Enacted in 1993, the Company Law has been revised several times with the latest adoption in 2018. In the amendment, long standings provisions are changed to simultaneously increase protection for bona fide parties and further regulate unethical practices. Major alterations are outlined below.

Share classes

Joint stock limited companies are permitted to issue other types of shares. Other than ordinary shares, shareholders may issue preferred shares and deferred shares, shares with a different number of voting rights, and determine corresponding rights protection for such shareholders.

Simplified procedures

Provisions to simplify administrative procedures improve the facilitation of company operations. Specifically, capital reduction and simplified deregistration procedures under specific conditions are simplified.

Registration Rules

A company registration chapter is added to enhance the administration procedure. Such addition elevates the Administrative Regulations of the People’s Republic of China on the Registration of Market Entities (effective on March 1, 2022) to the rule of law. In the chapter, further clarification is provided on matters and procedures related to the company’s establishment registration, alteration registration, and cancellation registration, and the company registration authority is instructed to optimise the registration process and improve the efficiency and convenience of registration.
Powers and duties of directors, supervisors, and senior management

The duties of loyalty and diligence of the directors, supervisors, and senior management are further stressed to protect stakeholder interests. Joint and respective liable are provisioned for those who cause damage to others in an intentional act or gross negligence whilst performing duties.

Shareholders’ right to know

Another addition is the right for shareholders to consult the register of shareholders and accounting vouchers. Shareholders can entrust agencies to access information, enable professionals of agencies to collate and analyze information and define reasonable decisions based on such insights.

The Revised Draft is envisioned to be adopted in 2023. For companies, the revisions advance the corporate legal framework in China and provide a greater legal basis for courts to handle disputes.

Furthermore, we foresee forthcoming corporate legislation supplementing the Revised Draft (once adopted) and arising from needs of social development, such as the latest series of laws, regulations, and standards related to information and data protection and security.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

The post Revised draft company law in China: paving a significant chapter in corporate law appeared first on China Collaborative Group.

Die Gerichte haben bei der notwendigen Kontrolle den unternehmerischen Entscheid wie nachfolgend zu beurteilen, wobei der Richter nicht sein unternehmensfremdes Wissen und Ermessen anstelle der Unternehmensführung setzen darf.

Voraussetzungen für den korrekten Entscheid sind:

• Formell ordnungsgemässer Beschluss (Einladung, Protokoll);
• Kein Interessenkonflikt (Einhaltung der Ausstandsregelungen);
• Beachtung von Gesetz und Statuten (Compliance);
• Einholung aller zumutbaren Informationen und Abwägung der möglichen Alternativen.

Ein Verwaltungsrat oder Geschäftsführer sollte seine Entscheidungen so vorbereiten dass die notwendigen Beweise vorliegen, um das mangelfreie Zustandekommen des Entscheids zu belegen. Aus diesem Grund ist ein Beschlussprotokoll in der Regel ungenügend und die Erstellung eines Beratungsprotokolls zu empfehlen. Ebenfalls von Wichtigkeit ist die stete Prüfung, ob ein Interessenkonflikt vorliegen könnte.

Als Faustregel gilt deshalb: je grösser das unternehmerische Risiko, umso wichtiger ist die Nachweisbarkeit des korrekten Zustandekommens des Entscheides.

Haben Sie weitere Fragen? Das HütteLAW-Team berät Sie gerne.

Author: Michael Endres

This content appears as a courtesy of HütteLAW, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.huettelaw.ch.

The post Business Judgement Rule appeared first on China Collaborative Group.