Following the recent amendments to the PRC Company Law, SHIHUI PARTNERS is releasing a series of articles providing our insights into the implications and practical application of the updated Company Law, continuing with our latest article focusing on major changes of relevance to limited liability companies.
On December 29, 2023, China’s lawmakers enacted numerous amendments to the PRC Company Law (the “2023 Amendments”). While some of these amendments reinforce current rules and practices, others are poised to significantly influence the operations of businesses in China for the foreseeable future. The 2023 Amendments will come into force on July 1, 2024.
The 2023 Amendments not only govern new companies established after July 1, 2024, but also have a significant impact on companies already established before this date. At present, the full implications of the 2023 Amendments are still uncertain, although the authorities have now begun to release measures to flesh out the requirements of the 2023 Amendments. As such, companies and other stakeholders should pay close attention to any additional regulations, judicial interpretations and official guidelines from the PRC authorities that may further clarify the practical effects of the incoming changes.
To assist limited liability companies in navigating through the new regime, our latest article will focus on some of the major changes in the 2023 Amendments, particularly those of relevance to foreign-invested enterprises operating in China. Firstly, this article will provide a clear summary and analysis of the updated rules on the transition periods for shareholder capital contribution. The updated rules were released on February 6, 2024, and clarify the registered capital contribution requirements for limited liability companies under the 2023 Amendments.
In addition, the article will explore the greater duties and responsibilities imposed on company directors, supervisors and senior management personnel by the 2023 Amendments, including areas such as fiduciary duties, dealing with conflicts of interest, liability for unpaid shareholder capital contributions, and expanded duties upon company liquidation.
This article is part of our series of SHIHUI’s Insight releases on the 2023 Amendments to China’s Company Law. The series began with our Q&A, which provided our initial analysis into how the changes will affect foreign-invested limited liability companies in China, followed by a companion full English translation of the updated Company Law, and our compliance checklist to further assist such companies in navigating through the new regulations.
To receive our compliance checklist, and all of our past and future releases in this series on the 2023 Amendments, please contact us.
