Xi Jinping at the national conference on Party building in State-owned enterprises, it is required that the party's leadership over the state-owned enterprises should not be shaken, give play to the role of the party organization as the leadership core and political core, and clarify the rights and responsibilities and working methods of the Party organization in decision-making, implementation and supervision; and make the role of the Party organization organized, institutionalized and specific. In recent years, China has promoted the reform of mixed-ownership enterprises, which has brought some impact on the management of state-owned enterprises and the norms of rights and behavior of different subjects. This article will discuss how to adhere to the party's leadership of state-owned enterprises.

1、 Basic Case and Judgment Results
     （1） Brief Introduction to the Case

The target company is a subsidiary controlled by Y Group. On April 8, 2011, Y Group held a party and government leadership office meeting and formed the Party and Government [2011] No. 4 "Minutes of Y Group Meeting" (hereinafter referred to as the Party and Government Meeting Minutes), agreeing to: firstly, acquire a total of 25% of the equity of other natural person shareholders of the target company at a price of one time the capital stock, and transfer 20% of the equity to QH Company; The second is to introduce strategic investors or Y Group to acquire 9.01198% of the equity held by the Employee Stock Club at a price of 1.4 times the capital stock, with priority given to QH Company acquiring it alone or jointly with JS; Thirdly, 5 years after the completion of this equity transfer, if the target company is not listed, it is agreed that QH Company and JS will withdraw their shares or the group will acquire their withdrawn shares. The withdrawal or acquisition price shall be based on the original transfer price of the equity, bank loan interest during the equity holding period, and cumulative dividends during the equity holding period.
     Afterwards, all parties signed relevant agreements or documents, implemented the aforementioned meeting minutes, and processed the industrial and commercial registration of changes in equity transfer.
However, Y Group has not fulfilled the approval procedures for the repurchase of equity.
On January 8, 2014, Company J sent a letter to Y Group through EMS requesting Y Group to pay the equity transfer fee, requesting Y Group to pay the transfer fee for repurchasing the equity before January 14, 2014. Y Group acknowledges the receipt of this letter, but believes that it has no obligation to repurchase the equity of the target company held by Company J, so it has not paid attention to it.
According to the court's investigation, the net profit of the target company in 2012 was -131119200 yuan. Both parties confirm that the target company no longer meets the conditions for listing within 5 years after the acquisition of equity in Company J.
Company J filed a lawsuit with the court requesting that Y Group pay the transfer fee for the repurchased equity to Company J.
     （2） Court Opinion
     The first instance court held that a consensus had been formed between Y Group and J Company regarding the equity buyback matter, and a contractual relationship for equity transfer had been established. This contractual relationship did not violate mandatory provisions of laws and administrative regulations. The judgment confirmed that the contractual relationship for Y Group to acquire the equity of the target company held by J Company was legal and valid.
Y Group filed an appeal against the first instance judgment.
     The court of second instance held that the transaction of state-owned assets should be subject to the approval of relevant regulatory authorities as the pre process, and Company J, as the investor, should be aware of the nature of the state-owned sole proprietorship enterprise of the trading partner Y Group. At the time of signing the minutes, Company J had sufficient foresight that Y Group still had to fulfill the approval procedures to the relevant regulatory authorities. As Y Group had not yet fulfilled the approval procedures, it should be determined that the equity repurchase contract involved in the case had not yet taken effect, and the first instance judgment should be revoked, rejecting Company J's lawsuit request.
     Company J refuses to accept the second instance judgment and applies for a retrial to the Supreme People's Court.
     The retrial court held that Y Group Company and J Company reached a consensus on the purchase of J Company's equity in the target company by Y Group Company. However, Article 44 of the Contract Law stipulates: "A contract established in accordance with the law shall take effect from the time it is established. If any law or administrative regulation requires approval, registration, or other procedures to take effect, it shall be in accordance with its provisions." Article 30 of the Enterprise State owned Assets Law stipulates: The merger, division, restructuring, listing, increase or decrease in registered capital, issuance of bonds, significant investments, provision of large guarantees for others, transfer of significant assets, large donations, distribution of profits, dissolution, and application for bankruptcy of state-owned enterprises shall comply with the provisions of laws, administrative regulations, and the articles of association of the enterprise, and shall not harm the rights and interests of the investors and creditors Article 23 of the Provisional Regulations on the Supervision and Administration of State owned Assets of Enterprises stipulates: "The State owned Assets Supervision and Administration Agency shall decide on the transfer of state-owned equity of the enterprises it invests in. For major matters related to important subsidiary enterprises, Article 66 of the Company Law stipulates: A solely state-owned company does not have a shareholders' meeting, and the state-owned asset supervision and management institution exercises the powers of the shareholders' meeting. The state-owned asset supervision and management institution may authorize the company's board of directors to exercise some of the powers of the shareholders' meeting and decide on major matters of the company. In accordance with the provisions of the aforementioned laws and administrative regulations and legislative purposes, major transactions of state-owned assets must be approved by the state-owned asset management department before the contract can take effect.
     In this case, Y Group Company is a state-owned enterprise solely owned by the Provincial State owned Assets Supervision and Administration Commission. Due to the failure to complete the above approval procedures, the equity transfer contract involved in the case did not take effect. The second instance court's determination that the contract did not take effect was not incorrect. Therefore, the request for retrial is rejected.

