On December 29, 2023, the 7th Session of the Standing Committee of the 14th National People's Congress amended and passed the Company Law of the People's Republic of China, which will come into force on July 1, 2024. (hereinafter referred to as the "Company Law").
Why is the Company Law amended? What is the significance of the revision? What are the highlights of the new Company Law?
Today, Beijing Yifa Law FirmLawyer Wang QingIn this article, I will briefly introduce the main points.
China's Company Law was formulated and promulgated on December 29, 1993, and was amended in 1999, 2004 and 2018. The purpose of this revision is to further standardize the company's organization and behavior, protect the legitimate rights and interests of the company, shareholders, employees and creditors, improve the modern enterprise system with Chinese characteristics, promote the entrepreneurial spirit, maintain social and economic order, and promote the development of the socialist market economy.
The revision of the Company Law is not only to meet the needs of practical development and improve the corporate legal system, but also to improve the modern enterprise system with Chinese characteristics and promote high-quality economic development.
The company's capital system has been improved
The new Company Law has improved the registered capital subscription hierarchy system, and the subscription system has been changed to a time-limited payment system. It is stipulated that the term of capital contribution by shareholders of a limited liability company shall not exceed five years. A transitional period will be set up for companies that have been registered and established before the implementation of the new law and whose capital contribution period exceeds the period specified in this law, requiring them to gradually adjust the capital contribution period to within the prescribed period. For the first time, it is expressly allowed that the capital reserve can be used to make up for losses, and the provident fund to make up for the loss shall be used first by arbitrary provident fund and statutory provident fund; If it still cannot be made up, the capital reserve may be used in accordance with the regulations. The company is allowed to make up for its losses by reducing its registered capital in accordance with the regulations, but it shall not distribute it to shareholders, nor shall it exempt shareholders from the obligation to pay capital contributions or shares. Add the system of loss of rights for shareholders who fail to pay their capital contributions on time, and the system for accelerating the maturity of shareholders' subscribed capital contributions.
The company establishment and exit system has been improved
The new Company Law establishes a new chapter on company registration, which clarifies the matters and procedures for the establishment, alteration and cancellation of registration, and requires the company registration authorities to optimize the registration process and improve the efficiency and facilitation of registration. Make full use of the achievements of informatization construction to clarify the legal effects of electronic business licenses, issuing announcements through the national enterprise credit information publicity system, and using electronic communication methods to convene meetings and vote. Expand the scope of assets that can be used for capital contribution, and clarify that equity and bonds can be used as capital contributions; Relax restrictions on the establishment of one-person limited liability companies, and allow the establishment of one-person shares*** Improve the company's liquidation system, and clarify the liquidation obligors and their responsibilities; The proposed deregistration and compulsory deregistration systems have been added to facilitate the company's withdrawal.
Improve the relevant regulations on state-funded companies
The special chapter on the establishment of special provisions on the organization of state-funded companies expands the scope of application from wholly state-owned limited liability companies to limited liability companies with sole state-owned enterprises and state-owned capital holdings, and shares, requiring that more than half of the outside directors of the board of directors of wholly state-owned companies should be required; Where a wholly state-owned company sets up an audit committee composed of directors on its board of directors to exercise the functions and powers of the board of supervisors, it shall not have a board of supervisors or supervisors. Provisions on the establishment and improvement of internal supervision and management and risk control systems for state-funded companies in accordance with the law have been added. Adhere to the party's leadership over state-owned enterprises, and emphasize the leading role of the Communist Party of China in state-funded companies.
Improve the relevant regulations on corporate bonds
The National Development and Reform Commission's corporate bond review responsibilities will be transferred to the China Securities Regulatory Commission, and the provisions on the registration of publicly issued bonds by the authorized departments will be deleted. It is clarified that corporate bonds can be issued to the public or non-publicly. The company that issues convertible bonds will be expanded from a listed company to all shares*** The provisions on the validity of the resolution of the bondholders' meeting will be increased, and the relevant provisions on bond trustees will be added.
Optimize corporate governance
If a company is allowed to have only a board of directors and no board of supervisors, and the company only has a board of directors, an audit committee member shall be appointed to the board of directors to exercise the functions and powers of the board of supervisors. Simplify your company's organizational setup. For companies with a small scale or a small number of shareholders, there may be no board of directors, one director, no board of supervisors, and one supervisor; For a limited liability company with a small scale or a small number of shareholders, there may be no supervisor with the unanimous consent of all shareholders. It is stipulated that a company with more than 300 employees shall have employee representatives of the company among its board of directors, except for those that have established a board of supervisors in accordance with the law and have employee representatives of the company. Employee representatives on the board of directors of a company can become members of the audit committee.
Strengthen shareholder protection
Strengthen shareholders' right to know. Expand the scope of shareholders' access to materials, allow shareholders of limited liability companies to consult accounting documents, shareholders who meet the requirements of shares to check accounting books and accounting vouchers, and allow shareholders to consult and copy relevant materials of wholly-owned subsidiaries. If the controlling shareholder of the company abuses the rights of shareholders and seriously damages the interests of the company or other shareholders, it is stipulated that other shareholders have the right to request the company to acquire their shares in accordance with a reasonable **. It is stipulated that if a company reduces its registered capital, it shall reduce the amount of capital contribution or shares according to the proportion of shareholders' capital contribution or shares, unless otherwise provided by law, otherwise agreed by all shareholders of a limited liability company, or otherwise provided by the articles of association of shares.
Information ** network, invasion and deletion.