News

Abstract

The right to claim for distribution of corporate surplus plays a pivotal role in the realisation of shareholders' investment income. This article explores the conditions and procedures for the exercise of this right in depth and in detail, and analyses how to allow shareholders to legally and efficiently claim their rights on the basis of the relevant provisions of the Company Law, so as to achieve a balance between corporate autonomy and the protection of shareholders' rights and interests.

As one of the core rights of shareholders, the right to claim for distribution of corporate surplus plays an important role in the protection of shareholders' rights and interests. One of the main purposes for shareholders to invest in a company is to obtain economic returns, and surplus distribution is a key way to achieve this purpose. Reasonable surplus distribution can not only directly increase the wealth of shareholders, but also enhance the confidence of shareholders in the company, attract more investors, and provide stable financial support for the sustainable development of the company.

From the perspective of the company's operation, a scientific and reasonable surplus distribution policy can help optimise the company's capital structure, improve the efficiency of the use of funds, and promote the long-term stable development of the company. Reasonable surplus distribution can convey to the market the signal that the company's operating condition is good, enhance the company's market image and reputation, and strengthen market competitiveness.

In practice, it is important to clarify the conditions and procedures for the exercise of the right to request for distribution of corporate surplus for the purpose of resolving disputes between shareholders and the company. With the development of market economy, the equity structure of the company is becoming more and more diversified, the interests of the shareholders are also more complex and diverse, and disputes over surplus distribution occur from time to time. Accurately grasping the conditions and procedures for the exercise of the right to claim for distribution of surplus can provide shareholders with a clear code of conduct, which can not only effectively safeguard the shareholders' ardent expectations for investment returns, but also inject vitality into the company's sustainable and sound operation and prosperous development, which has a far-reaching significance that cannot be ignored, both in the theoretical level of the company law and in the field of practical operation.

I. Overview of the Company's Right to Claim Distribution of Surplus

(I) Definition and nature

The right to claim for distribution of corporate surplus is an important and indispensable part of shareholders' rights and belongs to the category of self-interest. The exercise of this right is aimed at seeking their own interests and obtaining the corresponding share of the company's operating income. From the perspective of strict legal relationship, it is deeply rooted in the soil of the contractual relationship between the shareholders and the company as a result of the investment behaviour. Once the shareholders have completed the obligation of capital contribution, they can, based on their status as shareholders, enjoy the right to request the company to distribute the company's surpluses according to a certain proportion or manner. This right is one of the core purpose of the shareholders to invest in the company, but also an important way for shareholders to realise the benefits of their investment.

(B) the characteristics of the right to request the distribution of the company's surplus

1, statutory rights. The right to request the distribution of corporate surplus is the right of shareholders by law, reflecting the protection of the law on the rights and interests of shareholders. The company law provides that the company distributes the year's after-tax profit, should be extracted from the profit of ten per cent of the company's legal reserve, the company to make up for losses and withdraw the remaining after-tax profit after the withdrawal of the reserve, limited liability companies in accordance with the shareholders of the proportion of the capital contribution to the distribution of profits, all shareholders agreed not to distribute profits in accordance with the proportion of capital contribution, except for; limited liability companies in accordance with the proportion of the shareholders of the shares held in accordance with the distribution of profits, unless otherwise provided for in the articles of association of the company. Ltd. shall distribute profits in accordance with the proportion of shares held by shareholders, except as otherwise provided in the articles of association. This determines the shareholders' right to request for distribution of surplus from the legal level. This legal nature to ensure that the shareholders in the company's profits, there is a legitimate basis for claiming the distribution of surpluses, even if the company's articles of association or shareholders' meeting resolution on the distribution of surpluses of special provisions, but also shall not violate the mandatory provisions of the law, the basic rights of shareholders.

2. Self-interest. The right to request the distribution of corporate surplus is the shareholders for their own interests and the exercise of the right, belongs to the category of self-interest. Shareholders invest in the company's main purpose is to obtain economic benefits, the right to request the distribution of surplus is directly related to the shareholders' personal property income, is the shareholders to achieve the return on their investment of the key rights. Unlike the right of common interest, the exercise of the right of self-interest is mainly for the purpose of satisfying the shareholders' personal interest needs, rather than for the benefit of the company as a whole. For example, the shareholders in the company's profits, through the exercise of the right to request the distribution of surplus, request the company to distribute profits, the company's profits into their own actual income, so as to achieve the increase of personal wealth.