2、 Case analysis and practical exploration
     This case is a typical case of ineffective transaction behavior caused by internal approval of state-owned enterprises. Due to the internal governance characteristics of state-owned enterprises, internal decision-making processes often have a significant impact on external transactions. In addition to the supervisory procedures of higher-level units, the following content of this article explores how to effectively integrate and infiltrate the opinions of higher-level or party organizations into various stages of enterprise decision-making, execution, and supervision, and improve and improve the governance framework of modern enterprise system decision-making, execution, and supervision through extended interpretation.
     （1） How to identify state-owned enterprises
     In the existing laws and administrative regulations in China, there is no clear and unified definition of "state-owned enterprise", and various administrative agencies or competent departments have different descriptions in relevant normative documents.
According to the Notice on Adjusting the Classification of Enterprise Registration Types issued by the National Bureau of Statistics and the State Administration for Industry and Commerce, "state-owned enterprises" refer to non corporate economic organizations, mainly enterprises owned by the whole people.
According to the "Letter on Opinions on the Recognition of State Owned Enterprises" issued by the Ministry of Finance, "State owned enterprises" mainly include enterprises owned by the whole people, non corporate enterprises whose assets directly belong to the state, wholly state-owned companies registered in accordance with the requirements of the Company Law, limited liability companies and joint stock limited companies established by state-owned entities, and absolute holding enterprises with state-owned equity exceeding 50%, And enterprises that do not hold 50% of the state-owned equity but have control over the invested enterprises by state-owned capital. 
     According to the Notice on Issues Related to the Implementation of the Opinions on Regulating the Shareholding and Investment of Employees in State owned Enterprises issued by the State-owned Assets Supervision and Administration Commission of the State Council of the State Council, state-owned enterprises refer to state-owned and state holding (including absolute and relative holding) enterprises at all levels and their authorized operating units (branches).
With the continuous deepening of the reform of state-owned enterprises, the connotation of "state-owned companies and enterprises", which was commonly used in the past, has undergone significant changes. The state-owned enterprises referred to in this article refer to wholly state-owned companies, state-owned holding companies, and joint stock companies.
     （2） Methods and channels for party organizations in state-owned sole proprietorship and state-owned holding enterprises to participate in decision-making on major issues
     According to the requirements of the Central Committee, all major decisions, important personnel appointments and removals, major project arrangements and large amount of capital operations (referred to as "three major and one large" for short) must be made by the leadership collectively. The Opinions of the General Office of the CPC Central Committee and the General Office of the State Council on Further Promoting the Implementation of the "Three Major and One Large" Decision Making System in State owned Enterprises has made relatively clear provisions.
     The decision-making bodies of state-owned enterprise party committees (party groups), board of directors, and management teams without a board of directors should collectively discuss and decide on "three major and one major" matters based on their respective responsibilities, authorities, and rules of procedure.
     When the board of directors or the management team without a board of directors studies the "three major and one major" issues, they should communicate with the party committee (party group) in advance and listen to the opinions of the party committee (party group). Members of the Party committee (Party group) who enter the board of directors or the management team without a board of directors shall implement the opinions or decisions of the Party organization.
     （3） The Methods and Approaches for Party Organizations in State Owned Equity Enterprises to Participate in Major Decision Making Issues
     By introducing non-public capital such as private capital and foreign investment to carry out mixed ownership reform and achieve diversification of property rights, it is not the withdrawal of state-owned capital, let alone the withdrawal of party leadership. Through necessary institutional improvement and reform, the unity of "capital mixing", "system mixing", and "governance structure mixing" can be achieved. Starting from the aspects of ownership, management power, supervision power, etc., while promoting the reform of mixed ownership, the leadership of the Party should be strengthened.

