On July 1, the newly revised Company Law of the People's Republic of China came into effect. The new Company Law has shown bright spots in improving the corporate capital system, optimizing the corporate governance structure, strengthening the protection of the rights and interests of small and medium-sized shareholders, and strengthening the responsibilities of controlling shareholders, actual controllers, directors, supervisors and senior executives.
◆ The new Company Law clarifies that the newly added equity and debt rights can be used as non-monetary property contributions, that is, shareholders can make capital contributions in monetary terms, or they can use physical objects, intellectual property rights, land use rights, equity rights, creditor's rights, etc., which can be valued in currency and can be transferred in accordance with the law as capital contributions.
■ Financial Investment News reporter Liu Min
On July 1, the newly revised Company Law of the People's Republic of China (hereinafter referred to as the "New Company Law") came into effect. The new Company Law has shown bright spots in improving the corporate capital system, optimizing the corporate governance structure, strengthening the protection of the rights and interests of small and medium-sized shareholders, and strengthening the responsibilities of controlling shareholders, actual controllers, directors, supervisors and senior executives.
Through interviews with lawyers and scholars, the reporter of the Financial Investment News learned that the implementation of the new "Company Law" has a significant role in deepening the reform of state-owned enterprises and improving the modern enterprise system with Chinese characteristics, and at the same time helps to improve the governance level of listed companies, strengthen the protection of the legitimate rights and interests of small and medium-sized investors, and promote the high-quality development of the capital market.
Optimize the governance structure of "three committees and one layer".
Zhou Yousu, vice president of the Securities Law Research Association of the China Law Society and researcher of the Sichuan Academy of Social Sciences, said in an interview with a reporter from the Financial Investment News, "The newly revised "Company Law" is the largest revision since the promulgation of the "Company Law" in 1993, and it is also the one that involves the most articles, which directly or indirectly involves the capital market There are many contents, which have a very positive effect on the stable, sustainable and healthy development of the capital market. ”
The reporter of the Financial Investment News noted that the new "Company Law" optimizes the governance structure of the company's "three committees and one layer", that is, the shareholders' meeting, the board of directors, the board of supervisors and the senior management, improves the flexibility of the operation of the "three committees", highlights the core position of the board of directors in corporate governance, and improves the protection of directors' performance of duties and rights and interests. Introducing a single-tier corporate governance structure, the new Company Law allows companies to have only a board of directors and no board of supervisors. If the company only has a board of directors, it shall set up an audit committee in the board of directors to exercise the functions and powers of the board of supervisors. In the future, the board of supervisors or supervisors will no longer be a mandatory option for the corporate governance structure, which will help to enhance the flexibility of the corporate governance structure, so that listed companies can choose the appropriate organizational structure according to their own circumstances.
The new Company Law will reallocate the functions and powers of the shareholders' meeting and the board of directors. For example, the power of the shareholders' meeting to "decide on the company's business policy and investment plan" is deleted, and the board of directors "decides on the company's business plan and investment plan" is retained; Expand the functions and powers of the board of directors, for example, the shareholders' meeting can authorize the board of directors to make resolutions on the issuance of corporate bonds. At the same time, the new Company Law strengthens the supervisory function of the board of supervisors by adding a provision that "the board of supervisors may require directors and senior management to submit reports on the performance of their duties". The new Company Law clarifies that the articles of association of a listed company shall specify "the composition, powers and functions of the special committees of the board of directors, as well as the remuneration and evaluation mechanism of directors, supervisors and senior management".
In this regard, Yang Lilong, a partner of Chongqing Baijun Law Firm, said in an interview with a reporter from Financial Investment News, "The new "Company Law" points out a new direction for the corporate governance structure, and gives the company's shareholders more choices based on the general law of the market economy that the market determines the allocation of resources. For example, the shareholders' meeting may delegate other functions and powers to the board of directors, and the board of directors shall have an audit committee to exercise the functions and powers of the board of supervisors, and there shall be no board of supervisors. However, it also poses new challenges to corporate governance, such as the blank space in the number of audit committees, deliberation methods and voting procedures of limited liability companies, and whether the resolution without supervisors can be decided by written resolution with the consent of all shareholders, which requires further improvement of judicial practice. ”
Enrich the forms of capital contribution and encourage investment
The new Company Law clarifies that the registered capital of a limited liability company shall be the amount of capital contribution subscribed by all shareholders registered with the company registration authority. The amount of capital contribution subscribed by all shareholders shall be paid in full by the shareholders within five years from the date of establishment of the company in accordance with the provisions of the articles of association.
Li Dandan, a senior partner of Beijing Jingshi (Chengdu) Law Firm, said in an interview with a reporter from the Financial Investment News, "This legal provision has changed greatly compared with the Company Law before the amendment, and many companies have begun to reduce their capital for this reason, but there are also significant legal risks in the reduction of capital in violation of laws and regulations." She said that existing companies, i.e., those established before July 1, 2024, do not need to be too nervous. On February 6 this year, the State Administration for Market Regulation issued the Provisions of the State Council on the Implementation of the Registered Capital Registration and Management System of the Company Law of the People's Republic of China (Draft for Comments), which clearly set a three-year transition period for existing companies established before the implementation of the new Company Law.
In Li Dandan's view, because newly established enterprises no longer allow long-term subscription like the Company Law before the amendment, but require that they must be paid in place within five years from the date of establishment. It seems that the requirements are stricter, but in fact, it is also the reconstruction of the integrity system, which prevents the proliferation of leather bag companies and optimizes the overall business environment.
It is generally believed in the industry that one of the highlights of the revision of the Company Law is that equity and debt can be used as non-monetary assets. The new Company Law clarifies that the new equity and creditor's rights can be used as non-monetary property contributions, that is, shareholders can make capital contributions in monetary terms, or they can use physical objects, intellectual property rights, land use rights, equity, creditor's rights, etc., and can be valued in currency 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.
Li Dandan said, "This provision relieves the pressure of requiring companies to pay for five years. This is because this provision enriches the form of capital contribution of registered capital. In the past, there were many disputes in the market about equity contribution and debt contribution, but now their forms are recognized at the legal level, which alleviates the pressure of many shareholders who do not have monetary assets. ”
Zhou Yousu said, "This revision has a promoting effect on encouraging investment. However, due to the uncertainty of equity and debt contributions, this also increases the difficulty of supervision to a certain extent. ”
In addition, the new Company Law clarifies that listed companies shall truthfully, accurately and completely disclose information on shareholders and actual controllers in accordance with the law, and prohibit illegal holding of shares of listed companies on behalf of others. Industry insiders said that this is the first time that this issue has been regulated at the legal level, which is of great significance. It provides a clear legal basis for determining the effectiveness of the nominee shareholding of listed companies, which is conducive to promoting the standardization of information disclosure of listed companies.
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