On 29 December 2023, the Standing Committee of the National People’s Congress of the People’s Republic of China promulgated the amended Company Law of the People’s Republic of China (“PRC” or “China“) (“2023 Company Law“), after its deliberation of four versions of draft amendments in the past three years. The 2023 Company Law will come into force on 1 July 2024.
Following an overhaul in 2005, the Company Law of the PRC had two rounds of relatively minor amendments in 2013 and 2018 respectively (the version currently in effect as last amended in 2018 is hereinafter referred to as the “2018 Company Law”). This round of amendments in 2023 is another overhaul, as over 200 articles have been added and amended in the 2023 Company Law, including substantial amendments to over 100 articles. The amendments cover a wide range of topics, including capital contribution and reduction, equity/share transfer and repurchase, corporate governance matters (such as organizational structure and responsibilities and duties of controlling shareholders, actual controllers, directors, supervisors and senior management, etc.), shareholder rights protection, company establishment and dissolution/liquidation, etc.
The 2023 Company Law not only governs new companies established after its effective date, but also has significant implications on companies existing as of its effective date. Yet, the implementation of quite many articles is still subject to further interpretation and/or guidance of the Chinese authorities and courts. Therefore, companies, investors and other stakeholders should pay close attention to this new legislation and the pertinent regulations, judicial interpretations and other official guidelines that may be issued for its implementation in the near future.
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