Interpretation of Key Points for Amending Company Articles After the New Company Law
The newly revised Company Law took effect on July 1, 2024, introducing significant adjustments to corporate governance structures, shareholder rights and obligations, and the company capital system, among other areas. Existing companies are required to complete amendments to their articles of association within the transition period to comply with the new legal requirements.
Key amendments to the articles of association include: adjustments to the subscribed capital contribution timeline, as the new law requires shareholders of a limited liability company to pay in full their subscribed capital contributions within five years; improvements to the legal representative system, clarifying the scope of selection and obligations of the legal representative; and the introduction of a shareholder forfeiture system, which allows for restrictions on the corresponding rights of shareholders who fail to make capital contributions on schedule.
Related-party transactions that harm the company's interests may be challenged. The controlling shareholder or director may be held liable for damages.
It is advisable for the company to conduct a comprehensive review of its existing articles of association under the guidance of legal counsel, and to formulate an amendment plan in light of the requirements of the new law and the company's actual circumstances. The amendment plan for the articles of association shall be deliberated and approved by the shareholders' meeting, and the industrial and commercial change registration procedures shall be completed in a timely manner.
