Dispute between Qu Zhe and Chen Yizhou over equity transfers

Abstract of judgement:

The court held that the deal of equity transfers signed between Qu Zhe and Chen Yizhou was valid because it was their real intention and conformed to statutory rules of laws and administrative regulations. Section 416 (a) of the California Corporation Code stipulates that every holder of shares in a corporation shall be entitled to have a certificate signed in the name of the corporation by the chairman or vice-president of the board, or the president or a vice president and by the chief financial officer or an assistant treasurer or the secretary or any assistant secretary, certifying the number of shares and the class or the series of shares owned by the shareholders. Any or all of the signatures on the certificate may be facsimile. Ding Jingjing, president of Lakungfu, a California-based Chinese catering firm, issued a certificate of shareholder to Qu in accordance with Californian laws on September 25, 2017. Subsequently, Qu attended shareholders' meetings of the company, expressed his views about its business operation, and made financial contributions in three batches in line with equity proportion. All these actions indicate that Qu has already enjoyed and fulfilled the rights of a shareholder. Although Qu claimed that other shareholders hadn't been notified about the equity transfers between him and Chen and neither had the company  convened a special shareholders' meeting about the transaction, yet other shareholders showed no objection to Chen’s status as a new shareholder when they jointly attended shareholders' meetings. It can be concluded that other shareholders have shown their recognition of Chen’s shareholder status even if the aforementioned circumstances did exist. Therefore, the court didn't support Qu's request to terminate the contract.