CHINA Trends and Developments Contributed by: Jiang Guoliang, Huang Jie, Xie Tingting and Lang Tao, T&C Law Firm
T&C Law Firm 7/F Block A Huanglong Century Square No.1 Hangda Road Hangzhou 310007 Zhejiang China Tel: +86-571 8790 1111 Fax: +86-571 8790 1500 Email: tchz@tclawfirm.com Web: www.tclawfirm.com
Shareholder Rights Under China’s New Company Law: Practical Guidance and Early Observations In the 2024 Chambers Trends & Developments arti- cle, T&C Law Firm analysed the amendments to the PRC Company Law (the “New Company Law”) from a statutory perspective, focusing on how the revised provisions expanded shareholder rights, lowered thresholds for shareholder actions, and introduced new remedies. Since the New Company Law came into effect on 1 July 2024, it has begun to shape corporate practice. While reported cases remain relatively few, the leg- islation has already generated significant discussion among courts, practitioners, and academics. These early judicial indications and expert interpretations offer important insights into how the new provisions may operate in practice. This year’s article, therefore, moves beyond textual comparison to practical application. Drawing on emerging judicial commentary, expert opinions, and a few illustrative cases, the aim is to provide guidance to the shareholders – particularly minority sharehold- ers – on how to exercise and safeguard their rights effectively under the new regime. Strengthening shareholder rights before disputes arise Expanded scope of shareholder information rights Under the previous law, minority shareholders fre- quently faced limited inspection rights and inconsist- ent judicial enforcement. Article 57 of the New Com-
pany Law addresses these concerns by expanding and clarifying shareholder information rights. Share- holders are now expressly entitled to inspect and copy the shareholder register, enabling them to verify equity structures and track changes in shareholding. Additionally, shareholders may review the company’s accounting vouchers and financial records. In practice, shareholders should be mindful of the scope of their information rights. While shareholders are permitted to take notes or make excerpts from accounting records, such extracts must remain within a reasonable scope and proportional to the purpose of inspection; in other words, one-to-one reproduction of the original records is generally not allowed. A further point of contention in judicial practice con- cerns whether supporting materials attached to the original vouchers and kept for record-keeping purpos- es fall within the right to information. One judicial view holds that, under the PRC Accounting Law, “account- ing vouchers” comprise only original vouchers and bookkeeping vouchers, and therefore, such support- ing materials are not part of the statutory inspection scope. This position often involves balancing the shareholders’ right to information against the need to protect the company’s trade secrets. Given that post- amendment case law remains limited, further judicial clarification on this issue is anticipated. In enforcement, courts have required non-compliant companies to prepare specified electronic account- ing records – including the general ledger, subsidiary
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