3. Right of expectation. In the company did not make a surplus distribution resolution, the shareholders of the right to request the distribution of surplus is in a state of anticipation, belongs to the right of anticipation. Although the shareholders enjoy the right to request the company to distribute the surplus, but the realisation of this right depends on the company's profitability, the resolution of the shareholders' meeting and other factors. Only when the company has the profit available for distribution, and the shareholders‘ meeting passed the resolution of surplus distribution, the shareholders’ right to request for distribution of surplus may be transformed into a specific, realisable right. For example, Company A makes profit in a certain year, but the shareholders‘ meeting has not yet made a resolution on the distribution of profit for that year, at this time the shareholders’ right to request the distribution of surplus is only a kind of anticipatory right, and the shareholders can only expect that the company can make a reasonable distribution resolution as soon as possible in order to realise their own interests in the distribution.

(iii) Distinction from the right to claim payment of surplus distribution

In the company's legal system, the company's right to request the distribution of surplus and the right to request the distribution of surplus is two closely related but obviously different concepts.

1, the right attribute is different. Company surplus distribution right in the company did not make distribution resolution, is a kind of right of expectation, shareholders expect the company to meet certain conditions in surplus distribution, its realisation has uncertainty. And the surplus distribution of the right to pay the shareholders' meeting in the company to make a resolution on the distribution of surplus, the shareholders of the company enjoys a certain claim, the company is obliged to pay the corresponding surplus to the shareholders in accordance with the resolution.

2, different independence. The company surplus distribution right and the identity of shareholders closely linked, inseparable, it is the shareholders based on the qualification of shareholders and enjoy the right, with the acquisition of the identity of shareholders, with the loss of the identity of shareholders and eliminate. And the surplus distribution of the right to request for payment in the shareholders' meeting to make a resolution on the distribution of the relative independence of the shareholders can be independently transferred to others, as ordinary claims transfer.

3, the restriction situation is different. The exercise of the right to request the distribution of the company's surplus by the company's profitability, the shareholders' meeting resolution and other factors. If the company is not profitable, or the shareholders‘ meeting did not pass the resolution of surplus distribution, the shareholders’ right to request surplus distribution can not be realised. In addition, the company's articles of association may make special provisions for the exercise of the right to claim for distribution of surplus, and the shareholders are required to comply with these provisions. As a kind of claim, the right to claim for distribution of surplus is mainly subject to the limitation of the statute of limitations and other legal provisions relating to claims. If the shareholders fail to exercise the right within the statutory limitation period, they may lose the right to win the case, resulting in their claims not being effectively protected by the law.

II. Conditions for the exercise of the right to claim distribution of corporate surplus

(I) Substantive elements

1. The company has surplus available for distribution

It is a basic principle of the modern corporate system that ‘no distribution shall be made unless there is profit’. The surplus of a company, to be precise, refers to the portion of profit remaining after the company has properly made up for its losses, withdrawn the legal reserve in accordance with the law and a series of other legal operations. Only when a company's carefully prepared financial statements conclusively show net profit figures, and there is still a balance to be deployed after the completion of the necessary funds set aside in accordance with the law, does the company really have a material basis for distribution. This is undoubtedly the company's financial management put forward strict requirements, the company must build up a complete and sound financial accounting system, in order to accurately reflect the results of the operation, at the same time, the shareholders enjoy the right to access the company's financial information in accordance with the law, in order to verify the surplus situation.

In the case of Zhao Mou, Wang Mou, etc. v. Beijing Mou Limited Liability Company, Liu Mou, etc., the plaintiff claimed that the major shareholders, Liu Mou, Sheng Mou, husband and wife, maliciously manipulated and controlled Beijing Mou Limited Liability Company and abused the rights of the shareholders by never convening the shareholders' meeting of the company, not formulating any profit distribution plan, and not distributing the profits to the other shareholders. The defendant Beijing a company to pay dividends to the plaintiff. After hearing the case, the court held that:

