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The sixth revision of China’s Company Law represents the most extensive amendment in its history. From stricter capital injection rules to enhanced corporate governance, the changes introduced in the New Company Law have far-reaching implications for businesses, including foreign invested enterprises (FIEs) operating in or entering the China market.

Since January 1, 2020, the Company Law has governed both wholly foreign-owned enterprises (WFOEs) and joint ventures (JVs), following the enactment of the Foreign Investment Law (FIL). Most FIEs must align with the provisions of the New Company Law from July 1, 2024, while those established before January 1,2020 have bit more time for adjustments due to the five-year grace period provided by the FIL. The final deadline for their alignment is December 31, 2024.

FIEs are advised to thoroughly understand the provisions of the New Company Law in how it will affect them, and initiate necessary adjustments to ensure compliance and optimize strategic planning. It is crucial that companies commence preemptive assessments and actions early on, recognizing that several aspects may entail lengthy processes, including reporting to overseas headquarters, seeking board-level approvals, adjusting agreements, and negotiating with domestic partners (in the case of JVs).

In this publication, we guide foreign investors through the implications of the New Company Law for existing and new FIEs and relevant stakeholders. We begin with an overview of the revision’s background and objectives, followed by a summary of key changes. Our in-depth analysis, from a foreign stakeholder perspective, illuminates the practical implications. Lastly, we explore tax impacts alongside the revisions, demonstrating how the New Company Law may shape future business transactions and arrangements.

In this issue:

• The New Company Law in China: An Overview
• Considerations for Foreign Stakeholders and FIEs
• Tax Implications Under the New Company Law