Key points of the draft company law

Recently, the Company Law (Revised Draft) (hereinafter referred to as the Draft) was submitted to the 32nd meeting of the 13th the National People's Congress Standing Committee (NPCSC) for initial deliberation. On the basis of existing laws and regulations, the draft has greatly increased and revised nearly 70 articles. Based on the revision of this draft, Desai French businessmen summarized the legislative trends that entrepreneurs should care about. 1. Simplify the establishment and withdrawal mechanism of companies and promote market prosperity. Allow one person (natural person or legal person) to set up a joint stock limited company. Previously, China only stipulated that one person could set up a limited liability company. This revision will further encourage self-employment and stimulate market vitality. 2. Shareholders are allowed to use "equity and creditor's rights" as the mode of capital contribution. The draft affirms the legitimacy of shareholders using equity and creditor's rights as the company's capital contribution, and provides more convenient channels for corporate financing methods such as "debt-to-equity swap" and "equity incentive". 3. Simplify the company exit procedure. Unless otherwise agreed, the directors of the company are the liquidation obligors and shall perform the liquidation obligations. If the company has not incurred debts or has paid off all debts during its existence, it can apply simple cancellation of registration to protect its legal withdrawal with the commitment of all shareholders. Second, strengthen the division of functions between the legal representative and senior management personnel, and strengthen the legal effect of the legal representative of the company engaging in civil activities abroad. For example, when a company is established or changed, it shall submit documents such as establishment registration and application for change directly signed by the legal representative; The legal representative engages in activities in the name of the company, and the consequences shall be borne by the company. 2. Improve the sense of responsibility of company directors and senior managers. It is clear that the above-mentioned personnel should bear the obligation of loyalty and diligence, strengthen the responsibility of maintaining the company's capital enrichment, and the joint liability of the company for harming the interests of minority shareholders. Third, add "state-funded companies" 1 to strengthen the leadership of state-owned enterprises. Established the legal right to "study and discuss major management issues of the company". 2. Expanded the scope of application of wholly state-owned enterprises. The scope of application will be expanded from a wholly state-owned limited liability company to a wholly state-owned and state-controlled limited liability company or joint stock limited company. This draft accords with the practical needs of China's economic development and provides a strong support for improving China's modern enterprise system. For entrepreneurs, the new rules proposed in this draft also bring new challenges to corporate governance, risk control and compliance. Desai lawyer will continue to pay attention to the legislative trends and provide legal services for enterprises with the times in combination with his rich practical experience in serving corporate clients for a long time.