NPC Standing Committee Circulates Second Draft of Company Law Amendment
Practical Law China
NPC Standing Committee Circulates Second Draft of Company Law Amendment
Practical Law China
On 30 December 2022, the National People’s Congress (NPC) Standing Committee released the Company Law of the People’s Republic of China (Revised Draft for Second Review).
The second draft contains significant changes against the first draft, including revisions related to corporate governance, registered capital of LLCs, transfers of equity interests in LLCs., and shares of joint stock companies.
In the February edition of GC Agenda China (subscription required), Morrison Foerster partner Paul McKenzie commented on the revised draft that, “The thinking of legislators on the Company Law evidently continues to evolve. The new draft contemplates a number of liberalizations over the prior draft, including a widening of the eligibility to serve as legal representative of a company so that any director could serve, as well as the possibility for a company to set up an audit committee in lieu of a board of supervisors. The new draft also provides for a streamlining of certain procedures. The burning question is when will the Company Law actually be amended. This is not yet clear. It’s possible an amendment might pass this year, but equally possible that there are multiple further drafts still to come and the law will not be amended until 2024 or later.”
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