One Hesitant Step Forward: New Company Law Brings Mixed Feelings

November 30, 2005 | BY

clpstaff &clp articles

Whilst China's new Company Law is not all it could have been, it goes a long way in introducing protection for minority shareholders, improving corporate governance and ensuring more realistic capitalization requirements for the establishment of companies.

By Jean-Marc Deschandol and Charles Desmeules, Norton Rose, Beijing

The new PRC Company Law (中华人民共和国公司法)('New Company Law') was issued by the National People's Congress Standing Committee on October 27 2005 and was effective starting January 1 2006. As expected, the New Company Law relaxes certain capitalization requirements for the establishment of companies and introduces provisions protecting minority shareholders and improving corporate governance. However, compared with the innovative draft amendments circulated in the last year, the final text of the New Company Law provides yet another example of the cautious, step-by-step legislative approach adopted by the PRC legislator. This article provides an overview of the major features and regrettable omissions in the new law.

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