Corporate counsel system enters new phase

Mounting pressures of a sliding Chinese economy in 2016 set the reform of state-owned enterprises (SOEs) off to a rocky start. The “one belt, one road” (OBOR) strategy continues apace, while pressures from overseas legal environments are increasing. Measures to reform the legal services sector are issued with great frequency, making the developmental direction of corporate legal work clear. And in-house legal work keeps expanding, enhancing the influence of corporate counsel.

Corporate counsel system develops. In June 2016, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the Opinions on Promoting the Legal Counsel System and the Government Lawyer and Company Lawyer Systems, expressly providing for the implementation of the legal counsel system and company lawyer system in SOEs. The opinions were jointly issued by the two general offices, which establishes the authoritativeness of the document and provides the basis for resolving certain difficult issues since the implementation of the legal counsel system and company lawyer system, including participation by corporate counsel in major enterprise decisions, the practice rights of company lawyers, and pursuit of liability where the performance by legal counsel or company lawyers of their roles has been affected.

The objective set by the opinions is that an SOE legal counsel and company lawyer system consistent with the demands of socio-economic development and legal services in China will have taken shape by 2020, indicating the future developmental direction of corporate counsel work. The opinions expressly set out the future requirements in respect of the qualifications for serving as legal counsel in SOEs, and implement the “old ways for existing personnel and the new ways for new personnel”, permitting persons who have not secured legal practice qualifications or lawyer qualifications but are currently serving as legal counsel in SOEs to continue performing their responsibilities.

Ye Xiaozhong is the director of China Enterprise Legal Management Research Centre at the China University of Political Science and Law