Nexis for Grammar and Business.
Once a year, once a year, one look back, the past can be learned, and the future can be chased. Based on specific fields and industries, LexisNexis has invited a number of senior professional lawyers and industry law managers to summarize and perspective the key points from the perspectives of opportunities, challenges, and trends, analyze the key directions of corporate compliance in 2024, and form the "LexisNexis Legal Annual Observation Report" covering many fields and industries. This article excerpts the analysis and judgment of senior corporate law managers in the report on the compliance priorities and trends of relevant industries.
The revision of the Company Law focuses on the "corners".
Henkel Group North Asia (Greater China, South Korea and Japan).General Counsel Shen Yuezhi
As an important part of China's rule of law construction, the revision of the Company Law has always been the focus of attention. In addition to the points that are concerned by the market, further attention needs to be paid by enterprises:
The first is the interpretation of the provisions of Chapters 11 and 12. According to the General Theory of Commercial Law, the Company Law has the dual characteristics of organic law and behavior law, and the revision of the Company Law mainly focuses on "improving the registered capital subscription registration system, that is, stipulating that the capital contribution subscribed by shareholders of a limited liability company shall be paid in full within five years from the date of establishment of the company", "improving the provisions on the democratic management of the company, that is, improving the relevant system of employee representatives on the board of directors", "enhancing the protection of shareholders' rights, that is, the expansion of shareholders' repurchase rights, and the expansion of shareholders' right to know to shares". However, there is little ink on the "Chapter 11 Company Merger, Division, Capital Increase and Capital Reduction" and "Chapter 12 Company Dissolution and Liquidation" to encourage the development of the entrepreneurial spirit and promote the merger and reorganization of companies through merger, division, capital increase, capital reduction, dissolution and liquidation, and only mainly provide for simple deregistration and compulsory deregistration, and absorb the merger, division, capital increase, capital reduction and dissolution of companies into the relevant judicial interpretations previously issued by the Supreme People's Court within the framework of the original Company Law.
In practice, lawyers engaged in corporate M&A practice are rarely guided by the Company Law, and must navigate the M&A and restructuring process in accordance with a series of complex laws, regulations and practical precedents. In view of this, the academic community should pay full attention to the relevant legislation in the meantime.
The second is the adaptation and convergence of foreign-invested enterprises and the Company Law. As the five-year transition period set by the Foreign Investment Law for foreign-invested enterprises will expire on December 31, 2024, how to adapt and interface with the Company Law for foreign-invested enterprises remains an open question.
This is called problematic because the corporate governance structure and business philosophy of foreign-invested enterprises are substantially different from those of company laws, which are basically based on domestic commercial companies. In the absence of clear and operable guidance, the AIEs and the external law firms they hired mainly relied on their own knowledge and experience to revise the relevant documents on corporate governance, but the amendments to the Company Law did not respond to this, making them continue to become a "forgotten corner".
The auto finance industry is "fighting forward".
General Counsel (Chief Compliance Officer) of Dongfeng Motor FinanceDirector of Legal & Compliance Fu Jiajie
In 2023, the auto finance industry can be described as "the eve of the attack". With the gradual implementation of new markets, new technologies and new policies, the auto finance industry has ushered in a new stage of development in terms of market environment, business model, and risk control methods, which will bring growth momentum in the auto finance industry that is not inferior to that triggered by the introduction or revision of two key regulations in 1998 and 2008.
In 2023, the market witnessed the first auto finance company to go bankrupt and liquidate, and it is also experiencing the pain of continuous decline in penetration and scale, as well as the disintegration of traditional dealer networks and the failure of risk management and control methods, all of which are forcing the auto finance industry to accelerate its transformation to adapt to future business scenarios and market competition. Looking ahead to 2024, the following trends will come to the fore:
First, the binding between auto finance companies and OEMs will become closer and closer, and some auto finance companies may need to "change hands" in order to survive. **The Financial Work Conference clearly stated that it is necessary to adhere to the fundamental purpose of financial services for the real economy and adhere to the prevention and control of risks as the eternal theme of financial work. As a professional non-bank financial institution, the "origin" of auto finance companies lies in serving OEMs and promoting vehicle production and sales.
