Lawmakers reviewing changes to Company Law
Chinese lawmakers are reviewing a draft revision of the country's Company Law to facilitate corporate operations, which industry experts said will stimulate market vitality and drive the healthy development of companies as well as the capital market.
The new draft improves the system for company registration and facilitates the establishment and exit channels of companies. It offers greater autonomy for companies in terms of corporate structure.
It also improves the capital system for companies, boosts the responsibility system of company shareholders and management personnel, and highlights social responsibility efforts of enterprises.
"The new draft is an improvement of the basic rules for a company－the most important market entity," said Wu Rong, partner of Beijing Jingtian & Gongcheng, a leading Chinese law firm.
"More than 30 percent of provisions were newly added or revised, which clearly showed the country's response to companies' current bottlenecks in their operations," Wu said.
Consisting of 15 chapters and 260 articles, the new draft updates the current law by revising or adding around 70 articles. The new draft was submitted to the session of the Standing Committee of the National People's Congress for deliberation.
"It also demonstrated the country's full determination in driving the market vitality through improving registration and capital systems for companies and regulating improper investing and financing behaviors," Wu added.
Adopted in 1993, China's Company Law has been amended several times. The current version was enacted after an amendment in 2018.
The new draft also sets up a chapter specifically for State-funded enterprises. According to Wang Ruihe, an official with the Legislative Affairs Commission of the NPC Standing Committee, the revision is necessary for deepening reforms in State-owned enterprises and improving the modern corporate system with Chinese characteristics.
It is also important in optimizing the business environment, enhancing property rights protection and facilitating the sound development of the capital market, Wang said.
