PRC Foreign Investment Law China 2026: How to Convert Legacy Jvs and Align FIE Governance

Foreign investment law china reached a decisive milestone in 2025, when the five-year transition window under the PRC Foreign Investment Law (FIL) closed on 1 January 2025, and 2026 is the first full calendar year in which the transition has fully lapsed. Legacy Sino-foreign joint ventures established under the now-repealed Sino-Foreign Equity Joint Venture (EJV) and Sino-Foreign Cooperative Joint Venture (CJV) statutes can no longer rely on their original organisational forms, and those that have not completed conversion face registration friction, governance ambiguity, and heightened regulatory exposure.

This practitioner guide maps the statutory framework from the FIL into the PRC Company Law, sets out a step-by-step conversion roadmap, and walks through the MOFCOM, SAMR, and (where relevant) NDRC filings required to bring a foreign-invested enterprise (FIE) into compliance. The aim is operational clarity: what to file, in what order, and on what realistic timeline.

1. Executive summary: why 2026 matters for legacy JVs

The PRC Foreign Investment Law, which took effect on 1 January 2020, replaced the three separate laws that once governed foreign-invested enterprises, the equity joint venture, cooperative joint venture, and wholly foreign-owned enterprise statutes, with a single, unified regime. From the FIL’s effective date, existing FIEs were given a five-year transition period to adopt the organisational forms and governance structures required under the PRC Company Law. That window expired at the end of 2024, which means conversions are no longer optional in practical terms: an FIE that retains its legacy structure cannot cleanly complete corporate changes, and registration authorities may decline to process routine filings until the organisational form is aligned with the Company Law.

The consequence for many legacy joint ventures is a compressed set of tasks that should be finalised without further delay: reconstituting the governance framework, amending the articles of association, obtaining shareholder consents, and completing registration updates with the market regulator. Delay creates real cost, stalled dividend distributions, blocked equity transfers, and difficulty executing financings or exits, because counterparties and regulators increasingly expect a Company Law-compliant FIE.

Quick action checklist

• Confirm organisational form. Establish whether the entity is a legacy EJV, CJV, or WFOE and whether conversion has been completed.
• Review foundational documents. Pull the current articles of association, the joint venture contract, and any shareholder agreements.
• Map governance gaps. Compare the existing board, management, and supervisory arrangements against Company Law requirements.
• Check the Negative List. Verify whether the business scope falls within restricted or prohibited sectors requiring approval.
• Obtain shareholder consents. Prepare resolutions and secure the requisite approval thresholds.
• Adopt amended articles. Draft Company Law-compliant articles of association.
• Complete regulatory filings. Submit MOFCOM information reporting and SAMR registration updates.
• Handle housekeeping. Update tax, social insurance, banking, IP, and contract records.

2. Legal framework: the foreign investment law china regime and the Company Law

The FIL is the anchoring statute for inbound foreign investment. It establishes the principle of pre-establishment national treatment plus a Negative List, protects foreign investors and their investments, and introduces a foreign investment information reporting system administered through the commerce authorities. Critically, the FIL does not itself prescribe the internal corporate governance of an FIE. Instead, it directs that foreign-invested enterprises are organised, governed, and operated according to the PRC Company Law and the Partnership Enterprise Law. This is the pivot that makes conversion necessary: the FIL sets the investment framework, while the Company Law supplies the corporate architecture, the shareholders’ meeting, the board of directors, the supervisory arrangements, and the rules on profit distribution and capital.

Understanding this division of labour is the foundation of any conversion project. The foreign investment law china framework governs whether and how foreign capital may enter a sector; the Company Law governs how the resulting company is structured once inside. For a legacy EJV or CJV, the practical effect is that the bespoke governance features embedded in the original joint venture contract, such as board-centric decision-making or profit-sharing formulas that departed from equity proportions, must be re-examined against, and where necessary conformed to, the Company Law default rules or preserved through validly drafted shareholder arrangements.

Note that a revised PRC Company Law took effect on 1 July 2024, introducing changes to capital contribution rules, corporate governance structures, and director and shareholder duties that FIEs should factor into any conversion.

Key statutory texts to know

• PRC Foreign Investment Law. National treatment, the Negative List, investment protection, and the information reporting obligation. The authoritative text is published by the National People’s Congress.
• PRC Company Law (as revised, effective 1 July 2024). The organisational and governance rules that apply to FIEs after conversion, shareholder resolutions, board and supervisory design, capital, and profit distribution.
• The Negative List and sector access measures. Maintained by the NDRC together with MOFCOM, these determine whether foreign investment in a given field is permitted, restricted, or prohibited.

