New Company Law in China

Next July 1, 2024, the new Company Law comes into force in the People’s Republic of China. Some of the objectives of this law are homogenization in the treatment of Chinese and foreign companies. The aim is to align these regulations with the Commercial Law that governs other Western countries, as well as commonly accepted norms within comparable International Law. This is intended to improve some of the difficulties that appeared in relation to previous legislation.

Some of the most relevant innovations affect contributions of social capital, business management, or transfers of Capital and Liquidation. All of them have tax implications and improvements in governance, including stricter transparency controls. The application of this new regulation may mean a slowdown or increase in the number of administrative procedures for carrying out activities in China. Therefore, it is advisable to reach agreements with companies of a similar or complementary nature (in terms of Joint Ventures), especially in Special Economic Zones (SEZ).