[Legal News] Pay Attention to These Laws Coming Into Effect from January 1st, 2024
2024. 1. 5
[Legal News] Pay Attention to These Laws Coming Into Effect from January 1st, 2024
As 2024 begins, it is important to pay attention to new and updated laws that come into effect from January 1st. As a corporate law firm, we keep our clients informed of the changing legal landscape that may affect their business operations. We have gathered some highlights below:
Article 6 of the New Companies Act: the right to a company name is protected by law
Original Text: A company shall have its own name. The name of the company shall conform to the relevant provisions of the State. The company's name right is protected by law.
The inclusion of "name right" in the New Company Law will make the judicial thinking and rules of evidence in such cases change more obviously in favor of the plaintiff (rights holder).
Article 10 of the New Companies Act: on the resignation of legal representatives
Original Text: The legal representative of a company shall be a director or manager who executes the affairs of the company on behalf of the company in accordance with the provisions of the articles of association of the company. The resignation of a director or manager who serves as the legal representative shall be deemed to be the resignation of the legal representative at the same time. If the legal representative resigns, the company shall determine a new legal representative within thirty days from the date of the legal representative's resignation.
In our view, by permitting a titular person to resign in a timely manner, the actual person in charge of the company's operations is forced to seek a legal representative for his or her company who can assume real responsibility, giving the person who is actually unable to perform the duties of a legal representative a legal way to resign in a timely manner and withdraw from his or her position.
Article 23 of the New Companies Act: improvement of the "piercing of the corporate veil" rule
Original text: If a shareholder uses two or more companies under his control to commit the acts provided for in the preceding paragraph, each company shall be jointly and severally liable for the debts of any one of the companies. Only one shareholder of the company, the shareholders cannot prove that the company's property is independent of the shareholders' own property, shall be jointly and severally liable for the debts of the company.
The new provisions expand the scope of shareholders "piercing the corporate veil", the company's property and shareholders' property are independent of each other, if the shareholders abuse their rights and seriously harm the interests of other people related to the company, they shall be jointly and severally liable for the company's debts.
Article 47 of the New Companies Act: registered capital must be paid up within five years
Original text: The amount of capital contributed by all shareholders shall be paid in full by the shareholders within five years from the date of incorporation of the company in accordance with the provisions of the articles of association.
The shareholders of the company are required to re-examine the registered capital of the company, and if it cannot be paid in full within five years, the registered capital shall be reduced in a timely manner through the capital reduction procedure, in order to prevent the increase of unnecessary burden on the company's capital and the loss of shareholders' rights.
Article 390 of the Draft Amendments to the Criminal Law (XII): increasing the penalties for bribery-type offences
Original Text: Any of the following circumstances shall be subject to heavier penalties in accordance with the provisions of the preceding paragraph:
(i) Multiple bribery, or bribery to more than one person;
(ii) Bribe-giving by a state official;
(iii) Bribery in important national work, key projects, major projects;
(iv) bribery in the organization and personnel, law enforcement and justice, ecological and environmental protection, financial and fiscal, safety production, food and drugs, help and relief, pension and social security, education and medical care;
(v) for the purpose of committing illegal and criminal activities to pay bribes;
(vi) Using the proceeds of the offence to pay bribes.
The penalties for passive and active bribery offences have been increased, the provisions on heavier penalties for six categories of circumstances have been added to the offence of active bribery, and the penalty levels have been adjusted, while the penalties for the offences of passive bribery of a unit, active bribery of a unit and active bribery of a unit have been aggravated. This legislative adjustment means that the State's criminal crackdown on anti-commercial bribery has been further strengthened, and the criminal risk of commercial bribery faced by enterprises has further increased.
Articles 165, 166 and 169 of the Draft Amendments to the Criminal Law (XII): creating offences related to breach of trust and malfeasance by personnel of non-State-owned enterprises
Original Text: The addition of new criminal liability for breach of trust and malfeasance committed by personnel of non-state-owned enterprises extends to personnel of non-state-owned enterprises the criminal liability for the offences of illegally operating a similar type of business, illegally profiting for a relative or friend, and the offences of undervaluing shares and selling state-owned assets for favoritism, which may have been involved only in the case of personnel of state-owned enterprises. This new legislation means that the scope of criminal risks faced by executives or other business personnel, such as those in private and foreign-funded enterprises, has suddenly expanded, and the current criminal compliance system for enterprises needs to be adjusted in a timely manner.
