General Offices of the Ministry of Commerce, Ministry of Foreign Affairs, Ministry of Public Security and Ministry of Justice, Working Guidelines on Cross-border Pursuit of Liability and Initiation of Legal Action by Relevant Interested Parties in Connection with Abnormal Withdrawal from China of Foreign Investors

Issued: November 19 2008

Main Contents: According to the Guidelines, where the abnormal withdrawal from China of a foreign investor results in losses to creditors due to failure to perform normal liquidation obligations, the foreign enterprise or individual that is a shareholder of a limited liability company, a controlling shareholder or director of a company limited by shares, or the de facto controlling person of a company shall still bear the corresponding civil liability and bear the joint and several liability for repaying the company's debts in accordance with the Supreme People's Court, Provisions on Several Issues Concerning the Application of the «PRC Company Law» (2) (Article 3).

Where the Chinese party prevails in a civil action instituted in a Chinese court, but the losing foreign party does not have any property in China available for enforcement, the prevailing party may, in accordance with relevant provisions of the Civil and Commercial Judicial Assistance Treaty concluded between China and the relevant country or the law of the overseas location of the losing party's property, petition the foreign court with jurisdiction to recognise and enforce the effective judgment and ruling of the Chinese court (Article 4).