What Should Foreign-Invested Enterprises Do As the Five-Year Transition Period Deadline Approaches?

Summary

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• The Foreign Investment Law provides a Five-Year Transition Period, during which FIEs incorporated in accordance with the Three FIE Laws are required to adjust their organization forms and organization structures to comply with the Company Law and the Partnership Enterprise Law
• Sino-foreign cooperative joint ventures and wholly foreign-owned enterprises that were incorporated under the Three FIE Laws without legal person status are required to complete the adjustment and change registration of their organization forms according to the Partnership Enterprise Law
• FIEs are required to adjust their highest authority organ, method for election of legal representative or director, deliberation and voting mechanism, etc. to comply with the Company Law
• Where FIEs are required to adjust their organization forms and structures, they must also pay attention to amending their Articles of Association accordingly and submit required materials to the local market regulatory authorities for change registration (filing)

I.     What is the Five-Year Transition Period?

The PRC Foreign Investment Law (the "Foreign Investment Law") (中华人民共和国外商投资法) was officially implemented on January 1, 2020, and in accordance with Article 42 thereof, the PRC Sino-Foreign Equity Joint Ventures Law (the "Sino-Foreign Equity Joint Ventures Law") (中华人民共和国中外合资经营企业法), the Wholly Foreign-owned Enterprises Law (the "Wholly Foreign-owned Enterprises Law") (中华人民共和国外资企业法) and the PRC Sino-foreign Cooperative Joint Ventures Law (the "Sino-foreign Cooperative Joint Ventures Law") (中华人民共和国中外合作经营企业法) (collectively the "Three FIE Laws") were simultaneously repealed.