‘According to Paragraph 4 of Article 166 of the Company Law of the People's Republic of China, the after-tax profit remaining after the company has made up for its losses and withdrawn its provident fund may only be distributed by the limited liability company in accordance with the provisions of Article 34 of the Company Law. In view of this, the court of first instance held that the three distributable surplus profit amounts determined by the judicial appraisal opinion in the case in question could not reflect the real situation of all the annual profits earned by Beijing Municipal Company, and could hardly serve as the basis for Beijing Municipal Company's distributable surplus, and therefore did not support the litigation requests of Zhao Mou, Wang Mou and Sun Mou. ...... When the small and medium-sized shareholders exercise the right to request for abstract profit distribution in the absence of a resolution on distribution of surplus in a limited liability company, the court shall focus on the following two points: firstly, whether there is actual distributable profit after the company pays tax and withdraws provident fund; and secondly, whether the controlling shareholders have abused the rights of shareholders to cause the company not to distribute profit and caused losses to other shareholders. If the foregoing conditions cannot be satisfied at the same time, the litigation requests of the small and medium-sized shareholders should not be supported. Firstly, on the premise that the company has actual distributable profits, the company needs to have paid tax and withdrawn provident fund in accordance with the Company Law and have sufficient ‘free cash’. Secondly, it is necessary to clarify the specific circumstances under which the controlling shareholder abuses its rights, including discriminatory distribution or treatment, profit grabbing in disguise, excessive withdrawal of arbitrary provident fund and other behaviours ......’ .

2. Resolutions on distribution at shareholders' meetings

Under the established corporate governance structure, the distribution of surpluses is a major decision-making matter, which is usually subject to prudent deliberation and approval by the shareholders' meeting. The content of the resolution must cover a series of core elements such as the amount, manner and time of distribution, and the voting process must strictly comply with the Company Law and the fine provisions of the Articles of Association, so as to fully safeguard the shareholders' legal right to participate in the decision-making process in-depth, and effectively prevent the controlling shareholders or management from manipulating the distribution matters inappropriately without authorisation. Taking Company B as an example, its controlling shareholder attempted to bypass the shareholders‘ meeting and decided privately not to distribute the surplus for the current year, intending to retain all the profits and invest them in new projects, which instantly triggered the strong discontent of minority shareholders and was eventually ruled as an unlawful operation according to the law because it blatantly violated the fundamental principle of distributing the surplus through the resolution of shareholders’ meeting.

Before the promulgation of the Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the Company Law of the People's Republic of China (IV), there was a great deal of controversy in judicial practice as to whether shareholders could directly apply for the distribution of surpluses in the absence of a resolution on the distribution of surpluses by the company. Article 15 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (IV) clearly stipulates that if the shareholders do not submit a resolution of the shareholders‘ meeting or shareholders’ general meeting setting out a specific distribution plan, requesting the company to distribute the profits, the people's court shall reject the litigation request, except for the case where the abuse of the shareholders' rights in violation of the provisions of the law has resulted in the company not distributing the profits, causing losses to other shareholders. .

In the case of Liu Yifeng's dispute with Chen Yang and other companies over the distribution of surplus [(2022) Beijing 03 Civil Final No. 5308], the court held that: ‘Article 15 of the Provisions of the Supreme People's Court on the Application of Certain Issues of the Company Law of the People's Republic of China (4) stipulates that: where the shareholders do not submit a resolution of the shareholders’ meeting or general meeting setting out a specific distribution plan, requesting the company to distribute the profits, the people's court shall reject their litigation requests. If the company distributes profits, the people's court shall reject the litigation request, but the abuse of shareholders' rights in violation of the provisions of the law, resulting in the company does not distribute profits, causing losses to other shareholders. In this case, firstly, Liu Yifeng and Chen Yang, as shareholders of ZKGRC, did not form a shareholders' meeting resolution since 12 February 2015 setting out a specific profit distribution plan. Secondly, Liu Yifeng claimed that Chen Yang had transferred the business of Zhongke Gelun Centre to Guoke Wanyuan Company, damaging his shareholders' rights and interests, and Liu Yifeng had previously reported to the public security department on Chen Yang's misappropriation of functions, and the public security authorities did not find that Chen Yang had committed the criminal fact of misappropriation of functions. Existing evidence is difficult to prove that Chen Yang has abused the rights of shareholders to cause the company not to distribute profits, causing losses to Liu Yifeng. It was not improper for the court of first instance to reject Liu Yifeng's claim for distribution of the profits of Zhongke Gelun Centre since 12 February 2015.’

