China Laws and Regulations Update in January 2024

1. Company Law of the People’s Republic of China (Revised)

Promulgated by Standing Committee of the National People’s Congress

Promulgated date: 13 December, 2023

Implementation date: 28 December, 2023

Document number: Chinese President Order No. 15

The revised Company Law consists of 15 chapters, including company registration, establishment and organization of limited liability companies, transfer of shares of limited liability companies, and establishment and organization of joint stock companies. The Company Law improves the contribution registration system of limited liability companies, clarifying that the capital contributions made by all shareholders shall be paid in full by the shareholders within five years from the date of the establishment of the company in accordance with the provisions of the articles of association of the company. At the same time, if the period of capital contribution of a company that has been registered and established prior to the implementation of the new Company Law is longer than the period stipulated therein, it shall be adjusted gradually to the period stipulated therein, unless otherwise stipulated by laws, administrative regulations or the State Council. Where the period or the amount of capital contribution is obviously abnormal, the company registration authority may, in accordance with the law, require it to make timely adjustments. (Source: NPC website)

http://www.npc.gov.cn/c2/c30834/202312/t20231229_433999.html

2. Interpretation of Several Issues Concerning the Application of the General Provisions of the Contract Part of the Civil Code of the People’s Republic of China

Promulgated by the Supreme People’s Court

Promulgated date: 4 December, 2023

Implementation date: 5 December, 2023

Document number:LI [2023] No. 13

The Interpretation consists of nine parts: general provisions, conclusion of contracts, effect of contracts, performance of contracts, preservation of contracts, modification and assignment of contracts, termination of rights and obligations under a contract, liability for breach of contract and supplementary provisions. Among them, on the determination of reservation contracts, according to the Interpretation, where the parties agree to enter into a contract within a certain period of time in the future by subscription, order, booking and other forms, or pay a deposit to guarantee the conclusion of the contract within a certain period of time in the future, and the subject, subject matter and other contents of the contract to be concluded in the future can be determined, the court shall find that the reservation contract has been established. Where the parties, by signing a letter of intent or memorandum of understanding, etc., only express the intention of the transaction and fail to agree to enter into a contract within a certain period of time in the future, or and the subject, subject matter and other contents of the contract to be concluded in the future cannot be determined despite an agreement, the court shall not support the party who claims that the reservation contract has been established. (Source: Supreme People’s Court website)

https://www.court.gov.cn/fabu/xiangqing/419382.html

3. Regulation on Supervision and Administration of Non-Bank Payment Institutions

Promulgated by the State Council

Promulgated date: 17 December, 2023

Implementation date: 1 May, 2024

Document number: State Order No. 768

The Regulation consists of six chapters and 60 articles, focusing on the following: firstly, clarifying the definition of non-bank payment institutions and the license of establishment; secondly, improving the payment business rules; thirdly, protecting the legitimate rights and interests of users; fourthly, specifying regulatory responsibilities and legal liabilities. Adapting to the development needs of payment business, the Regulation divides payment business into two categories: operation of stored-value accounts and processing of payment transactions, and authorizes the People’s Bank of China to formulate specific rules. It specifies the requirements for the management of payment business, stipulating that non-bank payment institutions shall improve their business management and other systems, and have business systems, facilities and technologies that meet the requirements to ensure that the payment business is continuous, safe and traceable. It also clarifies the management stipulations for payment accounts, provision funds and payment instructions, requiring that payment accounts shall be opened in the user’s real name, and that non-bank payment institutions shall not misappropriate, occupy or borrow provision funds, or forge or alter payment instructions, so as to prevent risks in the non-bank payment industry. (Source: State Council)

https://www.gov.cn/zhengce/content/202312/content_6920724.htm

4. Decision on Amending the Provisions of the Supreme People’s Court on Several Issues Concerning the Establishment of International Commercial Tribunals

