On 24 December 2021, the NPC Standing Committee published the Company Law of the People’s Republic of China. If adopted, the draft amendment would mark the first major overhaul of the law since 2013 and the first update of any kind since 2018.
In the February edition of GC Agenda China (subscription required), Morrison & Foerster partner Paul McKenzie commented on the draft that, “The proposed amendment contemplates a major overhaul of rules governing the capitalization, financing, governance and dissolution of companies in China.
These changes would provide shareholders with far greater flexibility in the structuring of companies than the current Company Law offers. Depending on when Company Law amendments are finalized, foreign investment enterprises having only recently benefitted from liberalisations effected by the Foreign Investment Law might have an opportunity to make additional changes to their structure even before the five-year transition period under that law expires at the end of 2024.
But take note. Not all the changes are liberalisations. For example, the amendments contemplate requiring that any company with more than 300 employees include an employee representative on its board of directors.”
For further information, please contact:
Paul D. McKenzie, Partner, Morrison & Foerster
pmckenzie@mofo.com