In addition, the court usually examines whether the profit distribution plan resulting from the resolution is specific and clear as well as enforceable. The Supreme Court stated in Gazette Case (2021) Supreme Court Civil Re-arrangement No. 23: ‘A specific profit distribution plan should include the amount of profit to be distributed, the distribution policy, the scope of distribution, and the time of distribution, among other specific distribution matters. The key to determining whether a profit distribution plan is specific lies in whether the available information can be integrated to determine the specific amount of profit that the right holder claiming distribution can receive under the plan.’

(ii) Formal requirements

It is important for shareholders to maintain their status as shareholders on a continuous and solid basis. From the date of the formal formation of the resolution of the shareholders' meeting until the stage when the distribution plan is actually implemented, any change in the identity of the shareholders is very likely to adversely affect their specific claims for distribution rights and interests.

In the case of Xu Wenchao and Beijing Qingda Huizhi Culture Communication Co., Ltd, a dispute over the distribution of the company's surplus [(2018) No. 2088 of Beijing 0111 Minchu], the court held that ‘this case is a dispute over the distribution of the company's surplus, and the main body of the lawsuit filed in such a case should be the shareholders. The equity transferor loses the qualification of shareholder after the transfer of equity, the right to distribution of surplus is transferred together with other rights of shareholders, and the equity transferor has no right to initiate litigation on the dispute over the distribution of company surplus due to the loss of the qualification of shareholders. In this case, xu wenchao to transfer his original shares to kang hongxin withdrawal, at the same time, its enjoyment of shareholders' rights are also transferred to kang hongxin, so it has no right to claim the distribution of the company's surplus.’

III. Procedures for the exercise of the right to request the distribution of corporate surplus

(I) Internal procedures

1. Written request by shareholders

Shareholders shall strictly follow the standard procedures set out in the Articles of Association and submit a written request for surplus distribution to the Board of Directors or management of the Company. In the request, the basis of the request, the amount of money and the contact details of the individual must be clearly stated, so that the company can efficiently verify and process the request. It is worth emphasising that the proper retention of this written request will provide significant evidence to support any subsequent disputes that may arise. For example, Wang Mou, a shareholder of Ding Company, after noticing that the company had made profits for two consecutive years but had not distributed the surplus, submitted a detailed written request to the board of directors in accordance with the articles of association of the company, explicitly requesting the distribution of 30 per cent of the previous year's surplus and attaching the basis of his own careful accounting as well as his contact information.

After receiving the shareholder's request, the board of directors should organise a special meeting to consider the shareholder's request in a comprehensive manner. The deliberation process should take into account multiple factors such as the company's current financial situation, long-term business planning and urgent financial needs, and weigh them together to determine whether the conditions for the distribution are met, and submit a professional and constructive proposal to the shareholders' meeting accordingly. On this basis, the shareholders' meeting conducts a serious and formal voting process, resulting in a legally binding resolution on the distribution. In the case of Company E, for example, the Board of Directors, upon receipt of a request for distribution jointly submitted by a number of shareholders, took into account the shortfall in funding for the large-scale production line expansion project for which the Company was in the midst of preparations, and prudently recommended to the shareholders‘ meeting that the proportion of the current year's distribution be appropriately lowered, and the shareholders’ meeting adopted the recommendation after a prudent vote to form a brand new resolution on the distribution.

(ii) Procedures in case of disputes and other special circumstances

1. Refusal of distribution by the Company

When the company rejects the shareholders' request for distribution of surplus without justifiable reasons, the shareholders can take various remedies to safeguard their rights and interests. The shareholders may try to negotiate with the company to solve the problem through friendly communication. During the negotiation process, shareholders should fully express their demands, understand the reasons for the company's refusal to distribute, and seek a solution acceptable to both parties. For example, the company may refuse to make a distribution on the ground that it is cash-strapped. Shareholders may request the company to provide detailed financial statements and a plan for the use of funds in order to judge whether the company's reasons are reasonable. If the shareholder believes that the company's capital constraints are due to unreasonable investment or other misconduct, he or she may negotiate with the company to adjust the strategy for the use of the capital to achieve a reasonable distribution of surplus while safeguarding the normal operation of the company. If the negotiation fails, the shareholders may submit a written request to the Supervisory Board or Supervisors of the Company to supervise and investigate the Company's refusal to distribute.

