Corporate and M&A

The National People’s Congress of China has made substantive changes to the current PRC Company Law (2018 version) in the draft Amendment to the Company Law (“Draft Amendment”) published for public consultation on 24 December 2021. The Draft Amendment, upon implementation, will directly affect existing foreign-invested enterprises taking the form of limited liability companies and companies limited by shares (“FIE”) conducting business in China in a number of aspects.

With the replacement of the three previous laws (the Chinese-Foreign Equity Joint Venture (“EJV”) Law, the ChineseForeign Cooperative Joint Venture (“CJV”) Law and the Wholly Foreign Owned Enterprise Law) governing foreign investment by the PRC Foreign Investment Law (“FIL”) which took effect on 1 January 2020, FIEs are subject to the PRC Company Law which applies to both domestic and foreign invested companies. Under the FIL, FIEs (especially the EJVs and CJVs) have a five-year transitional period (up to 31 December 2024) to adjust their corporate governance structure in accordance with the Company Law. We will discuss several key aspects that FIEs should pay attention to in the Draft Amendment.

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