On June 30, 2024, 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) was officially promulgated and came into force on July 1, 2024. This provision is a supporting judicial interpretation to cooperate with the implementation of the new Company Law, which mainly addresses the issue of the convergence and application of the old and new Company Law, with a total of eight provisions. Although the number of articles is small, it involves many specific provisions of the new Company Law, and has clear guiding value for the specific application of the new Company Law, especially the new provisions and detailed provisions in the new Company Law, which is worthy of attention. In order to facilitate the comparative study with the new Company Law, on the basis of the Interpretation Provisions, we hereby sort out the corresponding or related provisions of the New Company Law one by one, and form a comparison table as follows:
| Provisions on the validity of time | New Corporate Law |
| Article 1 [General Provisions and Beneficial Retroactivity] 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. | Paragraph 1 of Article 266 of the Company Law (Revised in 2023) This Law shall come into force on July 1, 2024. Paragraph 2 of Article 26 A shareholder who has not been notified to attend a shareholders' meeting may request the people's court to revoke it within 60 days from the date on which he knows or should know that the resolution of the shareholders' meeting has been made; If the right of revocation is not exercised within one year from the date of the resolution, the right of revocation shall be extinguished. Paragraph 2 of Article 28 If the resolution of the shareholders' meeting or the board of directors is declared invalid, revoked or confirmed by the people's court as invalid, revoked or confirmed as invalid, the civil legal relationship formed between the company and the bona fide counterpart in accordance with the resolution shall not be affected. Article 48, Paragraph 1 Shareholders may make capital contributions in monetary terms, or in kind, intellectual property rights, land use rights, equity rights, creditor's rights, and other non-monetary assets that can be valued in monetary terms and can be transferred in accordance with the law; However, there is an exception for property that is not allowed to be used as capital contribution as stipulated by laws and administrative regulations. Paragraph 2 of Article 84 Where a shareholder transfers equity to a person other than a shareholder, it shall notify the other shareholders in writing of the quantity, price, payment method and term of the equity transfer, and the other shareholders shall have the right of first refusal under the same conditions. If the shareholder does not reply within 30 days from the date of receipt of the written notice, it shall be deemed to have waived the right of first refusal. If two or more shareholders exercise the right of first refusal, they shall negotiate to determine their respective purchase ratios; If the negotiation fails, the right of first refusal shall be exercised in accordance with the proportion of their respective capital contributions at the time of transfer. Article 211 Where a company distributes profits to shareholders in violation of these regulations, the shareholders shall return the profits distributed in violation of the regulations to the company; If losses are caused to the company, the shareholders and the directors, supervisors and senior managers who are responsible shall be liable for compensation. Article 226 Where the registered capital is reduced in violation of the provisions of this Law, the shareholders shall return the funds they have received, and the capital contributions of the shareholders shall be restored to their original state; If losses are caused to the company, the shareholders and the directors, supervisors and senior managers who are responsible shall be liable for compensation. Article 212 Where the shareholders' meeting makes a resolution on the distribution of profits, the board of directors shall make the distribution within six months from the date of the resolution of the shareholders' meeting. Paragraph 3 of Article 224 If a company reduces its registered capital, it shall reduce the amount of capital contribution or shares in accordance with the proportion of capital contributed or shares held by shareholders, unless otherwise provided by law, otherwise agreed by all shareholders of a limited liability company, or otherwise provided by the articles of association of a company limited by shares. |
| Article 2 [Beneficial Retroactivity of the Effect of Civil Juristic Acts] The provisions of the Company Law shall apply to the following circumstances in which a dispute arises over the validity of a civil juristic act before the implementation of the Company Law, which is found to be invalid in accordance with the laws and judicial interpretations at the time and is found to be valid in accordance with the Company Law: (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. | Paragraph 2 of Article 14 of the Company Law (Revised in 2023) stipulates that a company shall not become a contributor jointly and severally liable for the debts of the invested enterprise. Article 214 The company's provident fund shall be used to make up for the company's losses, expand the company's production and operation, or increase the company's registered capital. The provident fund to make up for the company's losses should first use the arbitrary provident fund and the statutory provident fund; If it still cannot be made up, the capital reserve may be used in accordance with the regulations. When the statutory reserve fund is converted into an increase in registered capital, the reserve fund retained shall not be less than 25% of the registered capital of the company before the conversion. Article 219 In the event of a merger between a company and a company holding more than 90% of the shares, the merged company shall not be subject to a resolution of the shareholders' meeting, but shall notify the other shareholders, who shall have the right to request the company to acquire its equity or shares at a reasonable price. If the price paid by the company on a consolidated basis does not exceed 10% of the company's net assets, it may be resolved without a resolution of the shareholders' meeting; However, unless otherwise provided in the Articles of Association. If the company merges in accordance with the provisions of the preceding two paragraphs without a resolution of the shareholders' meeting, it shall be resolved by the board of directors. |
