Analysis The Importance Of Non-legal Facts In Company Control Right Fighting Through The Case Of NVC Fighting

With the development of China’s capital market, equity trading hasbecome more frequent, thus resulting shareholding gradually dispersed, thecase of company control right fighting between large shareholders is alsoincreasing. Most of prior researchesabout company control right fighting arefrom the Company Law, the Articles of Association and other legal aspects,and in fact, there is also some other outside the law factors including keystaffs control, business control and so on. This article attempts to analyzethe important impact from these factors through the case of NVC controlright fighting.NVC had experienced three years of rapid growth since it had been listedin2009. In2012, the company met development bottlenecks, which lead toweak business growth, profitability decline and stock prices fluctuatesignificantly. The contradictions between large shareholders which had beenovershadowed by the rapid growth finally broke. The second largestshareholder of SAIF and the fourth largest shareholder of Goldman Sachs, asthe representative of venture capital and the third largest shareholder Schneider, which has industrial capital background, were very unsatisfiedwith the largest shareholder, NVC founder, WuChangjiang’s behavior ofusing company resource to self-serve.They united to initiate a battle forcontrol of NVC. It’s seemed that Wu Changjiang, facing the joint pressurefrom both venture capital and industrial capital,from the equity point ofview,had no chance of winning to keep the controlof the company. But hefirmly controlled the company relying on its controlling to network ofdistributors, suppliers, key employees, etc. core resources. Fierceconfrontation led to the operations of NVC was greatly affected, the companystock price quickly diving, investors suffered heavy losses. Eventually, thetwo sides fighting for control right at loggerheads introduced a third part,DehaoRunda. Wu Changjiang transferred most of his stock in NVC toDehaoRunda, while transferred part of control right of NVC to DehaoRunda.NVC control right fighting reached a temporary compromise.In this paper, through the analysis to case of NVC control right fighting,we find that some non-legal factors including the control to company’sdistributors, suppliers, key employees and some other external and internalcore resources have important influence in company control right fighting.These external resources and employees as stakeholders have their owninterest demands.If any side of the two sides fighting for company control rights can effectively use these non-legal factors, analyze these stakeholders’interest demands and combine the interests of these stakeholders withthemselves, it will significantly enhance their chips in the fighting. They willhave more favorable advantages in the company control right fighting.This study found could provide a reference for potential similar companycontrol right fighting in the future. It can also provide a reference for therelevant regulatory authorities to further improve relevant laws andregulations, standardize business conducts of Chinese listed companies.