Why not Use the Time of Telework to Amend the AOA of FIEs?
The Foreign Investment Law of the People’s Republic of China (the “Foreign Investment Law”) that issued last year came into effect on January 1, 2020 together with the supporting Regulations for the Implementation of the Foreign Investment Law of the People’s Republic of China. This have a significant impact on the structure of foreign-invested enterprises(“FIEs”). Although FIEs may choose to amend their articles of association(“AOA”) at any time during the five-year transition period, FIEs consider making amendments as early as possible. Especially for Equity Joint Ventures and Contractual Joint Ventures with both Chinese and foreign shareholders, when amending the AOAs, shareholders are very likely to start new rounds of negotiations on core issues such as power division of enterprise governance structure, rules of procedure, profit distribution, etc. The amendment of the AOA should be started sooner rather than later.