New Regulation Issued to Facilitate Enterprise Restructuring

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Last updated at: (Beijing Time) Saturday, January 04, 2003

New Regulation Issued to Facilitate Enterprise Restructuring

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China's Supreme People's Court (SPC) promulgated a new regulation here on Friday, to correct and curb illegal activities relating to enterprise restructuring and better protect creditors' and employees' legitimate rights and interests.

According to the regulation, effective Feb. 1 this year, civil parties involved in disputes resulting from the restructuring of enterprises will be able to file a civil suit in court.

Such disputes may result from the merger, sale or split-up of an enterprise, debt to equity swaps, or the conversion of a state-owned enterprise into a corporation or joint-stock company, the regulation says.

With the deepening of China's state-owned enterprise restructuring, new problems beyond the scope of current laws and regulations are arising, SPC Vice-President Li Guoguang said at a press conference this morning.

Li said that the new regulation, which covers all the problems that have emerged thus far in China's enterprise restructuring, will guide the work of Chinese courts in this regard and provide a strong legal guarantee for the restructuring process.

"This regulation will protect the results of China's enterprise restructuring more effectively and play a positive role in maintaining enterprise and social stability," he said.

In addition, the protection of employees' interests is one of the regulation's objectives, Li said.

He asked China's courts at various levels to pay special attention to the protection of the legitimate rights and interests of employees in enterprises to be restructured, adding that the courts should firmly stop any illegal activities related to enterprise restructuring and tolerate no actions detrimental to the interests of employees.

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