| Article 3 [Application of Law for Contract Performance] If a contract related to the company entered into before the implementation of the Company Law continues until the implementation of the Company Law, and a dispute arises due to the performance before 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. | Paragraph 2 of Article 140 of the Company Law (revised in 2023) prohibits holding shares of listed companies on behalf of others in violation of laws and administrative regulations. Article 141 A holding subsidiary of a listed company shall not acquire the shares of the listed company. If a holding subsidiary of a listed company holds shares of a listed company due to a merger, exercise of pledge rights, etc., it shall not exercise the voting rights corresponding to the shares it holds, and shall promptly dispose of the shares of the relevant listed company. Article 163 The Company shall not provide gifts, loans, guarantees or other financial assistance for others to obtain the shares of the Company or its parent company, except for the implementation of the Company's employee stock ownership plan. For the benefit of the company, the company may provide financial assistance for others to obtain the shares of the company or its parent company upon resolution of the shareholders' meeting, or a resolution made by the board of directors in accordance with the articles of association or the authorization of the shareholders' meeting, but the cumulative total amount of financial assistance shall not exceed 10% of the total issued share capital. The resolution of the board of directors shall be passed by more than two-thirds of all directors. If the provisions of the preceding two paragraphs are violated and losses are caused to the company, the directors, supervisors and senior managers who are responsible shall be liable for compensation. |
| Article 4 [Blank Retroactivity] In the case of civil disputes 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. | Paragraph 1 of Article 88 of the Company Law (Revised in 2023) If a shareholder transfers the equity of the subscribed capital contribution but has not yet completed the capital contribution period, the transferee shall bear the obligation to pay the capital contribution; If the transferee fails to pay the capital contribution in full on time, the transferor shall bear supplementary liability for the capital contribution that the transferee fails to pay on time. Paragraphs 3 and 4 of Article 89 If the controlling shareholder of the company abuses the rights of shareholders and seriously harms the interests of the company or other shareholders, the other shareholders have the right to request the company to acquire their shares at a reasonable price. The equity of the Company acquired by the Company due to the circumstances specified in paragraphs 1 and 3 of this Article shall be transferred or cancelled in accordance with the law within six months. Article 161 In any of the following circumstances, a shareholder who votes against the resolution of the shareholders' meeting may request the company to acquire its shares at a reasonable price, except for a company that publicly issues shares: (1) The company has not distributed profits to shareholders for five consecutive years, and the company has made profits for five consecutive years and meets the conditions for distributing profits stipulated in this Law; (2) The company transfers its main property; (3) When the business period specified in the articles of association of the company expires or other reasons for dissolution as stipulated in the articles of association occur, the shareholders' meeting shall pass a resolution to amend the articles of association to make the company exist. If the shareholder and the company cannot reach a share acquisition agreement within 60 days from the date of the resolution of the shareholders' meeting, the shareholder may file a lawsuit with the people's court within 90 days from the date of the resolution of the shareholders' meeting. The shares of the Company acquired by the Company due to the circumstances specified in the first paragraph of this Article shall be transferred or cancelled in accordance with the law within six months. Article 180 Directors, supervisors and senior managers shall have a duty of loyalty to the Company, shall take measures to avoid conflicts between their own interests and the interests of the Company, and shall not abuse their authority to seek improper benefits. Directors, supervisors and senior management have a duty of diligence to the company, and shall exercise reasonable care in the best interests of the company in the performance of their duties. Where the controlling shareholder or actual controller of a company does not serve as a director of the company but actually performs the company's affairs, the provisions of the preceding two paragraphs apply. Article 192 Where the controlling shareholder or actual controller of the company instructs the directors or senior management to engage in acts that harm the interests of the company or its shareholders, it shall be jointly and severally liable with the directors or senior managers. |
