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The Ministry of Transport of the People's Republic of China has recently issued a public consultation paper on the draft proposed amendments to the China Maritime Code ("CMC").
The current CMC was implemented in China 25 years ago. Due to developments in trade and the shipping industry, as well as other areas of law, there is a need to update the current maritime legal system to keep up with these developments. Yu Zheng (Partner (Foreign Lawyer)) of Rajah & Tann Singapore LLP was part of the CMC Amendments Committee that reviewed the existing CMC and made recommendations to the China Ministry of Transport on amendments to the CMC.
The key changes include the following:
- CMC to apply compulsorily where load port or discharge port is China
- Expansion of carrier's right to lien over cargo
- Expansion of port operators' potential liability as carriers
- Pollution Damage Claims – Claimant's direct right of action against P&I Club
- Limitation period for suits between carrier and cargo interests is now 2 years and unilaterally renewable
- Increase of liability limitations to match the 1996 Protocol
On 26 October 2018, the Standing Committee of the Peoples' Republic of China ("PRC") National People's Congress approved the Amendment to the PRC Company Law (the "Amendment"), which took effect as of the same date. The Amendment only provides one revision to the current Company Law, i.e., the revision to Article 142 of the Company Law, which is concerning the buyback of shares.
The Amendment broadens the circumstances for a company limited by shares to buy back its own shares, and the following circumstances are newly added into Article 142 of the Company Law: (a) for the purpose of employee stock ownership plan or the employee stock incentive plan; (b) where the listed company buys back its shares to convert the convertible corporate bonds it has issued; and (c) where the listed company has to buy back its shares to protect the company's value and its shareholders' rights and interests. The Amendment also streamlines the decision-making procedures for the share buyback, where under the aforesaid 3 newly added circumstances, the company may buy back up to 10 percent of all the shares it has offered, if this buyback is approved at the meeting of the board with the attendance of more than two-thirds of the directors on the board in accordance with the rules of its articles of association or the authorisation granted at the general meeting of shareholders. The buyback shares, under the newly added 3 circumstances, shall be traded in a public and centralised manner and shall be transferred or cancelled within three years.
On 29 September 2018, the Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission and the Ministry of Commerce of the Peoples' Republic of China ("PRC") had jointly promulgated the Notice on Expanding the Applicable Scope of the Policy of Temporary Exemption of Withholding Income Taxes for Direct Investment Made by Overseas Investors with Distributed Profits (the "Notice"). One month later, on 29 October 2018, the PRC State Administration of Taxation ("SAT") issued an Announcement on the same subject matter (the "Announcement") to clarify some issues in relation to such temporary exemption of withholding income taxes enjoyed by overseas investors.
According to the Notice, the applicable scope of the temporary exemption of withholding taxes for overseas investors has been expanded to all projects and sectors for which foreign investment is not prohibited. Meanwhile, the Notice has set out several conditions which the overseas investor who intends to declare temporary exemption of withholding taxes shall meet concurrently, including the modes of the direct investment with the distributed profits, the sources of such distributed profits and the way to which the distributed funds shall be transferred. On the ground of the Notice, the Announcement further clarifies that using distributed profits to make up the registered capital which the overseas investor has subscribed shall fall within the circumstance that the overseas investor is entitled to declare the exemption as set out in the Notice.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Rajah & Tann Singapore LLP Shanghai Representative Office Unit 1905-1906, Shui On Plaza, 333 Huai Hai Middle Road, Shanghai 200021 PRC http://cn.rajahtann.com
Contacts: Chia Kim HuatPartnerD +65 62320464kim.huat.chia@rajahtann.comLinda QiaoHead, Shanghai OfficeD +86 21 6120 8818F +86 21 6120 8820linda.qiao@rajahtann.comRajah & Tann Asia is a network of legal practices based in Asia. | Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. | This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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