Tiêu đề 1. China Foreign Investment Law_ How Will It Impact the Existing FIEs_ _ China Law Insight.pdf ✅

21/04/2023, 14:58 China Foreign Investment Law: How Will It Impact the Existing FIEs? | China Law Insight https://www.chinalawinsight.com/2019/06/articles/foreign-investment/china-foreign-investment-law-how-will-it-impact-the-existing-fies/ 1/15 China Foreign Investment Law: How Will It Impact the Existing FIEs? By King & Wood Mallesons on June 3, 2019 By Mark Schaub, Atticus Zhao, Dai Xueyun, Zheng Wei It has been more than two months since China’s new Foreign Investment Law (FIL) was passed at the second session of the 13th National People’s Congress (NPC) of China on 15 March 2019. Some thought the FIL was an indication that the US-China trade talks would soon be wrapped up. This is unlikely. Despite this the FIL has shown China reiterating a willingness to deepen reform and open up its economy.


21/04/2023, 14:58 China Foreign Investment Law: How Will It Impact the Existing FIEs? | China Law Insight https://www.chinalawinsight.com/2019/06/articles/foreign-investment/china-foreign-investment-law-how-will-it-impact-the-existing-fies/ 4/15 Key Impact of FIL on Existing FIEs Below we set out the key impact of the FIL on existing FIEs: 1. Corporate governance As noted above, the FIL will replace the Three FDI Laws from 1 January 2020 and by that time the organizational form, corporate structure and operating rules of new FIEs will be subject to the China’s Company Law and the Partnership Enterprise Law[ii] For existing FIEs, they can remain their corporate structure etc. unchanged for five years starting from the effectiveness of the FIL, i.e. 1st January 2020.[iii]. Upon the expiration of the 5-year transition period, all FIEs shall be governed by PRC Company Law or the Partnership Enterprise Law. Given partnership is barely adopted in practice for joint ventures, most FIEs will need to follow the Company Law. We believe the FIL will have very limited impact on WFOEs on corporate governance as the organizational form and corporate structure of WFOEs have been governed by the Company Law since 2006. In accordance with an implementation opinion published by four China ministerial authorities on 24 April 2006[iv], corporate governance of the WFOEs should follow the Company Law, including that the highest authority of a WFOE should be the board of shareholders rather than the board of directors. In contrast with the WFOEs, the FIL will have a major impact on the existing joint ventures. The main reason is that the organizational form and corporate structure under the JV Laws are radically different from those set out under the