What Legislative Precedents Apply to Shareholder Deadlock at Vtron Technologies( AI Translation)

【周刊提前读】“卫星第一股”振芯科技股东内斗僵局：有何立法镜鉴？

[para. 1] The saga involving Chengdu Vibration Technologies Co., known in its original form as Zhentong Science & Technology Co., Ltd., began with Mo Xiaoyu, Xie Jun, Xu Jin, and Bai Jie, who partnered with financier He Yan to establish the company 22 years ago. This collaboration led to the company's listing on the ChiNext Board of the Shenzhen Stock Exchange in 2010, where it earned the title "first satellite stock" with its involvement in the Beidou Satellite Navigation System. Guoteng Electronics, owned 51% by He Yan and 49% collectively by Mo Xiaoyu and his partners, serves as the controlling shareholder. However, differences between these parties became more pronounced following He Yan's legal troubles, which strained corporate governance.

[para. 2][para. 3][para. 4] He Yan’s involvement in a corruption scandal with Zhou Yongkang led to her criminal conviction in 2016, shaking the corporate structure and leading to deteriorating relationships with minority shareholders, such as Mo Xiaoyu. These shareholders attempted to legally dissolve Guoteng Electronics through a judicial ruling from 2018 to address the governance deadlock and free the company from He Yan's influence.

[para. 5][para. 6][para. 7] The core issue was control over Zhentong Technology (later rebranded as Zhenxin Technology). Initially, He Yan was the actual controller, but this recognized control shifted in 2020 to a state of having no actual controlling person. This shift, however, reverted back in 2025 when He Yan reassumed control, despite earlier attempts by Mo Xiaoyu and others to seek a judicial solution to their grievance.

[para. 8][para. 9][para. 10][para. 11] He Yan’s criminal proceedings and the enforcement of her legal penalties also led to significant financial upheavals. For instance, the announcement of her investigation led Zhentong Technology’s stock price to drop sharply in 2013, and the company faced substantial profit losses due to halted financing efforts. These events have contributed to increased urgency from Mo Xiaoyu and his partners to sever ties; however, initially unsuccessful shareholder meetings and board paralysis continue to impede resolution.

[para. 12][para. 13][para. 14] Throughout the judicial proceedings that followed, courts examined the calls for dissolving Guoteng Electronics by interpreting criteria established under the Company Law (revised 2023), which mandate significant operational difficulties before corporate dissolution can be enforced. While lower and middle courts in Chengdu deliberated, the judicial system ultimately favored He Yan’s position, underscoring the lack of statutory reasons to dismantle Guoteng Electronics.

[para. 15][para. 16][para. 17] The courts, unmoved by arguments from Mo Xiaoyu's side regarding shareholder rights and alleged deadlock, emphasized that continuing Guoteng Electronics under He Yan's structure didn’t equate to the alleged paralysis if shareholder meetings still convened effectively, albeit disputed by Mo Xiaoyu and others. They criticized Mo Xiaoyu’s interpretation as failing to meet the legal benchmarks necessary for forced dissolution.

[para. 18][para. 19][para. 20] In a climate of minority shareholder unrest and a governance structure perceived as untenable by Mo Xiaoyu and other early stakeholders, He Yan's consolidated hold on control represents the central contention, where both legal and shareholder accord finds itself lacking.

[para. 21][para. 22][para. 23][para. 24] Legal scholars like Fu Qiong and Zhang Xiaochen elaborate on the systemic issues within corporate governance law in China. They suggest that shareholder disputes such as these highlight the tension between majority governance principles versus protecting minority rights, which remains unresolved without adequate judicial instruments.

[para. 25][para. 26][para. 27] The multifaceted case of Chengdu Vibration Technologies underscores critical governance challenges within listed technology companies, revealing the broader implications for managing stakeholder relations and legal frameworks that mediate between corporate operation continuation and equitable shareholder treatment. The case serves as a stark reminder of the delicate balance that must be maintained in company law to support stakeholder equity without undermining corporate stability.