     1. Pre procedure for setting up party organizations to participate in deliberation and decision-making at shareholder meetings, board of directors, and business management institutions
Article 19 of the Company of the China stipulates: "In the company, according to the provisions of the Constitution of the CPC, an organization of the Communist Party of China is established to carry out Party activities. The company should provide the necessary conditions for the activities of the Party organization." The Company Law provides the legal basis for the legal existence, normal operation and effective functioning of the enterprise party organization.
Article 43 of the Company Law of the Company Law of the People's Republic of China stipulates that "the discussion methods and voting procedures of the shareholders' meeting shall be prescribed by the articles of association, except as provided in this Law." Article 48 stipulates that "the discussion methods and voting procedures of the board of directors shall be prescribed by the articles of association, except as provided in this Law, Give play to the role of the Leadership core and political core of the Party organization. On this basis, establish a normal communication mechanism between the shareholders' meeting, board of directors, management, and the company's party organization for state-owned or mixed ownership enterprises.
According to the Company Law, resolutions of the company's shareholders' meeting, shareholders' meeting, or board of directors that violate laws and administrative regulations are invalid. If the convening procedures or voting methods of the shareholders' meeting, shareholders' meeting, or board of directors' meeting violate laws, administrative regulations, or the company's articles of association, or if the content of the resolution violates the company's articles of association, shareholders may, within 60 days from the date of making the resolution, request the people's court to revoke it. According to the above legal provisions, in the evaluation of major projects, major investments, and operational performance, as well as the evaluation and management of personnel, selection, directors, and senior management personnel, professional committees and other institutions with the participation or leadership of party organizations or their members shall be established in a pre procedural manner. The evaluation procedures of professional committees shall be used as a pre procedural procedure for the General Manager, Board of Directors, or Shareholders' Meeting to make resolutions or decisions, otherwise their effectiveness may be denied.
     2. The institutional guarantee of the company's articles of association for the responsibilities and authorities of the deliberative organs
Through the improvement of the company's articles of association and its rules of procedure, state-owned equity enterprises or mixed ownership enterprises can, based on their own characteristics, clarify the establishment method, responsibility positioning, and management mode of party organizations, clarify the boundaries of power and responsibility under the corporate governance structure, achieve seamless connection, and form a corporate governance mechanism of each department, each responsible, coordinated operation, and effective checks and balances.
For the enterprise strategic planning, the company's business policy and investment plan and other major issues, the pre procedure of the party organization's discussion can be clearly stipulated in the articles of association and rules of procedure. While handling affairs according to law and operating in compliance, the feasible list of decision-making matters involving "three priorities and one major" involving the participation of the party organization in the enterprise can be formulated on the basis of highlighting the supervision of the implementation of various management systems of the enterprise.
By improving and connecting the company's articles of association and various systems, the rights, responsibilities, and work methods of the party organization in decision-making, execution, and supervision are clarified, so that the party organization can play a more organized, institutionalized, and concrete role.
     3. Implementing the Party's supervisory and leadership role through contract management or project management systems
In addition to equity investment, state-owned enterprises can also extend party decisions to related economic activities or civil and commercial transactions through project management or contract management.
According to Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the Company Law of the People's Republic of China (IV), if a company's shareholders, directors, supervisors, etc. request to confirm that the resolution of the shareholders' meeting, shareholders' meeting, or board of directors is invalid or not established, the people's court shall accept it according to law. From the above provisions, if the resolution of the shareholders' meeting, shareholders' meeting, or board of directors is invalid or unfounded, it is generally proposed by the company's shareholders, directors, and supervisors. However, this provision does not limit the right of interested parties other than the aforementioned subjects to raise objections to the effectiveness of the resolution.
For example, when state-owned enterprises implement major projects that implement the decisions and deployments of higher-level party organizations, it is stipulated in project contracts and other documents that state-owned enterprises have the veto power over major matters of the partners and contract parties. If the project partners fail to make decisions according to the contract agreement, it can harm the rights and interests of state-owned enterprises. Based on this, state-owned enterprises can raise objections to the effectiveness of the partners' resolutions.

     On the other hand, it is also possible to constrain the project party by requiring that the contract signed by the project partner regarding major projects take effect only with the consent document of the state-owned enterprise, so that the state-owned enterprise has legal interests in the company resolution of the project partner.
     In addition, in combination with the voting system of the shareholders' meeting and the board of directors, standardize the contract management system and other normative documents of subordinate state-owned enterprises or state-owned equity participating enterprises, and require subordinate enterprises to take the consent or resolution documents of relevant parties as a prerequisite for the effectiveness of the transaction documents for major projects or other major matters.
     In summary, as long as the relationship between party organizations and other governance entities is well handled, the boundaries of power and responsibility are clarified, seamless connection is achieved, and a corporate governance mechanism that performs its own duties, responsibilities, coordinated operation, and effective checks and balances is formed, it can promote the deepening of reform, improve the level of operation and management of state-owned enterprises, strengthen the supervision of state-owned assets, and firmly strengthen, optimize, and expand state-owned enterprises.