Introduction

The new Company Law (effective July 1, 2024) introduced significant changes including the restricted subscription system. The Supreme People’s Court Draft Judicial Interpretation (September 30, 2025) provides detailed guidance. This article examines key stakeholder implications.

I. Capital Contribution System

1. Contribution Methods

The new Company Law maintains non-monetary contribution options including intellectual property, equity, and creditor rights. The司法解释 clarifies:

• Non-monetary contributions require formal valuation
• Property with encumbrances may be contributed subject to conditions
• Credit rights as contribution requires substantiation

2. Acceleration of Due Contributions

Under Company Law Article 54, creditors may petition courts to accelerate shareholder contributions when the company lacks清华 adequate清偿能力. The司法解释 establishes procedural mechanisms for this.

3. Consequences of Non-Compliance

Non-compliant contribution triggers:

• Continued payment obligation
• Liability for losses caused to company
• Shareholder rights restrictions or forfeiture

II. Shareholder Agreement Effects

1. Agreement vs. Resolution

Shareholder agreements generally bind only parties. The司法解释 clarifies that agreements on profit distribution, capital reduction, and preemptive rights that violate statutory requirements may be unenforceable against the company without valid board approval.

2. Coordination with Articles

Coordination between shareholder agreements and articles of association requires careful structuring.

III. Governance Implications

1. Board Responsibilities

Directors face increased liability exposure under the new framework:

• Duty to monitor contribution compliance
• Duty to pursue unpaid contributions
• Personal liability for losses caused by failure to act

2. Supervisor Oversight

Supervisory board members also face expanded oversight responsibilities and potential liability.

IV. Creditor Protection

1. Creditor Rights in Capital Reduction

Creditor protection in capital reduction includes:

• Notification requirements
• Acceleration rights
• Security interests

2. Fraudulent Transfer

The司法解释 addresses fraudulent transfer risks in corporate restructurings.

V. Enforcement Mechanisms

1. Judicial Enforcement

Courts have broad enforcement powers including:

• Compelling performance
• Damages awards
• Account freezing and asset seizure

2. Provisional Measures

Parties may apply for preliminary injunctions and evidence preservation to protect rights during proceedings.