Research on Improving Internal Corporate Governance under the Background of China’s New “Company Law”

Purpose - The “Company Law of the People’s Republic of China” (“Company Law”) has been revised and improved several times since its promulgation in 1993. It is mainly based on the experience of modern enterprise operation management and future development needs, and simultaneously draws on advanced foreign governance methods. The laws and regulations have been adjusted to ensure that the legitimate rights and interests of all stakeholders are taken into consideration, to improve the shareholder protection mechanism and to make the corporate governance structure more reasonable. Design/Methodology/Approach - On December 29, 2023, the seventh meeting of the Standing Committee of the 14th National People’s Congress voted to adopt the newly revised “Company Law”, which included many amendments and improvements. From July 1, 2024, China’s new “Company Law” will be officially implemented. As an important task for the survival and development of a company, internal corporate governance cannot be ignored in the revision of the Company Law. Findings - Chen Mingquan (2023) believes that the corporate governance structure under the background of China’s current company law mainly has problems such as the direct participation of shareholders’ meetings in business decision-making, the director-centrism of the board of directors, which is difficult to stand on its own, and the serious virtualization of the organizational functions of the board of supervisors. Therefore, the new “Company Law” should clarify the shareholder-first governance path, address the shortcomings of flexible system design for the board of directors and the board of supervisors, and focus on substance over form, and explore multi-level internal and external supervision closure mechanisms. Research Implications - Guo Weiqing (2023) found that the content of the new “Company Law” has indeed strengthened and optimized the powers of the board of directors, improved the governance system and management structure with the company’s articles of association as the core, and reconstructed the corporate governance system, which will become the basis for deepening the governance of Chinese companies. A benchmark for reforming and comprehensively promoting the modernization of corporate governance capabilities. This article mainly combines the necessity of corporate governance, analyzes the existing shortcomings of corporate governance, and proposes an optimization plan for corporate internal governance from the perspective of the new “Company Law”.