[Legal Update] Amendment of Over 300 Provisions in China's Company Law
2024. 1. 19
[Legal Update] Amendment of Over 300 Provisions in China's Company Law
On December 29, 2023, the National People's Congress adopted a newly revised Company Law of the People's Republic of China (hereinafter referred as the "Company Law"), which will officially take effect on July 1, 2024. The new "Company Law" is based on the 2018 version, with a total of 300 provisions added and revised, making it the most significant revision to date.
This revision mainly involves various aspects of democratic management of employees, capital injection, company organizational structure, and legal responsibilities of related personnel. Regarding capital injection, the 2013 version of the "Company Law" made significant changes to the provisions regarding capital injection commitments, requiring capital to be injected within five years from the establishment of the company (unless otherwise provided by law). For already established companies, if the capital injection deadline is not in line with the provisions of the new "Company Law", adjustments must be made to comply with the five-year requirement.
In addition, the current "Company Law" requires the establishment of a "Board of Supervisors" or "Supervisors" as necessary organs in the company's organizational structure. However, the new "Company Law" reduces the requirement for a Board of Supervisors and Supervisors and states that a company may not be required to establish a Board of Supervisors or Supervisors if it meets certain conditions. For foreign companies with a small number of shareholders, it may be possible to consider simplifying the company's organizational structure in the future.
This revision contains many changes and will have a significant impact on companies. If you have any questions about this topic, please do not hesitate to contact us.
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