Private Law Entities in China

Since the Civil Code took effect, Chinese law has classified private law entities into profit-oriented and non-profit organizations.

The limited liability company stands as the prototype of the profit-oriented corporation. Since 2020, its organizational constitution has also applied to companies owned by foreign investors in China. The Company Law underwent a fundamental reform on 1 July 2024, thus marking the most comprehensive revision since 2005.

Non-profit organizations now include, in addition to associations and foundations, novel legal forms – for which no direct counterparts exist in German law – such as social service institutions and religious organizations. The Charity Law, adopted in 2016 as the central regulatory framework for the entire non-profit sector, was extensively revised in 2023.

Will Chinese company law, originally developed to reorganize state-owned enterprises, succeed in resolving the conflicts of interest inherent in modern corporations?

What role can non-profit organizations play in a political system that continues to correspond to a type of centralized socialist party dictatorship?

Are there functional equivalents of the new Chinese legal forms in other legal systems?