The Company Law of the People's Republic of China, as amended for the second time at the Seventh Session of the Standing Committee of the 14th National People's Congress on December 29, 2023, will come into force on July 1, 2024. In order to solve the problem of the convergence and application of the old and new laws after the implementation of the Company Law, the Supreme People's Court formulated the Several Provisions of the Supreme People's Court on the Temporal Effect of the Application of the Company Law of the People's Republic of China (Fa Shi [2024] No. 7, hereinafter referred to as the "Provisions"), which was adopted by the 1922nd meeting of the Adjudication Committee of the Supreme People's Court on June 27, 2024, and will come into force on July 1, 2024.
Guided by Xi Jinping Thought on the Rule of Law, the Provisions adhere to a problem-oriented approach, and make specific provisions on situations in which the time effect needs to be clarified in the current trial work of the people's courts. While adhering to the principle of non-retroactivity of the law, in order to better play the role of the Company Law in regulating and guiding economic life, the Provisions distinguish between substantive amendments, new provisions and specific detailed provisions according to the revision of the provisions of the Company Law, and list the specific provisions applicable retroactively. There are eight articles in the full text, the main contents of which include: the general provisions and favorable retroactivity rules of the Company Law, the favorable retroactivity rules on the validity of civil juristic acts, the favorable retroactivity rules for contract performance, the blank retrospective rules of the newly added provisions, the retroactive application rules of the detailed provisions, the legal application of liquidation liability, the rules on res judicata over retroactivity, and the effective time.
The "Several Provisions of the Supreme People's Court on the Temporal Effect of the Application of the Company Law of the People's Republic of China" was passed by the 1922nd meeting of the Adjudication Committee of the Supreme People's Court on June 27, 2024, and is hereby promulgated, to take effect on July 1, 2024.
Supreme People's Court
June 29, 2024
Legal Interpretation [2024] No. 7
The Supreme People's Court's Regard
Application of the Company Law of the People's Republic of China
Several provisions on temporal effect
(Adopted at the 1922nd meeting of the Adjudication Committee of the Supreme People's Court on June 27, 2024, to take effect on July 1, 2024)
In order to correctly apply the Company Law of the People's Republic of China, as amended for the second time at the Seventh Session of the Standing Committee of the 14th National People's Congress on December 29, 2023, and in accordance with the Legislation Law of the People's Republic of China, the Civil Code of the People's Republic of China and other legal provisions, the following provisions are made on issues related to the temporal validity of the Company Law in the trial of civil disputes related to companies by the people's courts.
Article 1 The provisions of the Company Law shall apply to civil disputes arising from legal facts after the implementation of the Company Law.
In the case of a civil dispute arising from legal facts before the implementation of the Company Law, where the law or judicial interpretation at that time has provisions, the provisions of the law or judicial interpretation at that time shall apply, but the application of the Company Law is more conducive to achieving its legislative purpose, and the provisions of the Company Law shall apply:
(1) Before the implementation of the Company Law, if the convening procedures of the company's shareholders' meeting are improper, and the shareholders who have not been notified to attend the meeting request the people's court to revoke it within one year from the date of making the resolution, the provisions of paragraph 2 of Article 26 of the Company Law shall apply;
(2) Where the resolution of the shareholders' meeting or the resolution of the board of directors before the implementation of the Company Law is confirmed by the people's court in accordance with law that it is not established, and there is a dispute over the validity of the legal relationship formed between the company and the bona fide counterpart in accordance with the resolution, the provisions of paragraph 2 of Article 28 of the Company Law shall apply;
(3) Before the implementation of the Company Law, if a shareholder makes a capital contribution with creditor's rights, and a dispute arises due to the form of capital contribution, the provisions of Paragraph 1 of Article 48 of the Company Law shall apply;
(4) Before the implementation of the Company Law, if a shareholder of a limited liability company transfers equity to a person other than the shareholder, and a dispute arises due to the transfer of equity, the provisions of paragraph 2 of Article 84 of the Company Law shall apply;
(5) Before the implementation of the Company Law, if the company violates the provisions of the law by distributing profits to shareholders or reducing the registered capital and causes losses to the company, and disputes arise due to liability for damages, the provisions of Articles 211 and 226 of the Company Law shall apply respectively;
(6) Where a resolution on profit distribution is made before the implementation of the Company Law, and a dispute arises over the time limit for profit distribution, the provisions of Article 212 of the Company Law shall apply;
(7) Before the implementation of the Company Law, if the company reduces its registered capital, and the shareholders have a dispute over the corresponding reduction of the amount of capital contribution or the number of shares, the provisions of paragraph 3 of Article 224 of the Company Law shall apply.
