How to Protect Trade Secrets When a Shareholder want to Inquiry Company’s Account Book?

(By You Yunting and Wang Ting) Pursuant to China’s Company Law, any shareholder shall be entitled to inspect and copy the Articles of association, minutes of shareholders’ meetings, resolutions of meetings of the board of directors, resolutions of meetings of the board of supervisors and financial reports of a company in which he or she owns shares. However, if a shareholder operates a business in competition with a company in which he or she owns stocks, then when exercising the shareholder’s right to information, such inspection may result in leaks of confidential business and trade secrets. In today’s post, we will introduce this conflict, and discuss ways in accordance with relevant Chinese laws to balance this conflict of interests while maintaining a shareholder’s right to information and a business’ right to protect its trade secrets.

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Trade Secret Litigation Injunction Rulings in China

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(By You Yunting) According to media reports (note: the link is in Chinese), Eli Lilly and Company and Eli Lilly (China) sued an employee named Huang in the Shanghai No.1 Intermediate People’s Court. That court recently issued the first trade secret litigation injunction in China’s history, and ruled a litigation preservation that prohibited Huang from disclosing, using, or allowing any third party to use 21 documents that were protected as trade secrets by the plaintiff.

Inductions to the Case:

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