24 May 2019 China legal update: Better Protection for Shareholders’ Rights in the 5th Judicial Interpretation on Company Law.
I. Legal News
1. New Civil Aviation Agreements Boost China-EU Cooperation
Following last month’s China-EU Summit, both sides signed two landmark aviation agreements in Brussels on May 20, 2019, as the first step to implement their reached consensuses. The Agreement on Civil Aviation Safety between China and the EU (the “Aviation Safety Agreement”) and the Agreement between China and the EU on Certain Aspects of Air Services (the “Air Services Agreement”), as the first time that China and the EU reached such a deal in the civil aviation sector, signify the milestone for both sides’ cooperation.
(1) Aviation Safety Agreement
The main objective of the first agreement is to support worldwide trade in aircraft and related products. For aeronautical products, it is significant that the Aviation Safety Agreement will remove unnecessary duplication of evaluation and certification activities by the civil aviation authorities and therefore reduce costs for the aviation sector1. This newly-signed agreement is believed by the insiders to make it easier for aircrafts to acquire certification and sales in both sides that will eventually boost the trade between China and the EU.
From the China side, the Aviation Safety Agreement is a good opportunity for aircrafts made in China to be exported to the international aviation market. From the EU side, a massive Airbus order also comes amidst the fatal crashes and the recent exposure of safety concerns of the U.S. Boeing 737 airliners and it is reported that this year, a large order for 300 Airbus aircrafts has already been signed between China and France.2
(2) Air Service Agreement
At present, only airlines owned and controlled by some specific EU member state or its nationals could fly between that state and China, but the conclusion of the second agreement is going to change this situation.3 All EU airlines will be allowed to fly to China from everywhere in the EU upon implementation of the Air Services Agreement.
For now, China owns the 3rd largest domestic aviation market in the world, which is expected to maintain an annual growth rate of 7% between 2015 and 2034. This certain move came amid uncertainties worldwide and it is predictably estimated by the EU that this cooperation will bring about US $3.5 billion in the first eight years after signing the agreements while also creating approximately 11,000 job opportunities.4 Besides this enrichment of China-EU’s stable partnership, the both sides have also been on conversations about agreements on IP rights and investment matters and their further cooperation in the future can be expected.
2. China to Regulate App’s Illegal Behaviors on Collection and Use of Personal Information
The National Information Security Standardization Technical Committee has recently issued the Methods for Identifying Unlawful Acts of Applications to Collect and Use Personal Information (Draft for Comment) (the “APP Draft”), inviting public’s opinions by May 26, 2019.
The APP Draft intends to clearly define what constitutes illegal behaviors of Apps operators on collecting and using personal information, providing guidance to the Apps operators to conduct self-checks and self-corrections, and serving as a reference for the governmental authorities to evaluate the Apps operators and to make corresponding punishment.
Drafted on the basis of the PRC Cyber Security Law with the reference to the National Standard Regulations for Personal Information Security, the APP Draft is more detailed, for example:
(1) When checking the apps’ privacy policies, users are reluctant to read all small characters therein, thus normally they will click “Agree” directly. The APP Draft stipulates that when collecting users’ personal information, Apps operators are obliged to remind users, and corresponding collecting instructions shall not be too long to read or too difficult to understand;
(2) Personal information to be collected shall be directly linked to the functions of the Apps, which will prevent the Apps operators from collecting unnecessary personal information for their illegitimate use;
(3) When collecting sensitive information such as ID card number and bank card number of the users, the Apps operators are obliged to explain the reasons for such information collection;
(4) For a young user whose age is under 14, it is mandatory for the Apps operator to obtain the consent from his parents; and
(5) The Apps operators shall clearly instruct the uses on how to cease their Apps’ accounts or amend/delete their personal information.
II. Hot topic
China’s Inbound Foreign Investment in Q1 Maintained a Steady Growth
From January to April this year, China’s inbound foreign investment continued to grow steadily, according to the Ministry of Commerce’s statistics. Specifically, there are in total 13,039 foreign-invested enterprises newly established nationwide, and 45.14 billion U.S. dollars of investment capital was received during the four months period, which increased by 6.4% of the previous quarter.
Investment in high-tech industry maintained a rapid growth. and there is a large increase of the use of foreign investment in high-tech manufacturing and high-tech service industry in the first quarter this year. What also worth notice is that major investors South Korea and Germany, increased their investment in China by 114.1% and 101.1% respectively. In addition, there is a 17.7% growth on the investment made by EU.
What’s more, the central and western regions and the free trade zones in China have become new investment hot spots for their advantages of resources and labor, and for their locations tightly connected with the Belt and Road Initiative. The foreign investment in the central and the western region increased by 15.4% and 18.5% respectively last year.
It is said that this optimistic growth probably owes to China’s ongoing reform and opening-up, such as the promulgation of the Foreign Investment Law5, the reduction of the negative list of foreign investment and the cutting down of the administrative approvals and licensing matter6 to strengthen the protection and to promote foreign investment.
A recently-published annual survey7 conducted by the European Union Chamber of Commerce in China shows that 62% of the respondents hold the opinion that China remains among the top-three current and future investment destinations. It is also reported in the annual survey that since the size of the market and untapped growth potential still outweigh the considerable costs of operating in China that arise from difficult operating conditions, the European companies remain dedicated to doing business in China.
⑤ See our previous article “Foreign Investment Law: What Foreign Investors Should Know About This Landmark Legislation”, at: < http://asiallians.com/en/foreign-investment-law-foreign-investors-know-landmark-legislation/ >
⑥ See our previous article: “Administrative Licensing Items Further Canceled or Delegated by the State Council”, at: < http://asiallians.com/en/china-legal-update-samr-invites-opinions-reform-enterprise-name-registration-system/ >
⑦ European Chamber of Commerce in China, “European Business in China: Business Confidence Survey 2019”, see: < https://static.europeanchamber.com.cn/upload/documents/documents/Business_Confidence_Survey_2019%5B663%5D.pdf >
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