| Article 5 [Retroactivity of Detailed Provisions] 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 that the provisions of the Company Law shall apply to the following circumstances: (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 157 of the Company Law (Revised in 2023) The shares held by the shareholders of a company limited by shares may be transferred to other shareholders or to persons other than the shareholders; If the articles of association of the company have restrictions on the transfer of shares, the transfer shall be carried out in accordance with the provisions of the articles of association. Article 181 Directors, supervisors and senior managers shall not engage in any of the following acts: (1) Embezzlement of company property or misappropriation of company funds; (2) Storing the company's funds in an account opened in his or her own name or in the name of another individual; (3) Exploiting authority to bribe or accept other illegal income; (4) Accepting commissions from others for transactions with the Company as their own; (5) Unauthorized disclosure of company secrets; (6) Other acts that violate the duty of loyalty to the company. Article 182 Directors, supervisors and senior managers who directly or indirectly conclude contracts or conduct transactions with the Company shall report to the Board of Directors or the shareholders' meeting on matters related to the conclusion of contracts or transactions, and shall be approved by the Board of Directors or the shareholders' meeting in accordance with the provisions of the Articles of Association. The provisions of the preceding paragraph shall apply to the close relatives of directors, supervisors, or senior managers, enterprises directly or indirectly controlled by directors, supervisors, senior managers, or their close relatives, as well as related persons with whom directors, supervisors, or senior managers have other related relationships, and enter into contracts or conduct transactions with the company Article 183 Directors, supervisors and senior managers shall not take advantage of their positions to seek business opportunities belonging to the company for themselves or others. However, there is an exception in any of the following circumstances: (1) Report to the board of directors or shareholders' meeting, and pass by the resolution of the board of directors or shareholders' meeting in accordance with the provisions of the articles of association; (2) According to the provisions of laws, administrative regulations or the articles of association of the company, the company cannot take advantage of the business opportunity. Article 184 Directors, supervisors and senior managers who fail to report to the board of directors or the shareholders' meeting and are approved by the board of directors or the shareholders' meeting in accordance with the provisions of the articles of association of the company shall not operate the same kind of business as the company for which they work or for others. Article 265, paragraph 4 The following terms shall have the meanings of the following terms in this Law: …… (4) "Affiliation" refers to the relationship between the controlling shareholder, actual controller, director, supervisor and senior management of the company and the enterprise directly or indirectly controlled by the company, as well as other relationships that may lead to the transfer of the company's interests. However, state-controlled enterprises are not only related to each other because they are also controlled by the state. |
| Article 6 [Application of the Law on Company Liquidation] If the legal fact that the 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 232 of the Company Law (Revised in 2023) If a company is dissolved due to the provisions of Items 1, 2, 4 and 5 of Paragraph 1 of Article 229 of this Law, it shall be liquidated. The directors are the liquidation obligors of the company and shall form a liquidation group for liquidation within 15 days from the date of the occurrence of the cause of dissolution. The liquidation group shall be composed of directors, unless otherwise provided in the articles of association of the company or the resolution of the shareholders' meeting to elect another person. If the liquidation obligor fails to perform the liquidation obligation in a timely manner and causes losses to the company or creditors, it shall be liable for compensation. |
| Article 7 [Res judicata is superior to retroactive effect] In civil dispute cases that have 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: [Implementation Time] These Provisions shall take effect on July 1, 2024. | Article 266 of the Company Law (Revised in 2023) This Law shall come into force on July 1, 2024. If a company registered and established before the implementation of this Law has made a capital contribution that exceeds the time limit specified in this Law, it shall be gradually adjusted to within the time limit specified in this Law, unless otherwise provided by laws, administrative regulations or the State Council; If the term and amount of capital contribution are obviously abnormal, the company registration authority may require it to adjust in a timely manner in accordance with the law. The specific implementation measures are to be formulated by the State Council. |
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Comparison and Key Interpretation of the Provisions of the New Company Law
China Legal Publishing House, 2024 edition
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Comparison of the old and the new, interpretation of key points, related provisions, and case reference
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