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Modern Avenue Group Co.Ltd(002656) on the issue of liability under the arbitration case of Lin Fengguo
Legal opinion
Beijing Jindu (Shenzhen) law firm
Legal opinion on the liability of Modern Avenue Group Co.Ltd(002656) in the arbitration case of Lin Fengguo
To: Modern Avenue Group Co.Ltd(002656)
Beijing Jindu (Shenzhen) law firm (hereinafter referred to as “the firm”) accepted the entrustment of Modern Avenue Group Co.Ltd(002656) (hereinafter referred to as “the company”) on the company’s (2019) szszsz Zi No. 15777 [corresponding execution case No. (2020) Yue 01 Zhi No. 5353], (2019) SZ Zi No. 15778 [corresponding execution case No. (2020) Yue 01 Zhi No. 5354] This legal opinion is issued in accordance with the provisions of relevant laws, regulations and normative documents in China (excluding Hong Kong, Macao special administrative regions or Taiwan for the purpose of this legal opinion).
The exchange shall issue legal opinions based on the facts that have occurred or existed before the date of issuance of this legal opinion, and based on the understanding of relevant facts and relevant laws, regulations and normative documents.
In order to issue this legal opinion, the exchange consulted the relevant documents involved in the arbitration case and made necessary inquiries to the relevant staff of the company on relevant matters.
This legal opinion is only for the purpose of the company’s handling the lifting of the restricted shares at the Shenzhen Stock Exchange. It shall not be used for any other purpose for any other person without the prior written consent of the exchange.
In accordance with the business standards, ethics and the spirit of diligence recognized by the lawyer industry, and in accordance with the provisions of China’s current effective laws, regulations and normative documents, this legal opinion is issued on the liability of the company under arbitration cases as follows:
1、 Basic information of arbitration case
On February 20, 2020, the company disclosed the announcement on new arbitration and newly discovered external guarantee matters of the company (Announcement No.: 2020014), which announced that it had received the notice of arbitration of the arbitration case issued by Guangzhou Arbitration Commission. Lin Fengguo initiated arbitration with Lai Xiaoyan, Zhang QinYong, Chen Madi, the company and Lin Yongfei (later withdrawn) as the respondent, The case numbers are (2019) Suizhong case Zi No. 15777, (2019) Suizhong case Zi No. 15778 and (2019) Suizhong case Zi No. 15779.
Lin Fengguo claimed that in April 2018, he signed the agreement on share transfer of employee stock ownership plan with the company’s supervisors Chen Madi, Zhang QinYong and Lai Xiaoyan respectively, agreeing to transfer his shares in the company’s phase I employee stock ownership plan to Chen Madi, Zhang QinYong and Lai Xiaoyan. In May 2018, Lin Fengguo signed a supplementary agreement with the company and Lin Yongfei, stipulating that the company shall bear the guarantee liability for assisting Lin Fengguo to complete the repayment obligations agreed in the loan contract, and Lin Yongfei shall bear the joint and several guarantee liability for Chen Madi, Zhang QinYong and Lai Xiaoyan to fulfill the above payment obligations. The above payments were overdue, so Lin Fengguo filed an arbitration, requesting Chen Madi, Zhang QinYong and Lai Xiaoyan to pay the transfer price, liquidated damages and relevant arbitration expenses, and requesting the company to bear joint and several guarantee liabilities.
According to the verification of the company, the above guarantee matters have not been deliberated by the board of directors or the general meeting of shareholders of the company, nor have the approval procedures of the company’s seal been fulfilled. It is an act of personal ultra vires agency of Lin Yongfei, the actual controller of the company, the then chairman of the board of directors and the then legal representative, who signed the contract in the name of the company without the deliberation and consent of the board of directors and the general meeting of shareholders.
Later, Guangzhou Arbitration Commission made an award on the above arbitration case and found that the guarantee of modern company was issued by Lin Yongfei beyond his authority, and Lin Fengguo was not a bona fide counterpart, so the guarantee was invalid. Modern company does not need to bear the guarantee liability, but needs to bear one-half of the supplementary compensation liability for the part payable by Lai Xiaoyan, Zhang QinYong and Chen Madi that cannot be paid off. On March 3, 2022, the company disclosed the announcement on the company’s receipt of the letter of exemption from guarantee liability (Announcement No.: 2022015), which announced that Lin Fengguo issued the letter of exemption on supplementary joint and several liability to the company, and Lin Fengguo voluntarily agreed to exempt the company from paying compensation to Lai Xiaoyan, Zhang QinYong Chen Madi’s supplementary joint and several liability in the equity transfer dispute case, and the exemption letter shall come into force from March 2, 2022.
2、 Conclusion on the liability of the company under the arbitration case
According to the determination of Guangzhou Arbitration Commission in the award of the arbitration case, the guarantee of modern company is issued by Lin Yongfei beyond his authority, and Lin Fengguo is not a bona fide counterpart, so the guarantee is invalid, and modern company does not need to bear the guarantee liability.
At the same time, according to Article 130 of the civil code of the people’s Republic of China, “civil subjects exercise civil rights according to their own wishes without interference”, Lin Feng has the right to voluntarily exempt Lai Xiaoyan, Zhang QinYong Chen Madi shall bear half of the supplementary compensation liability for the part that should be paid but cannot be paid off.
Therefore, from March 2, 2022, the company shall not bear any liability including guarantee liability and supplementary compensation liability under the arbitration case.
This legal opinion is made in triplicate.
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(there is no text on this page, which is the sealed page of the legal opinion of Beijing Jindu (Shenzhen) law firm on the liability of Modern Avenue Group Co.Ltd(002656) in the arbitration case)
Beijing Jindu (Shenzhen) law firm March 3, 2002