Historical experience has proved that the rise and fall of auto finance companies are inseparable from OEMs, and in order to prevent risks, it is necessary to clarify the support obligations of OEMs to auto finance companies. For this reason, financial supervision should include factors such as the profitability of OEMs and automobile sales into the shareholder conditions and the rating of auto finance companies. At the same time, due to the restrictions on the development of financial companies by some OEMs, the value of owning a wholly-owned auto finance company is highlighted.
Second, the self-operated model of auto finance in the field of passenger cars will be valued by auto finance companies. With the self-operated car sales model of new energy manufacturers such as Tesla and "Wei Xiaoli" being verified by the market, the model of embedding financial services on the APP and bypassing dealers to directly carry out financial services to customers is emerging.
With the popularization and supervision of technologies such as face recognition, electronic signatures, Internet of Vehicles data, and intelligent customer service, the requirements for auto finance companies to independently acquire customers, approve and control risks are becoming increasingly stringent, and the auto finance self-operation model may become the optimal solution for the future auto finance industry.
Third, some market chaos may enter the "final carnival" stage. For a long time, the much-criticized high interest rate and high return, high loan arbitrage, ** sales, misleading sales, long loan short repayment and other auto finance market chaos or unfair competition accumulated risks, may be concentrated after the scale and loan term reach a certain critical value, the market will give a "lesson" to the institutions that are eager to make progress.
On the other hand, with the comprehensive strengthening of the penetrating and continuous supervision of institutions, behaviors and functions of financial supervision, and the gradual implementation of the "people-centered" value orientation in financial institutions, it is believed that the market environment of the auto finance industry will be further clarified.
The auto parts industry is "still strong".
Hanon SystemsNi Shengliang, General Counsel of China
Thousands of blows are still strong, and the wind is blowing, and the wind is blowing from east to west, north and south", this sentence can be used to describe the auto parts industry in 2023. In 2024, the development prospects of the auto parts industry are relatively optimistic, and the development trend of 2024 is summarized as follows:
First, the scale of the industry continues to expand. In 2024, the overall penetration rate of new energy vehicles will slow down but continue to grow, and traditional car companies will launch more products to compete with new power car companies, which will bring new growth momentum to the parts industry.
Second, technological innovation and service innovation will be an important driving force for development. In this process, the layout, improvement and protection of core patents, trade secrets and service trademarks will be the focus of legal compliance of Chinese parts and components enterprises.
Third, geopolitics and high-quality risks have created special local business development opportunities and compliance and risk control challenges. In 2024, on the basis of stabilizing their own manufacturing processes, production levels, and costs, local enterprises will have great opportunities to enhance their international competitiveness by exporting products and services. At the same time, in view of the fact that some economies continue to take technical restrictions and protective measures against China, Chinese parts companies will face uncertainties in raw material procurement, product development, finished product exports and business going overseas.
"New business forms are emerging" in the sales of sporting goods
Li Ning (China) Sporting Goods***Senior Director of Legal Affairs, Tong Jia
In 2023, with the continuous emergence of new formats and business models, the sportswear sales industry will involve more and more legal issues, including data privacy and information security, intellectual property protection, advertising compliance, etc. In 2024, the health and fitness sector will be one of the new business areas to watch. How to achieve compliance and sustainable development will be an important proposition for enterprises.
In view of the above problems, the legal department or compliance department of the enterprise should assume the responsibility of corporate compliance and continuously strengthen the legal awareness of all employees of the enterprise, such as through continuous and planned compliance training, so that the employees of the enterprise have a full understanding and awareness of the relevant laws and regulations, so as to ensure the sustainable development of the enterprise in the compliance environment.
In addition, with the improvement of sustainable development and environmental awareness, consumers are paying more and more attention to choosing environmentally friendly products and services, which also puts forward higher requirements for ESG compliance of enterprises.
The rules for the supervision of financial holdings are "from point to surface".
Zhejiang Oriental Financial Holding Group shares***Tong Chao, Head of Compliance Management and General Manager of Legal Compliance Department
In 2023, financial supervision has undergone tremendous development and changes at three levels: first, the regulators and regulatory functions have been systematically adjusted, including the establishment of the State Administration of Financial Supervision and Administration (hereinafter referred to as the "Financial Regulatory Administration"), the introduction of the new "Three Plans" of the Financial Regulatory Administration and the China Securities Regulatory Commission, and the formal formation of the financial regulatory framework of one bank, one general administration, one meeting and one bureau (the People's Bank of China, the State Financial Supervision and Administration Administration, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange); The second is to strengthen risk management and control, and the state has successively issued a series of regulations, including the Measures for the Risk Classification of Financial Assets of Commercial Banks, to embed risk management requirements in all fields and links of operation and management; The third is to establish various special compliance mechanisms, including three types of trust regulations, that is, the network of various financial institutions; data security control; Management of related party transactions of the Financial Holding Group.
