In the News: New Negative List; FX Rules Upgrade; and Shareholders Litigation

China upgrades provisional foreign exchange rules

The State Administration of Foreign Exchange (SAFE) has upgraded a set of provisional guidelines covering China's online cross-border foreign currency transactions into mandatory rules. With the upgraded rules, all cross-border payment businesses are now required to register with local authorities. Cross-border payment businesses are those that mainly provide services for individuals and corporations using e-commerce platforms. Another requirement is for payment services to report client information to regulators when the cumulative monthly transaction value exceeds $200,000. In an announcement, SAFE said it is upgrading the rules to facilitate cross-border e-commerce settlement, promote healthy development of foreign exchange business, and prevent foreign exchange payment risks. The value of cross-border e-commerce transactions last year reached Rmb134.7 billion, or $20 billion, a 50% jump from a year earlier. SAFE spokeswoman Wang Chunying earlier said the regulator will continue to crack down on illegal foreign exchange activities and safeguard the genuine and legitimate demands of the real economy.

More from CLP: Circular on Further Promoting Exchange Control Reform and Improving Genuineness and Compliance Reviews; State-owned Assets Supervision and Administration Commission of the State Council, Measures for Regulation of the Overseas Investments of Enterprises under the Central Government

China allows shareholders to sue companies for harmful transactions

China's Supreme People's Court has issued a judicial interpretation of the PRC Company Law, allowing shareholders to file lawsuits if transactions harm the interests of the company. Based on the judicial interpretation, shareholders now have the right to file lawsuits requesting that contracts in related-party transactions be invalidated and revoked if such transactions are deemed harmful to company interests. The move by the Supreme Court is seen as part of the efforts to increase protection of the rights of small and medium-sized shareholders in the country. The new interpretation aims to create a better legal environment for the country's economic development and clarifies certain problems related to company law. The move also comes after the World Bank found that China's company law is not clear enough, especially on whether shareholders can remove incompetent directors, among others. The Supreme Court said shareholders can remove directors before the end of their terms.

More from CLP: Legislation roundup: Company Law, technology transfer and intellectual property; PRC Company Law (2018 Revision)