The newly amended Company Law of the People’s Republic of China (hereinafter the “New Company Law”), which came into effect on July 1, 2024, introduces several important adjustments to corporate governance structures. These adjustments primarily concern the organization and allocation of powers among the board of directors, management, and supervisory boards. In particular, it provides detailed provisions on employee participation in corporate governance, thereby imposing higher compliance requirements on companies. This article interprets these requirements using limited liability companies as an example; however, the requirements are applicable to joint stock companies as well.

The Supreme People’s Court of the People’s Republic of China has recently issued a judicial interpretation — Interpretation (II) of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (the “Interpretation”), which took effect on September 1, 2025. The Interpretation is expected to have significant implications for all employers in China, including foreign invested enterprises.

On June 27, 2025, the Ministry of Finance, State Taxation Administration, and Ministry of Commerce jointly released Announcement [2025] No.2, titled "Announcement on Tax Credit Policy for Foreign Investors Using Distributed Profits for Direct Investments". Shortly thereafter, on July 31, 2025, the State Taxation Administration released Supporting Announcement No.18. These policies aim to strongly encourage foreign investors to reinvest profits earned in China back into the Chinese market. This combined policy signals the Chinese government’s clear commitment to stabilizing foreign investment and stimulating reinvestment.