Yan Yiming found it tough growing up in Shanghai in the 1970s with grandparents who had been landlords before the communists gained power in China. Children from working-class backgrounds, he says, picked on him a lot. So, to protect himself, Yan took up boxing. "People were always hitting me, so I decided I should get stronger," he explains.
Now 38, Yan is still fighting--but he's no longer using his fists. Instead, he's a pioneer in the tiny but growing battle in China's courts on behalf of the country's mom-and-pop investors. A partner at AllBright Law Offices, Shanghai's largest private law firm, Yan is targeting unscrupulous managers at China's listed companies who doctor their books, issue false revenue and earnings reports, and thereby cheat the small shareholders who make up the bulk of China's investment class.
Yan scored a big victory in January. That's when China's Supreme People's Court ordered that lower courts must consider cases filed by Yan and other lawyers on behalf of small investors. The ruling came after a court in Shanghai refused to hear a suit filed on behalf of minority shareholders by Yan against biochemical company Guangxia (Yinchuan) Industry Co. The plaintiffs charged that the company's misleading financial reports had caused the shareholders--mainly retirees and laid-off workers--to lose their savings. When Shanghai's High People's Court refused to hear the case, the shareholders staged a week of daylong protests, and Yan appealed to the higher court.
Now, Yan, who oversees a team of six lawyers and accountants working on shareholder rights' cases, is back in court against Guangxia. His clients will be helped by the fact that China's securities regulators recently found Guangxia guilty of inflating profits in 1999 and 2000 and revoked the license of the company's accounting firm. Meanwhile, Yan is working on three other minority-shareholder cases--and has a backlog of almost 80 inquiries from allegedly abused investors. He works pro bono for individuals with little money but charges his corporate clients $250 an hour. "I want to make money, but I also want to work for social justice," he says.
Yan developed an interest in the law after China began reforming its legal system in the late 1970s. Rather than attending a law institute for three years, he studied independently for two and passed the graduation exam at Shanghai's East China Institute of Politics & Law in 1988. After he worked as an in-house counsel at Shanghai's Bao Steel Group, the central government sent Yan to Japan to study antitrust issues. A stint at a Japanese law firm helped land him the job at AllBright in 1999.
By fighting for the rights of minority shareholders, Yan is hoping to make China's legal system more transparent. And while it's unlikely the country's listed companies will become models of corporate governance, he sees the recent surge in cases as a step forward. "It will help promote a more fair stock-trading system in China," Yan says. China's small investors can hardly wait.