As the supervisory body of the Company, the Supervisory Board or Supervisors have the duty to supervise the Company's operation and management activities to ensure that the Company's actions are in compliance with the laws and regulations and the Articles of Association. Upon receipt of a shareholder's request, the Supervisory Board or Supervisors shall conduct an investigation within a certain period of time and provide feedback to the shareholder on the results of the investigation. If the Supervisory Board or Supervisors find that the Company's refusal to distribute is unreasonable, they shall urge the Company to rectify the wrongdoing and distribute the surplus as soon as possible.

If the company still refuses to make the distribution, the shareholders may file a lawsuit with the People's Court. In the litigation process, the shareholders need to provide sufficient evidence to prove that the company has a surplus, they have the qualifications of shareholders, and that the company's refusal to distribute lacks justifiable reasons. For example, the shareholders can provide the company's financial statements, audit reports and other evidence to prove the company's profitability; provide the company's articles of association, shareholders' register, business registration information to prove their qualifications as shareholders; and investigate the company's flow of funds, investment decisions and other circumstances to prove that the company's refusal to distribute the unreasonableness. When hearing such cases, the court will consider various factors to determine whether the company's refusal to distribute is lawful and reasonable. If the court finds that the company's refusal to distribute violates the laws and regulations or the company's articles of association, and damages the legitimate rights and interests of the shareholders, it will rule that the company should distribute the surplus in accordance with the shareholders‘ request, and may require the company to bear the shareholders’ reasonable expenses incurred in the litigation, such as attorney's fees and litigation costs.

2. Disputes among shareholders

When there is a dispute between shareholders over the surplus distribution plan, amount, etc., the first thing you can try to do is to resolve it through mediation. Mediation can be carried out by the company's internal mediation organisation, such as the company's mediation committee; it can also be carried out by external neutral third-party organisations, such as professional commercial mediation organisations. During the mediation process, the mediator will listen to the views and demands of the shareholders of each party, analyse the focus of the dispute and the reasons for it, and put forward a reasonable mediation proposal to urge the shareholders to reach a settlement. For example, for the dispute over the distribution plan, the mediator can propose a compromise distribution plan based on the actual situation of the company and the interests of the shareholders, and try to meet the reasonable distribution requirements of the shareholders while ensuring the needs of the company's development; for the dispute over the amount of distribution, the mediator can analyse the company's financial situation and make reference to the distribution standards of the same industry, and help the shareholders to determine a reasonable distribution amount. The mediator can help the shareholders determine a reasonable distribution amount by analysing the company's financial situation and referring to the distribution standards of the same industry.

If the mediation fails, the shareholders may choose to resolve the dispute by arbitration or litigation in accordance with the articles of association or the agreement between the shareholders. If arbitration is chosen, the shareholders need to apply for arbitration to the agreed arbitration institution based on the arbitration agreement signed beforehand. The arbitration institution will hear and decide the dispute in accordance with relevant laws and regulations and arbitration rules. The arbitration award is final and binding on both shareholders once made. For example, the shareholders of a company have agreed on an arbitration clause in the company's articles of association, and when they have a dispute over the distribution of surplus, one of the shareholders applies for arbitration to the agreed arbitration institution on the basis of the clause. After accepting the application, the arbitration institution organised hearings and debates between the two parties, and eventually made an arbitration award based on the company's financial situation, the shareholders' capital contribution, and the relevant laws and regulations, and both shareholders were required to comply with the outcome of the award.

If litigation is chosen, the shareholders may file a lawsuit with the people's court with jurisdiction. During the litigation process, the shareholders need to provide evidence to support their claims, and the court will hear and pass judgement based on the evidence provided by both parties and relevant laws and regulations. The judgement of the court is enforceable, and if one shareholder fails to honour the judgement, the other shareholder may apply to the court for compulsory execution. For example, in a company's surplus distribution dispute, shareholders Wu and Zhao disputed over the amount of distribution, and after negotiation and mediation were unsuccessful, shareholder Wu filed a lawsuit with the court. In the litigation, shareholder Wu provided evidence such as the company's financial statements and proof of his own capital contribution, and shareholder Zhao also provided corresponding rebuttal evidence. After hearing the case and considering various factors, the court finally ruled that the company should distribute the surplus to shareholder Wu and shareholder Zhao in accordance with a certain ratio. If the shareholder Zhao mou does not fulfil the judgement, the shareholder Wu mou can apply to the court for compulsory execution, through the court's compulsory means to achieve their own rights and interests in the distribution of surpluses.

