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Owner sues her own company for salary

A district court has rejected a lawsuit filed by a Hong Kong woman who asked a company she invested to pay her salary.

Judges of the Qingpu District People's Court ruled that the woman surnamed Lau actually controlled the company's operation and wasn't its employee. So she had no right to ask for salary from the company.

Lau came to Shanghai in 2009 to develop business. Due to the strict criteria for overseas investors to open a company in the mainland, Lau asked to use the name of a local friend surnamed Wang to register a company and Wang agreed.

The company was registered in December 2009. Wang was its legal representative and held all the shares in the legal documents, while Lau was the real investor and business manager. Wang got no reward from the company.

Lau later signed a labor contract in the company's name with herself and appointed herself as the administrative manager with a monthly salary of 11,000 yuan (US$1,672). But she didn't take the salary and paid herself according to the company's monthly profits.

The company was soon in deficit and debts. Wang, afraid of taking all the responsibility as the legal representative, asked to take over the company.

Lau then applied for labor arbitration last September asking for eight months of salary. Not supported by the arbitration, she sued to the court last November.

The court judged that there was no labor relation between Lau and the company because she was the one who made decisions in the company. Thus, she had no right to ask for salaries which should be paid based on labor relationship.


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