NPC Standing Committee Circulates Second Draft of Revised Civil Law Principles

On 18 November 2016, the National People’s Congress (“NPC”) Standing Committee circulated for public comment the General Principles of the Civil Law of the People’s Republic of China (Draft) (“Draft for Second Review”).

This draft mainly updates the civil code to conform to laws enacted or revised since the original code was enacted in 1986. It also preserves and expands on a number of changes contained in the first draft.

Specifically, the second draft contains the following changes:

  • Expanding civil rights, for example by:
    • permitting agents ad litem to ratify the acts of minors six years or older and adults with limited civil capacity;
    • obligating adult children to care for, support and protect their parents, even where the parents have full civil capacity;
    • adding provisions on the protection of personal data; and
    • protecting data and network virtual property.
       
  • Conforming to the provisions of laws enacted or revised after the 1986 civil code, for example by:
    • expanding the recognised scope of non-profit legal persons to include foundations and social service organisations to conform to the Law of the People's Republic of China on Administration over the Activities of Overseas Non-government Organisations within China 2016;
    • protecting the rights to sue the infringer in a civil infringement case to conform to the Tort Liability Law of the People’s Republic of China 2009;
    • revising and adding rules related to the governing authority and board of supervisors of for-profit legal persons to conform to the Company Law of the People’s Republic of China 2013 (“2013 Company Law”); and
    • adding rules to protect minority shareholders and requiring the publication of information on legal person registration to conform to the 2013 Company Law.

Market Reaction
Paul McKenzie, Partner, Morrison & Foerster, Beijing and Shanghai

"The proposed amendments to the civil code are less important for their substance. In many cases, they reflect legal requirements already adopted in other laws or regulations. But the amendments do reflect an on-going project to codify these requirements as fundamental requirements of Chinese civil law. For that reason, the amendments are notable for data privacy and other practitioners."

Action Items

No specific action is required as a result of the draft. It is, however, important for counsel advising clients with operations or assets in China to understand and follow the general development of Chinese civil law, particularly insofar as this development impacts the rights of customers, employees and other interested parties.

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