Does the FIL repeal the EJV and CJV laws?

Yes. The FIL replaced the former equity joint venture, cooperative joint venture, and wholly foreign-owned enterprise laws when it took effect on 1 January 2020. Those statutes no longer operate as the governing framework for FIE organisation. During the five-year transition period, existing enterprises were permitted to retain their original organisational forms, but that grace period ended at the close of 2024. Legacy entities are now expected to have adopted, or to be finalising, Company Law-compliant structures, with governance and internal decision-making conformed to the Company Law rather than to the repealed joint venture regime.

3. Which JVs must convert, scope and triggers

The conversion obligation reaches enterprises established under the pre-FIL foreign investment statutes. In practice this covers three broad categories: equity joint ventures formed under the EJV law, cooperative joint ventures formed under the CJV law, and older wholly foreign-owned enterprises whose articles reflect the repealed regime. Each of these was permitted to operate under its original organisational form only through the transition period; with that window closed, alignment with the Company Law is the expected baseline.

The triggers for action are both time-based and event-based. The expiry of the transition period is the overarching driver, but discrete corporate events frequently force the issue: an equity transfer, a capital increase or reduction, a change of directors or legal representative, an amendment to the business scope, or a financing that requires a clean corporate structure. When any such event requires a registration change, the market regulator will typically expect the enterprise to be, or to become, Company Law-compliant before processing.

Common factual patterns

• Legacy EJV with a profit-distribution formula. Older equity joint ventures sometimes distributed profits in proportions negotiated in the joint venture contract. Under the Company Law, distribution is ordinarily made in proportion to capital contribution unless all shareholders agree otherwise, so any bespoke formula must be re-papered as a valid shareholder arrangement.
• JV with a foreign controlling shareholder. Where the foreign party holds control, the conversion is an opportunity to re-map board composition, reserved matters, and minority protections in a way that is enforceable under the Company Law.

When conversion is required versus a matter of shareholder choice

Conversion to a Company Law-compliant form is the expected end state for all legacy FIEs; the discretionary element lies in the internal design choices, whether to preserve legacy features through shareholder agreements, how to size the board, and how to allocate reserved matters. Because governance changes affect shareholder rights, they generally require shareholder resolutions at the thresholds prescribed by the Company Law and the entity’s articles. Where the changes materially alter the bargain struck in the original joint venture contract, unanimous or supermajority consent may be needed, making early alignment among shareholders a priority.

4. Step-by-step conversion roadmap

The following roadmap is the operational core of any China joint venture conversion. Each step should be treated as a discrete workstream with owners, documents, and a target completion date. Sequencing matters: due diligence and governance mapping precede shareholder approvals, which precede the adoption of amended articles, which in turn precede the regulatory filings and registration update.

Step 1: Pre-closing due diligence and governance mapping

Before drafting anything, review the current articles of association, the joint venture contract, and any shareholder agreements. Identify special approvals and licences, outstanding liabilities, pledged equity or assets, and any encumbrances. Map intellectual property ownership and licensing, material contracts with change-of-control or assignment clauses, and employment arrangements. This diagnostic sets the scope of the conversion and surfaces the consents that will be required downstream.

Step 2: Shareholder approvals, resolutions and consents

Convene the shareholders’ meeting and pass the resolutions needed to approve the conversion, the amended articles, and any changes to board and supervisory composition. Confirm the applicable approval thresholds under the Company Law and the entity’s existing constitutional documents, certain fundamental changes require supermajority approval. Observe notice periods and quorum requirements, and address minority protections directly: where the conversion alters distribution rights or governance previously guaranteed by the joint venture contract, secure informed consent to reduce the risk of later challenge. Where the JV contract required unanimity for constitutional changes, obtain unanimous sign-off rather than relying on statutory defaults. Document each resolution carefully; these minutes form part of the filing package with the market regulator.

Step 3: Drafting and adopting amended Articles of Association under the Company Law

Prepare articles of association that comply with the Company Law and reflect the negotiated governance. Include the mandatory clauses, company name, business scope, registered capital and contribution schedule, shareholder details, the shareholders’ meeting, the board of directors, the supervisory arrangements, and the legal representative. Incorporate foreign investor disclosures consistent with the information reporting regime. Where the shareholders wish to preserve legacy features, a bespoke profit split, reserved matters, or enhanced minority veto rights, capture these in the articles and in an updated shareholder agreement so that they are enforceable under the Company Law framework rather than left to the repealed joint venture rules.