According to the requirements of the ** Financial Work Conference in December 2023, financial supervision in 2024 will show the characteristics of "from point to surface" on the basis of strengthening "penetrating supervision", that is, on the basis of the integration of financial regulators in this round, gradually break through the regulatory barriers and regulatory depressions between different financial institutions, and move forward from the formulation of rules in the field of single or single regulatory compliance to the systematization and integration of financial regulatory rules.
Conglomerates revolve around "megatrends".
Cheng Guangdong, Legal Director of Nanshan Group
Under the "Belt and Road" initiative, the cooperation results of the comprehensive enterprise group are eye-catching, not only with foreign investment in the "Belt and Road" countries, but also in the cooperation between well-known enterprises of the "Belt and Road" countries and Chinese enterprises in China. The challenge comes with facing more legal issues in new business opportunities. In 2024, AIGC, data compliance, and amendments to the Company Law will all bring new compliance requirements.
Energy investment needs to adapt to the new requirements of overseas business expansion
Legal & Risk Management Department of CPID InternationalHuang Huina, General Manager of Internal Control and Audit Department
In 2023, outbound investment in the renewable energy sector has boomed. vigorously promotes the development of overseas clean energy projects, and the development and investment of overseas clean power projects, mainly renewable energy such as solar and wind energy, have begun to take shape, covering Europe, Southeast Asia, Latin America, Africa and other regions. In the same year, the EU countervailing regulations came into effect, Kazakhstan implemented a balanced power market, and many countries, including the United States, launched anti-tax avoidance investigations on Chinese manufacturers' photovoltaic modules.
Therefore, Chinese enterprises need to pay special attention to the risks of the legal environment and judicial environment of the host country, and pay close attention to the changes and development of the political situation in the host country. In 2024, Chinese enterprises should continue to learn and promote more industry-leading business models, focusing on comprehensive compliance requirements including tax compliance, labor and employment, ESG, antitrust, anti-subsidy, sanctions, etc.
Biopharma data security has become a "top priority".
Yang Jiao, Head of Legal & Compliance, Legend Biotech (Greater China).
Looking back on 2023, the data legal issues in the biopharmaceutical industry mainly revolve around data security and privacy protection, cross-border data transfer, data compliance, and ownership and benefit distribution. With the globalization of business and the widespread application of AI technology, as well as the increasing complexity of data processing and utilization, legal risks have increased. In 2024, it is recommended that enterprises increase investment in data security and privacy protection, and establish a sound data protection system and process. Pay attention to data compliance management and auditing, and pay attention to the ownership and benefit distribution of data in data-driven medical technology innovation and artificial intelligence applications, so as to avoid potential disputes and conflicts.
Iteration of Internet advertising management in the consumer goods industry
Tupperware (China)** Legal Director Wei Jing
In recent years, new business formats such as Internet live broadcasting, short advertising, and grass marketing have emerged, and the application of science and technology such as big data and algorithms has made the Internet advertising forms and formats continue to develop and iterate. In this regard, the most important thing to pay attention to in 2023 is the "Measures for the Administration of Internet Advertising" promulgated and implemented by the State Administration for Market Regulation.
In 2024, for enterprises in the FMCG industry, they should focus on two points: first, the revision of relevant important laws. The revision of important laws, such as the Tendering and Bidding Law and the Anti-Unfair Competition Law, deserves close attention, especially the Anti-Unfair Competition Law. Second, in terms of data compliance, the Provisions on Regulating and Promoting Cross-border Data Flows (Draft for Comments) deserves attention.
In addition, personal information protection compliance audits will be a new topic that needs attention. The Cyberspace Administration of China (CAC) has drafted the Measures for the Administration of Personal Information Protection Compliance Audits.
The above only represents personal views and does not represent the opinions of the unit).
Edited by Qu Yang.
Editor-in-charge: Wang Qian.
Proofreading by Zhang Bo Zhang Xuehui.