Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (IV) (known as the “Judicial Interpretations IV”) was issued on August 28, 2017, effective from September 1, 2017.
The long-expected Judicial Interpretations IV introduces 7 articles, among other things, to elaborate on the preemptive right, as the existing Company Law of the People’s Republic of China outlines the preemptive right only in two articles, leaving a series of issues regarding the notification given to shareholders for exercising their preemptive right, the manners and the time limit to exercise preemptive right and damage compensation unexplained. However, the Judicial Interpretations IV provides clarity on these issues to eliminate confusion in judicial practices.
The following chart is designed to give you a quick and clear look at the gist of the preemptive right stipulated in the Judicial Interpretations IV and the existing Company Law.
