China's Supreme People's Court (SPC) on Wednesday revoked a first ruling that ordered Singapore's Sino-Environment Technology Group Limited to pay extra registered capital for its China-based subsidiary, Thumb Env-Tech Group.
A local court in southeast China's Fujian Province, where Thumb is based, earlier granted the subsidiary's request for Sino-Environment to pay 45 million yuan (7.2 million U.S. dollars) as Thumb's additional registered fund. Sino-Environment appealed to the SPC to revoke the previous ruling and turned down the request.
According to a Wednesday statement from the SPC, Thumb was solely founded in 2000 by Sino-Environment. In 2008, extra registered funding was approved for the subsidiary, and Thumb deemed paying the 45 million yuan an obligation for Sino-Environment as its shareholder.
The statement cited Sino-Environment as saying that the company's decision-makers went through some changes in 2010, and the new team replaced Thumb's legal representative surnamed Sun with a new member of personnel.
Attorneys with Sino-Environment argued that the request for the 45 million yuan was maliciously made by Sun and was not the real intention of the subsidiary.
Meanwhile, lawyers with Thumb noted that the request for its parent company to pay the extra registered fund was legitimate, but Thumb's newly appointed legal representative didn't go through necessary procedures in line with Chinese laws and thus the move should be rendered invalid.
According to the statement, the court went through investigations and discussions concerning key issues such as whether the request represented Thumb in effect, whether the case should be closed and whether Sino-Environment should fulfil its duty to pay the money.
The SPC also rejected Thumb's request.
Shen Sibao, head of Shanghai University's law school, said after attending the trial that Wednesday's case served as a reference as to how to solve internal disputes of a foreign company and how to apply Chinese and Singaporean laws.