(iii) Procedures and conditions for judicial intervention in the distribution of corporate surplus

Judicial intervention in the distribution of corporate surplus mainly occurs when shareholders abuse their rights to cause the company not to distribute profits, causing losses to other shareholders. Specifically, it is manifested that the major shareholders make use of their control position to damage the rights and interests of small and medium shareholders in surplus distribution through unreasonable related transactions, excessive remuneration payment, concealment or transfer of company profits. For example, the majority shareholder transfers the company's high-quality assets to other companies under its control at a low price, resulting in a reduction of the company's profits and preventing the normal distribution of surpluses; or pays excessive remuneration to majority shareholders and their relatives serving in the company, distributing the company's profits in disguise, so as to damage the interests of other shareholders. In these cases, judicial intervention is to correct the improper behaviour of the shareholders, protect the legitimate rights and interests of small and medium-sized shareholders, and maintain fairness and justice within the company.

When a shareholder believes that the company is in the above situation and needs judicial intervention, he or she should file a lawsuit with the people's court with jurisdiction. When filing the lawsuit, the shareholders need to submit a statement of claim, specifying the demands of the lawsuit, such as requesting the company to carry out the specific amount of surplus distribution, pursuing the compensation liability of the shareholders who have abused their rights, etc., and setting out in detail the facts and reasons for the existence of shareholders' abusive behaviours in the company as well as the damages caused to them. At the same time, shareholders are also required to provide relevant evidence, such as the company's financial statements, audit reports, minutes of shareholders' meetings, connected transaction contracts, and remuneration payment vouchers, etc., to support their claims.

After accepting the case, the court will hear the case on a case-by-case basis. During the trial, the court may require the company to provide relevant financial information and conduct a judicial audit to ascertain the company's true profitability and flow of funds. For example, the court may commission a professional auditor to conduct a comprehensive audit of the company's financial accounts to check whether the company has concealed profits and transferred assets. If the audit results show that the company does have distributable profits and the rights of the shareholders have been infringed upon, the court will, in accordance with the relevant laws and regulations and evidence, rule that the company should distribute the surplus and may require the shareholder who has abused his or her rights to pay compensation for the losses of the other shareholders. For example, in the case of a dispute over the distribution of a company's surplus, the court, after trial and judicial audit, found that the majority shareholder had transferred the company's profits through connected transactions, resulting in the company's non-distribution of profits to the detriment of the small and medium-sized shareholders. The court ruled that the company should distribute the surplus to the small and medium-sized shareholders according to a reasonable proportion, and required the majority shareholder to compensate the small and medium-sized shareholders for the loss suffered as a result of the profit transfer.

In summary, the exercise of the company's right to claim for distribution of surplus is a complex process involving a number of conditions and procedures. The existence of surplus is the basis for the exercise of this right. Only after the company has made profits and completed all deductions and withdrawals from the provident fund in accordance with the law will the shareholders have a source of distributable profits. The resolution of the shareholders‘ meeting to adopt the distribution plan is the key link. A legal and valid shareholders’ meeting resolution confers the legitimacy and enforceability of the shareholders' right to request the distribution of surpluses, and its formation process and content must be in compliance with the laws and regulations and the company's articles of association. Confirmation of shareholders' qualification is a prerequisite for exercising the right, and only subjects with legal shareholder status can claim surplus distribution. In addition, factors such as the company's development strategy, financial situation, industry characteristics, market environment and changes in laws, regulations and policies will have an impact on the exercise of the right to claim surplus distribution.

In terms of the exercise procedure, generally speaking, shareholders are required to submit a distribution request to the company, and the company responds by the board of directors formulating a distribution plan, submitting it to the shareholders' meeting for consideration and approval, and then distributing it in accordance with the plan. When the company refuses to make the distribution or there is a dispute among shareholders, shareholders can resolve the issue through negotiation, mediation, arbitration or litigation. Judicial intervention, on the other hand, occurs mainly when shareholders abuse their rights resulting in the company's failure to distribute profits, causing losses to other shareholders, and is subject to strict procedures and conditions. Successful cases of exercising the right to claim for distribution of surplus show that fulfilling the conditions and following the legal procedures are the key to realising shareholders‘ rights and interests; while failed cases highlight the impact of irregularities in the company's operation and insufficient evidence of shareholders on shareholders’ rights and interests.