SOHO China's purchase of a major stake in a prime plot on the Bund from Shanghai Zendai Property Ltd and Greentown China Holdings was ruled invalid yesterday by Shanghai No. 1 Intermediate People's Court.

All three parties announced shortly after the ruling that they will appeal against the decision at the Shanghai Higher People's Court, according to separate filings made yesterday by the three developers to the Hong Kong stock exchange. This appeal must be lodged within 15 days.

The court said the agreement between SOHO and the sellers breached the rights of Fosun Group, the other major stakeholder of the plot, causing "direct harm" to Fosun's interest. The stake purchase was judged by the court as an "illegal purpose covered by a legal format."

Moreover, the 50-50 structure will inevitably leave a negative impact on the future operation of the project company as Fosun and SOHO are disputing the reelection of the board members after SOHO's acquisition of the 50-percent stake.

The court said yesterday the ownership structure of the plot should revert to its original status within 15 days of the ruling.

In May 2012 Fosun, headed by billionaire Guo Guangchang, filed a lawsuit against SOHO, a Beijing-based commercial real estate developer, and Zendai and Greentown.

SOHO agreed to pay 4 billion yuan (US$642 million) in late 2011 for a combined 50 percent stake of the plot owned by Zendai and Greentown.

Zendai first acquired the parcel in a public auction in 2010 for 9.22 billion yuan, the most expensive site on the Bund at that time. Fosun then bought a 50-percent stake, with 40 percent held by Zendai and 10 percent by Greentown, through affiliates.

The dispute was about whether the affiliates of Zendai and Greentown could sell their stake to another party without Fosun's consent.