Step 4: Regulatory filings, MOFCOM information reporting and sector approvals

Once the corporate documents are approved, complete the foreign investment information reporting required under the FIL and confirm whether any sector-specific approval is triggered by the change. The detailed filing sequence is set out in the next section, but this step must be scheduled alongside, and in the correct order relative to, the registration update so that the enterprise does not fall out of step with the market regulator.

Step 5: Company registration update with SAMR / local market regulator

File the registration changes with the competent local market regulator (operating under the State Administration for Market Regulation framework). This typically involves submitting the amended articles, the shareholder resolutions, updated director and supervisor details, and the prescribed change forms, resulting in a reissued business licence reflecting the updated structure. Ensure the unified social credit code, registered address, and legal representative records are all synchronised across systems.

Step 6: Post-conversion housekeeping

After registration, cascade the change through the enterprise’s records: update tax registrations, social insurance and housing fund filings, bank account signatories and mandates, and customs or foreign exchange records where relevant. Re-execute or novate contracts that reference the old entity form, confirm IP assignments and registrations are consistent, and refresh corporate seals and authorised signatory registers. Treat this as a formal close-out checklist rather than an afterthought, gaps here are a common source of later disputes.

5. Regulatory filing playbook: MOFCOM, SAMR, NDRC and sector regulators

Getting the filings right is where many conversions stall. The foreign investment law china regime distributes responsibility across several regulators, and the order of filings, the supporting documents, and the escalation points for restricted sectors all need to be understood in advance.

MOFCOM foreign investment information reporting, what to file and when

The FIL replaced the old case-by-case approval system for most investments with an information reporting regime administered through the commerce authorities. Foreign-invested enterprises are required to submit information about the investment and about subsequent changes to that information, including changes to shareholders, controllers, registered capital, and organisational structure. In practice, much of this reporting is integrated with the market regulator’s registration system, so that certain change information is transmitted to the commerce authorities as part of the registration process.

A conversion is a reportable change: prepare the updated articles, the shareholder change documentation, and the details of the actual controller for submission through the designated reporting channel, and coordinate it with the registration update rather than treating it as a standalone task.

SAMR / local market regulator registration changes

The company registration change is handled by the competent local market regulator. The package generally comprises the change application form, the amended articles of association, the shareholder resolutions authorising the conversion, updated identification and appointment documents for directors, supervisors, and the legal representative, and evidence of the shareholding structure. On acceptance and processing, the regulator issues an updated business licence. Build in time for document formalities, notarisation and legalisation (or apostille, where the relevant country is party to the Apostille Convention, which China joined in November 2023) of foreign shareholder documents where required, because these often drive the critical path more than the regulator’s own processing time.

Negative List, NDRC and special sector approvals, when to escalate

Before finalising the conversion, verify the business scope against the current Special Administrative Measures for Foreign Investment Access (Negative List), issued jointly by the NDRC and MOFCOM. If the enterprise operates in a restricted field, such as certain telecommunications, financial services, or energy activities, the change may require sector-specific approval or a licence variation before the corporate change can complete. Where the entity sits outside the Negative List, no special access approval is needed and the reporting-plus-registration route applies. Where it falls within a restricted category, escalate early: sector approvals run on the regulator’s timetable, not yours, and they frequently determine the overall duration of the project.

Antitrust considerations, the merger control dimension

Anti-monopoly review in China is administered by SAMR under the Anti-Monopoly Law. Most straightforward conversions that do not change ultimate control will not amount to a concentration of undertakings requiring merger notification. However, where a conversion is combined with an equity transfer, a capital injection, or a restructuring that shifts control and meets the applicable turnover thresholds, a merger filing may be required before completion. Assess this at the diligence stage so that any notification runs in parallel rather than becoming a late-stage roadblock.

6. Foreign-invested enterprise governance re-mapping post-conversion

Conversion is not merely a form-filling exercise; it is the moment to design a governance structure that is both Company Law-compliant and commercially fit for purpose. The revised Company Law offers flexibility in board size and supervisory arrangements, including, for smaller companies, the option to dispense with a supervisory board in favour of an audit committee or a single supervisor, and in the allocation of decision-making between shareholders and directors, so the re-mapping should be deliberate rather than a mechanical copy of the old joint venture terms. Effective foreign-invested enterprise governance strikes a balance: it preserves the protections the parties negotiated while placing them on an enforceable statutory footing.

