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ARTICLE · 21 MAY 2020

WFOE Compliance Issues During The Transition Period Under The New FIL

Llinks Law Offices
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The Company Law of the People's Republic of China ("Company Law") shall universally govern the WFOEs in the same way as it does domestic Chinese companies.

ChinaGovernment, Public Sector
Yuhua Yang
Yuhua Yang

On 1 January 2020, the Foreign Investment Law of the People's Republic of China ("FIL") came into force, and at the same time, the three-decades-old-plus Wholly Foreign-owned Enterprises Law of the People's Republic of China ("WFOE Law") and its relevant regulations were simultaneously repealed. With respect to the existing c.375,000 WFOEs already established in accordance with the previous WFOE Law and regulations, the new FIL and its Implementation Regulations provide a 5-year transition period ("Transition Period") for them to make the necessary adjustments and conversion to ensure compliance by the end of 2024. The Company Law of the People's Republic of China ("Company Law") shall universally govern the WFOEs in the same way as it does domestic Chinese companies.

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