What the Soho China and Fosun case means for the real estate sector
August 22, 2013 | BY
clpstaff &clp articlesThe case between Soho China and Fosun has shown that the transfer of equity without the consent of subsidiary equity-holders evades the right of first refusal. The Judgment may pose a threat to this practice
The two companies fought for the development rights of the most expensive piece of land in Shanghai before the Shanghai First Intermediate Court.
“The judgment ruled that the transfer of equity in a company without the consent of the company's subsidiary company's other equity-holders was considered as circumventing the other equity-holders' right of first refusal,” said Li Haifeng, a lawyer with Global Law Office in Beijing.
The dispute has been a topic of heated debate within the legal and business communities as it has far-reaching consequences for business practices, in particular in the real estate sector.
Case facts
The multi-layer equity transactions in the case involved a range of affiliated parties belonging to four independent groups: Soho China, Fosun, Greentown and Zhengda.
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