On December 29, 2023, the 7th meeting of the Standing Committee of the 14th National People's Congress amended and passed the Company Law of the People's Republic of ChinaIt will come into force on July 1, 2024
The amendment to the Company Law deletes 16 articles in the 2018 Company Law and adds or amends 228 articles, which is the largest revision of the Company Law in the past. The new Company Law has made significant changes and added many important provisions in terms of the company's capital system, corporate governance structure, company establishment and exit system, etc., which will have a significant and far-reaching impact on the company's development and governance in the future. The purpose of this article is to introduce and interpret some of the highlights of the revisions for readers' reference.
1. The term of capital contribution of shareholders of a limited liability company shall not exceed five years: shareholders shall pay up the subscribed capital contribution within five years from the date of establishment of the company.
2. For established companies with a capital contribution period of more than five years: ** After that, specific measures will be formulated to set a transition period for them to gradually adjust the capital contribution period.
3. The purpose of setting a five-year maximum capital contribution period is to encourage the company's shareholders to subscribe for capital contributions within the scope of their capabilities, so that the company's registered capital is consistent with the actual capital, and to rebuild the trust of creditors in the company's registered capital.
It is clarified that equity and debt can be used as capital contributions.
1. If the shareholder fails to pay the capital contribution on time, he will face the risk of losing the part of the equity that has not been paid.
2. The operation process of the shareholder loss system:
1) The company issues a written reminder notice, which may specify a grace period, which shall not be less than 60 days;
2) If the grace period expires and the shareholder still does not make capital contribution, the company shall issue a notice of loss of rights to the shareholder in writing by resolution of the board of directors;
3) The shareholder loses the equity corresponding to the unpaid capital contribution from the date of issuance of the notice of loss of rights.
3. Remedies for shareholders who have lost their rights:
If a shareholder has any objection to the loss of rights, he or she shall file a lawsuit with the court within 30 days from the date of receipt of the notice of loss of rights.
When the company is unable to pay off its debts as they fall due, the company or its creditors who have matured have the right to require shareholders to pay their capital contributions in advance.
If a shareholder transfers the equity of the unexpired capital contribution period, if the transferee shareholder fails to pay the capital contribution in full on time, the transferring shareholder shall bear supplementary liability for the unpaid capital contribution of the transferee shareholder. The purpose of this liability allocation is to encourage the transferring shareholders to carefully choose their transaction partners and urge the shareholders to honestly fulfill their capital contribution obligations. 
1. The articles of association or the shareholders' meeting may authorize the board of directors to decide to issue shares not exceeding 50% of the issued shares within three years.
2. The introduction of the authorized capital system reduces the difficulty of the establishment of the company, improves the flexibility of financing, and at the same time, requires the promoter to pay the full amount of shares before the establishment of the company, so as to reduce the virtual registration capital and other problems.
Shares*** can issue preferred shares, inferior shares, special voting shares, transfer restricted shares and other categories of shares to meet diversified investment needs.
1. The articles of association of the company can decide to issue par shares or no par shares, and can also decide on the conversion between the two.
2. More than half of the proceeds from the issuance of non-par shares shall be included in the registered capital.
1. The company can use the capital reserve to make up for the loss in accordance with the regulations.
2. The order of using the provident fund to make up for losses: 1) arbitrary provident fund and statutory provident fund; 2) Capital reserve.
1. The company can make up for the loss by reducing the registered capital in accordance with the regulations, but it shall not distribute it to the shareholders, nor shall it exempt the shareholders from the obligation to pay capital contributions or shares.
2. If the shareholders' meeting of the company resolves to make up for the loss by means of capital reduction, the resolution of capital reduction does not need to notify the creditors, and the creditors have no right to require the company to repay debts or provide guarantees, but it shall be announced in the newspaper or the national enterprise credit information publicity system within 30 days from the date of the resolution.
3. If the simple capital reduction is implemented, the company shall not distribute profits until the cumulative amount of the statutory reserve fund and the arbitrary reserve fund reaches 50% of the registered capital of the company.
Areas of PracticeMs. Chen Dandan's main areas of practice are civil and commercial dispute resolution (contract disputes, labor and personnel disputes, marriage and family disputes, etc.), corporate perennial legal counsel, criminal defense and other businesses.
Mr. Chen graduated from Southwest University of Political Science and Law and East China University of Political Science and Law with a master's degree in law.
Since practicing law, Mr. Chen has focused on the field of civil and commercial dispute resolution, and has accumulated rich litigation experience, specializing in handling contracts, labor and personnel disputes, marriage and family disputes, etc. Mr. Chen's style of handling cases is meticulous, and he is able to grasp the overall situation of the case, pay attention to the details of the case and seek breakthroughs, so as to strive for the best interests of the client to the greatest extent.
Mr. Chen also has rich experience in the company's perennial legal counsel business, providing contract review and drafting, daily legal advice and advice, issuing lawyer's letters and legal opinions, corporate governance, transaction negotiation and other services for many enterprises.