Board versus shareholder reserved matters, a recommended split

A clean governance design distinguishes matters reserved to shareholders from those delegated to the board. Fundamental decisions, amending the articles, changing registered capital, approving profit distribution, mergers, dissolution, and material related-party transactions, are typically reserved to the shareholders’ meeting. Operational and strategic execution, approving budgets, senior appointments below the top tier, and ordinary-course contracts within thresholds, sits with the board. Minority foreign or domestic shareholders should secure veto or supermajority rights over the reserved matters that most affect their economic interest, drafted so as to be valid under the Company Law and reflected consistently in both the articles and the shareholder agreement.

Management, employment and decision rights

Define the decision rights of the general manager and CFO clearly, including spending authority, hiring limits, and the boundary between management autonomy and board oversight. The conversion also raises employment continuity questions: senior executives whose appointments were rooted in the old joint venture governance may need re-appointment under the new articles, and employment contracts that reference the former entity form may need updating or novation. Address these alongside the corporate steps so that management authority is never left in a legal vacuum during the transition.

7. Typical timelines, risks and roadblocks

Timelines vary widely with the complexity of the enterprise and the sector. As a working guide, a straightforward conversion, where shareholders are aligned, consents are obtainable without dispute, and no Negative List or antitrust approval is triggered, can often move from resolution to updated business licence in a matter of several weeks to a couple of months, subject to regulator processing and document formalities. Where the change engages sector approvals, antitrust notification, or contentious shareholder issues, the realistic horizon can extend to several months or longer. These estimates are typical and non-binding; actual timing depends on the competent authority’s workload and the completeness of the filing package.

Common roadblocks include minority shareholder dissent over changes to distribution or governance rights; outstanding enforcement actions, tax arrears, or employee liabilities that must be cleared before registration proceeds; delays in notarising and legalising (or apostilling) foreign shareholder documents; and sector-specific regulatory review that runs on its own clock. Litigation risk around shareholder disputes is a live consideration, the Supreme People’s Court’s judicial interpretations on Company Law and shareholder rights underscore the value of documenting consents thoroughly and of respecting the approval thresholds set by the articles and the Company Law.

8. Sample document checklist and templates

A disciplined document set accelerates both the corporate and the regulatory workstreams. Prepare and version-control the following before you approach the regulators:

• Shareholders’ resolutions approving the conversion, the amended articles, and any governance changes, with correct thresholds and minutes.
• Amended articles of association compliant with the Company Law, including reserved matters and board composition clauses.
• Updated shareholder agreement preserving any negotiated protections on an enforceable footing.
• Director, supervisor and legal representative appointment and identification documents.
• Foreign investment information reporting package covering shareholder, controller, and structural change details.
• Market regulator change application and supporting evidence, plus notarised and legalised (or apostilled) foreign shareholder documents where required.
• Sector approval or licence variation evidence where the Negative List applies.

Sample resolution and articles wording, for example, a reserved-matters clause listing shareholder-level approvals, and a board-composition clause fixing seats and nomination rights, should be treated as drafting starting points only and reviewed against the enterprise’s specific facts. All sample language is illustrative and requires legal review before use.

9. Comparison table: legacy EJV/CJV versus post-conversion LLC

The table below summarises the principal differences a conversion introduces. The most consequential shifts are the change of governing framework from the repealed joint venture laws to the Company Law, the move toward capital-proportional profit distribution (subject to shareholder agreement), and the addition of the FIL information reporting layer alongside the registration update.

11. Next steps and how Global Law Experts can help

Bringing a legacy joint venture into line with the foreign investment law china regime is a defined, achievable project when it is sequenced correctly: diligence and governance mapping first, then shareholder consents and amended articles, then the foreign investment reporting and market regulator registration update, with Negative List and antitrust checks running in parallel. Global Law Experts can connect you with experienced local counsel, arrange a compliance workshop for your in-house team, and provide a conversion checklist to structure the work. To move from assessment to execution, request a compliance call and review our related China foreign investment resources, including the overview at Foreign investment in China 2026 (overview).

Sources

1. National People’s Congress, PRC legislation portal (Foreign Investment Law and Company Law)
2. Ministry of Commerce (MOFCOM), foreign investment reporting and guidance
3. State Administration for Market Regulation (SAMR), business registration and company filings
4. National Development and Reform Commission (NDRC), market access and Negative List
5. Supreme People’s Court (SPC), judicial interpretations and judgments on shareholder disputes
6. State Council, latest policy releases
7. Organisation for Economic Co-operation and Development (OECD), FDI resources