. Is a mortgage agreement valid if the legal representative of the company enters into the agreement to mortgage the company's assets in the absence of a proper board resolution, the creditor is not aware that the board has failed to authorize the mortgage, and the mortgage is properly registered with the relevant authority?