Promulgated by the Supreme People’s Court

Promulgated date: 18 December, 2023

Implementation date: 1 January, 2024

Document number: LI [2023] No. 14

The Decision consists of two articles. First, it expands the scope of cases in which the parties may choose the jurisdiction of an international commercial court by agreement. Article 2(1) of the Provisions is amended to read: “(1)  An international commercial cases of first instance with a subject matter of RMB 300 million or more, in which the parties has chosen the jurisdiction of the Supreme People’s Court by agreement in accordance with Article 277 of the Civil Procedural Law,”. Article 277 of the Civil Procedural Law has established a jurisdiction system for foreign-related agreements in line with China’s national conditions and international trends, and clarifies that if the parties to a foreign-related civil dispute agree in writing to choose the jurisdiction of the people’s court, the people’s court may take jurisdiction with no requirement of the dispute to be practically connected with China, in order to encourage foreign parties to choose the jurisdiction of Chinese courts, and to fully embody the judicial attitude of respect for the parties’ autonomy, equal protection, tolerance and openness in China. Accordingly, Article 2(1) of the Provisions has been adaptively amended to clarify that the scope of cases before an international commercial court includes international commercial cases of first instance with a subject matter of RMB 300 million or more, in which the parties have chosen the jurisdiction of the Supreme People’s Court by agreement in accordance with Article 277 of the Civil Procedural Law, and that Article 35 of the Civil Procedural Law (Article 34 of the Civil Procedural Law of 2012) that the parties shall choose the people’s court of the place with actual connection with the dispute by agreement shall not be applicable.

Second, it expands the means of ascertaining foreign laws. Paragraph 1 of Article 8 of the Provisions is amended to read: “When an international commercial court hears a case in which an extraterritorial law shall be applied to, it may ascertain the law through the following means: (1) provided by the parties concerned; (2) provided by the foreign party’s central or competent authority through the channel of judicial assistance; (3) provided by China’s embassy or consulate in the foreign country, or by the foreign country’s embassy or consulate in China upon the Supreme People’s Court’s request; (4) provided by the participants of the law ascertainment cooperation mechanism established or participated by the Supreme People’s Court; (5) provided by the experts of the International Commercial Expert Committee of the Supreme People’s Court; (6) provided by the law ascertainment service organizations or Chinese and foreign legal experts; (7) other appropriate means.” The amendment to the article has expanded the means for an international commercial court to ascertain foreign laws, keeping consistent with the means of ascertaining foreign laws stipulated in Article 2(1) of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Law of the People’s Republic of China on the Application of Laws to Foreign-Related Civil Relations (II), and embodying the unity and coordination among judicial interpretations. (Source: Supreme People’s Court website)

https://www.court.gov.cn/zixun/xiangqing/420962.html

5. Several Provisions on the Administration of Civil Unmanned Aerial Vehicle Production

Promulgated by the Ministry of Industry and Information Technology

Promulgated date: 18 December, 2023

Implementation date: 1 January, 2024

Document number: MIIT Order No. 66

The Provisions mainly clarifies the scope of application, the production management system and the supervision management system. With regard to the production management system, the Provisions regulate the following matters: firstly, it stipulates that manufactures of civil unmanned aerial vehicles shall set up a unique product identification code for their each civil unmanned aerial vehicles, except for flying toys with an independent power systems; secondly, it specifies the management system for the setting and use of the unique product identification code; thirdly, it stipulates that the telecommunication equipment, radio transmission equipment and radio frequencies used by civil unmanned aerial vehicles shall comply with China’s relevant national regulations. (Source: Ministry of Industry and Information Technology website)

https://www.miit.gov.cn/zcfg/jdcjxl/art/2023/art_25181ed2099e49f0af621a250bc92c0e.html

6. Regulation on the Donation and Transplantation of Human Organs

Promulgated by the State Council

Promulgated date: 4 December, 2023

Implementation date: May 1, 2024

Document number: State Order No. 767

The Regulation amends the former Regulation on Human Organ Transplantation, specifically, first, strengthening publicity and guidance on organ donation and further promoting organ donation; second, improving the organ procurement and allocation system and implementing whole-process management; and third, strengthening the management of the application of organ transplantation technology and guaranteeing medical quality. Among them, the Regulation stipulates the conditions that medical institutions should meet to engage in cadaveric organ procurement and the requirements that medical institutions should follow to provide cadaveric organ procurement services. It refines the requirements for ethical review before organ procurement and stipulates the witnessing procedures for the procurement of cadaveric organs. It also improves the allocation system of cadaveric organs, stipulating that the allocation of cadaveric organs shall meet medical needs, follow the principles of fairness, justice and openness, and be uniformly implemented through the allocation system established by the healthcare department of the State Council, and that the donation and allocation of cadaveric organs shall be published on a regular basis to be supervised by the society. In addition, the Regulations also improves the provisions on legal responsibilities and increases penalties to strictly crack down on illegal behaviors in the field of organ donation and transplantation. (Source: State Council website)

https://www.gov.cn/zhengce/content/202312/content_6920195.htm

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