Li

I. Background

Defendant-Appellee ArcSoft, Inc., was founded by Michael Deng in 1994. Though its products have varied, today it is primarily known for creating software that enables personal cellular devices to process images, including facial- recognition technology. Marc Chan was one of ArcSoft’s LI V. ARCSOFT, INC.

early investors. Although Chan was deeply engaged with ArcSoft’s operations for many years, by the mid-2000s he had personally ceased to hold any shares in the company. He instead transferred his shares to two shell companies— Strong Wealth Investment Ltd. and Pacific Smile Ltd.—and his wife, Lei Li, who are the plaintiffs-appellants in this dispute. Amid consistently lackluster performance by ArcSoft in the early 2010s, Deng was approached by a major Chinese institutional investor, Huatai Securities Co., which expressed interest in facilitating an ArcSoft IPO in China. In 2017, based on Chinese accounting principles, Huatai valued ArcSoft at the equivalent of $680 million U.S. dollars. This favorable valuation was the basis for plans developed between Deng and Huatai for reorganizing ArcSoft. A condition of Huatai investing in ArcSoft was for…