DeHeng Successfully Defended Founder Against Equity Repurchase Arbitration

2025-02-20

Recently, DeHeng lawyers represented the founder (respondent) of an innovative enterprise in an equity repurchase arbitration initiated by an institutional investor. The DeHeng team leveraged their expertise in foreign investment and corporate equity dispute resolution to secure a favorable ruling, saving the client nearly RMB 10 million in potential losses.

This case involved a cross-border equity repurchase agreement performance dispute. The founder had entered into an Equity Repurchase Agreement with an overseas investor, stipulating that the foreign party would transfer shares to the Chinese investor. However, due to unfeasible steps outlined in the agreement and impractical arrangements for receiving payment under Chinese law, the agreement could not be substantially executed. The investor then filed for arbitration, demanding substantial equity repurchase payments and high penalties for breach of contract.

The legal team led by lawyer Sang Sidong accepted the mandate and represented the founder comprehensively in this arbitration. Ultimately, the arbitral tribunal accepted DeHeng’s arguments, dismissing the applicant’s claims for higher equity repurchase amounts and associated penalties, and ordered the investor to first complete the necessary share transfer procedures before the founder paid the repurchase amount.