Article 2 The provisions of the Company Law shall apply to the following circumstances in which civil juristic acts related to the company before the implementation of the Company Law are found to be invalid in accordance with the laws and judicial interpretations at that time and are found to be valid in accordance with the Company Law, and disputes arise due to the validity of civil juristic acts:
(1) Where it is agreed that the company shall be jointly and severally liable for the debts of the invested enterprise, and there is a dispute over the validity of the agreement, the provisions of paragraph 2 of Article 14 of the Company Law shall apply;
(2) If the company makes a corporate resolution to use capital reserve to make up for losses, and there is a dispute over the validity of the resolution, the provisions of Article 214 of the Company Law shall apply;
(3) If a company merges with a company holding more than 90% of the shares, and there is a dispute over the validity of the merger resolution, the provisions of Article 219 of the Company Law shall apply.
Article 3 In the event of a dispute arising from the performance of a contract related to a company concluded before the implementation of the Company Law, and the performance of the contract continues until after the implementation of the Company Law, the provisions of the law and judicial interpretation at that time shall apply. The provisions of the Company Law shall apply to the following circumstances in which disputes arise due to the performance of the Company Law after the implementation of the Company Law:
(1) The provisions of paragraph 2 of Article 140 of the Company Law shall apply to the contract of holding shares of listed companies on behalf of others;
(2) The provisions of Article 141 of the Company Law shall apply to the contract in which a holding subsidiary of a listed company acquires the shares of the listed company;
(3) The provisions of Article 163 of the Company Law shall apply to contracts in which a company limited by shares provides gifts, loans, guarantees and other financial assistance for others to obtain the shares of the company or its parent company.
Article 4 In the case of a civil dispute arising from legal facts before the implementation of the Company Law, the provisions of the Company Law shall apply to the following circumstances that are not provided for in the laws and judicial interpretations at that time but are provided for in the Company Law:
(1) If a shareholder transfers an equity that has not yet completed the capital contribution period, and the transferee fails to pay the capital contribution in full on time, the provisions of Paragraph 1 of Article 88 of the Company Law shall apply to the determination of the liability of the transferor or the transferee for capital contribution;
(2) Where the controlling shareholder of a limited liability company abuses the rights of shareholders and seriously harms the interests of the company or other shareholders, and the other shareholders request the company to acquire its equity at a reasonable price, the provisions of paragraphs 3 and 4 of Article 89 of the Company Law shall apply;
(3) Where a shareholder who votes against the resolution of the shareholders' meeting of a company limited by shares requests the company to acquire its shares at a reasonable price, the provisions of Article 161 of the Company Law shall apply;
(4) The provisions of Article 180 of the Company Law shall apply to the determination of the civil liability of the controlling shareholder or actual controller who does not serve as a director of the company in carrying out the company's affairs;
(5) The provisions of Article 192 of the Company Law shall apply to the determination of civil liability for the controlling shareholder or actual controller of the company instructing the directors or senior management personnel to engage in activities that harm the interests of the company or shareholders;
(6) Other circumstances that do not clearly deviate from the reasonable expectations of the relevant parties.
Article 5 In the case of civil disputes arising from legal facts before the implementation of the Company Law, the laws and judicial interpretations at that time have already provided in principle for the following situations where the Company Law has made specific provisions, the provisions of the Company Law shall apply:
(1) The articles of association of a company limited by shares have a restriction on the transfer of shares, and if a dispute arises due to such provisions, the provisions of Article 157 of the Company Law shall apply;
(2) The provisions of Articles 181, Article 182, Paragraph 1, Article 183 and Article 184 of the Company Law shall apply to the determination of liability for similar businesses such as misappropriation of company funds, illegal related party transactions, improper seeking of business opportunities of the company, and business restrictions by the company's supervisors;
(3) The provisions of Articles 183 and 184 of the Company Law shall apply to the determination of the liability of the company's directors and senior managers for similar businesses that improperly seek business opportunities or business restrictions;
(4) The provisions of Article 182 and Article 265, Paragraph 4 of the Company Law shall apply to the determination of the scope of the entity of the related party relationship and the nature of the related party transaction.
Article 6 If the legal fact that liquidation should be carried out occurred before the implementation of the Company Law, and a dispute arises due to the liquidation liability, the provisions of the law and judicial interpretation at that time shall apply.
If the legal fact that should be liquidated occurred before the implementation of the Company Law, but the effective date of the Company Law has not yet reached 15 days, the provisions of Article 232 of the Company Law shall apply, and the time limit for the liquidation obligor to perform the liquidation obligation shall be recalculated from the effective date of the Company Law.
Article 7 In a civil dispute case that has been finalized before the implementation of the Company Law, where the parties apply for a retrial or the people's court decides to retry in accordance with the trial supervision procedures, the provisions of the laws and judicial interpretations at that time shall apply.
Article 8: These Provisions take effect on July 1, 2024.
Source: Information Bureau of the Supreme People's Court, Official Account of the Supreme People's Court
Editor: Xing Tianran
Editor of this article: Shi Yang
Review of this article: Wang Fang
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