## Facts

- Duan Jing Jing purchased 800,000 shares of Weyland Tech, Inc. in April 2016 and received a stock certificate bearing a restrictive legend limiting resale absent compliance with securities rules.
- Jing Jing alleged Weyland represented it would seek to remove the legend and reissue the shares as unrestricted after the required holding period.
- In January 2017, Jing Jing, through counsel, sent the transfer agent (Nevada Agency and Transfer Company) the original certificate and documentation (including a Rule 144 opinion letter) requesting legend removal and transfer processing.
- Weyland, through counsel, refused to remove the legend, asserting that a dispute (described as a “Singapore Complaint”) showed the shares originally issued to Jing Jing’s seller had been canceled, calling Jing Jing’s ownership into question.
- Jing Jing alleged Weyland did not provide adequate supporting documentation for the claimed cancellation and that a referenced public filing did not substantiate the refusal.
- Jing Jing later attempted to proceed with a second opinion letter; the transfer agent allegedly refused to act without the original certificate, despite Jing Jing’s claim that it had already been presented.
- Jing Jing sued Weyland and the transfer agent seeking statutory relief under Delaware law related to registration of transfer/legend removal and asserting a conversion claim based on the refusal to remove the restriction and register transfer.

## Issues

1. Whether the amended complaint sufficiently pled statutory prerequisites—especially presentment of the original certificate—so as to state a plausible claim that defendants had a duty to remove the restrictive legend and register transfer.
2. Whether allegations that defendants refused to remove the restrictive legend and effect transfer stated a plausible claim for conversion under Delaware law.
3. Whether defendants’ contentions that the shares were invalid due to a purported cancellation could be resolved on a Rule 12(b)(6) motion.

## Decision

- The court denied the renewed Rule 12(b)(6) motions to dismiss the amended complaint.
- The court held Jing Jing plausibly pled the statutory element missing from the earlier complaint: presentment of the original certificate and supporting documentation to the transfer agent.
- The court held Jing Jing plausibly stated a conversion claim based on alleged wrongful interference with her ability to exercise ownership rights, including selling the shares.
- The court declined to decide, at the pleading stage, defendants’ merits-based defenses concerning the alleged cancellation of the underlying shares and related disputes.

## Legal Principles

- Statutory claims seeking transfer registration or legend removal under Delaware law require pleading the statute’s specific prerequisites; courts will not supply missing elements by inference.
- Allegations of presentment of the security to the issuer or transfer agent can be a threshold requirement to trigger statutory duties regarding transfer processing and restrictions.
- On a motion to dismiss, well-pleaded factual allegations are accepted as true; fact-bound defenses about ownership validity generally require factual development beyond the pleadings.
- A refusal to process transfer or remove a restrictive legend may support a conversion claim when it plausibly alleges wrongful dominion or control that deprives a shareholder of practical use of the shares.

## Conclusion

The court permitted the shareholder’s statutory and conversion claims to proceed because the amended complaint specifically alleged presentment of the original certificate and supporting materials and plausibly alleged wrongful interference with her rights, while defendants’ challenges to the validity of the shares were treated as merits disputes not suitable for resolution on a motion to dismiss.


Jing Jing v. Weyland Tech, Inc., 2017 WL 3189031 (D. Del. July 27, 2017)