Issued by: Supreme People's Court
Issue No.: Fashi No. 15 [2024]
Release Date: December 24, 2024
Effective Date: December 24, 2024
Links: https://www.court.gov.cn/zixun/xiangqing/450831.html

1. Background of the Reply:
On June 29, 2024, the Supreme People's Court issued the Several Provisions on the Temporal Validity of the Application of the Company Law of the People's Republic of China ( the "Judicial Interpretation") , stipulating that prior to the implementation of the new Company Law, for civil disputes arising from the legal fact that the assignor transferred equity rights where the prescribed contribution period yet expired and the assignee failed to make such capital contribution in full and on time, the provisions of the first paragraph of Article 88 of the new Company Law shall apply. That is to say, the assignor shall bear supplementary liability for the capital contribution that the assignee fails to pay on time. After the issuance of this judicial interpretation, it triggered disputes in public opinion regarding "the law shall not be retroactive";
On December 22, 2024, the Legal Affairs Committee of the National People's Congress proposed in its 2024 review report that the provisions of the first paragraph of Article 88 of the new Company Law should not have retroactive effect. The Legal Affairs Committee also stated that it would urge the relevant judicial interpretation formulation authorities to take appropriate measures to properly address this issue. The Reply issued by the Supreme People's Court is a timely response to the above-mentioned review opinions of the Legislative Affairs Committee;

2. The Reply clarifies that the first paragraph of Article 88 of the new Company Law is applicable only to equity transfers where the capital contribution period has not expired and such transfers occur after July 1, 2024. It does not have retroactive effect on disputes over investment liability that arose before July 1, 2024;

3. The Reply shall take effect immediately from December 24, 2024.