Starting January 1, 2020, the PRC Foreign Investment Law (FIL) replaced the old laws for Sino-foreign Equity Joint Ventures (EJVs) and Sino-foreign Cooperative Joint Ventures (CJVs). Previously, EJVs had the Board of Directors as their highest authority, unlike Wholly Foreign-Owned Enterprises (WFOEs) and domestic limited liability companies (DLLCs) which followed the Shareholders' Meeting. Now, EJVs and CJVs must align with the PRC Company Law, changing their highest authority to the Shareholders’ Meeting by December 31, 2024.
This change requires EJVs and CJVs to restructure their organizations, amend legal documents, and possibly renegotiate terms with Chinese partners. While these adjustments aim to create a more consistent and transparent legal environment for foreign investments, they also pose significant challenges for existing joint ventures, necessitating careful planning and compliance efforts.
