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The Company
Law of the People's Republic of China (Revised in 2005) The Company Law of the People's Republic of China has been amended and adopted at the 18th session of the Standing Committee of the Tenth National People's Congress of the People's Republic of China on October 27, 2005. The amended Company Law of the People's Republic of China is promulgated hereby and shall go into effect as of January 1, 2006. The President of the People's Republic of China Hu Jintao October 27, 2005
The Company Law of the People's Republic of
China (revised in 2005) Article 1 This Law is formulated for the purposes of regulating the organization and operation of companies, protecting the legitimate rights and interests of companies, shareholders and creditors, maintaining the socialist economic order, and promoting the development of the socialist market economy Article 2 The term "company" as mentioned in this Law refers to a limited liability company or a joint stock company limited established within the territory of the People's Republic of China in accordance with the provisions of this law. Article 3 A company is an enterprise juridical person, which has independent juridical person property and enjoys the property right of the juridical person. And it shall bear the liabilities for its debts with all its property. As for a limited liability company, the shareholders shall be responsible for the company to the extent of the capital contributions they have paid. As for a joint stock limited company, the shareholders shall be responsible for the company to the extent of the shares they have subscribed to. Article 4 The shareholders of a company shall be entitled to enjoy the capital proceeds, participate in making important decisions, choose managers and enjoy other rights.
Article 5 When undertaking business operations, a company shall comply
with the laws and administrative regulations, social morality and
business morality. It shall act in good faith, accept the supervision of
the government and the general public, and bear social responsibilities.
Article 6 For the establishment of a company, an application for
establishment and registration shall be filed with the company
registration authority. If the application meets the requirements for
establishment of this Law, the company registration authority shall
register the company as a limited liability company or a joint stock
limited company. If the application fails to meet the requirements for
establishment of this Law, it shall not be registered as a limited
liability company or a joint stock limited company. Article 7 For a lawfully established company, the company registration authority shall issue the company business license to it, and the date of issuance of the company business license shall be the date of establishment of the company. The company business license shall state the name, domicile, registered capital, actually paid capital, business scope, the name of the legal representative and etc. If any of the items as stated in the business license is changed, the company shall modify the registration, and the company registration authority shall replace the old business license by a new one. Article 8 For a limited liability company established according to this Law, it shall indicate in its company name the words "limited liability company" or "limited company". For a joint stock limited company established according to this Law, it shall indicate in its company name the words "joint stock limited company" or "joint stock company". Article 9 The change of a limited liability company to a joint stock limited company shall satisfy the requirements as prescribed in this Law for joint stock limited companies. The change of a joint stock limited company to a limited liability company shall meet the conditions as prescribed in this Law for limited liability companies. Under any of the aforesaid circumstances, the creditor's rights and debts of the company prior to the change shall be succeeded by the company after the change. Article 10 A company shall regard the locus of its main office as its domicile. Article 11 The company established according to this law shall formulate its articles of association which are binding on the company, its shareholders, directors, supervisors and senior managers. Article 12 The company's business scope shall be defined in its articles of association and shall be registered according to law. The company may change its business scope by modifying its articles of association, but shall go through the formalities for modifying the registration. If the business scope of a company covers any item subject to approval pursuant to laws or administrative regulations, the approval shall be obtained according to law. Article 13 The legal representative of a company shall, according to the provisions of its articles of association, be assumed by the chairman of the board of directors, acting director or manager, and shall be registered according to law. If the legal representative of the company is changed, the company shall go through the formalities for modifying the registration.
Article 14 The company may set up branches. To set up a branch, the
company shall file a registration application with the company
registration authority, and shall obtain the business license. The
branch shall not enjoy the status of an enterprise juridical person, and
its civil liabilities shall be born by its parent company. Article 15 A company may invest in other enterprises. However, it shall not become a capital contributor that shall bear the joint liabilities for the debts of the enterprises it invests in, unless it is otherwise provided for by any law.
Article 16 Where a company intends to invest in any other enterprise or
provide guarantee for others, it shall, according to the provisions of
its articles of association, be decided at the meeting of the board of
directors or shareholders or shareholders' convention. If the articles
of association prescribe any limit on the total amount of investments or
guarantees, or on the amount of a single investment or guarantee, the
aforesaid total amount or amount shall not exceed the responsive limited
amount. If a company intends to provide guarantee to a shareholder or
actual controller of the company, it shall make a resolution through the
shareholder's meeting or shareholders' convention.
Article 17 The company shall protect the lawful rights and interests of
its employees, conclude employment contracts with the employees, buy
social insurances, strengthen labor protection so as to realize safe
production.
Article 18 The employees of a company shall, according to the Labor
Union Law of the People's Republic of China, organize a labor union,
which shall carry out union activities and safeguard the lawful rights
and interests of the employees. The company shall provide necessary
conditions for its labor union to carry out activities. The labor union
shall, on behalf of the employees, conclude the collective contract with
the company with respect to the remuneration, working hours, welfare,
insurance, work safety and sanitation and other matters. Article 19 An organization of the Chinese Communist Party shall, according to the Charter of the Chinese Communist Party, be established in the company to carry out activities of the Chinese Communist Party. And the company shall provide necessary conditions for the activities of the Chinese Communist Party.
Article 20 The shareholders of a company shall comply with the laws,
administrative regulations and articles of association, and shall
exercise the shareholder's rights according to law. None of them may
injure any of the interests of the company or of other shareholders by
abusing the shareholder's rights, or injure the interests of any
creditor of the company by abusing the independent status of juridical
person or the shareholder's limited liabilities. Article 21 Neither the controlling shareholder, nor the actual controller, any of the directors, supervisors or senior managers of the company may injure the interests of the company by taking advantage of its connection relationship. Anyone who has caused any loss to the company due to violation of the preceding paragraph shall be subject to compensation.
Article 22 The resolution of the shareholders' convention, shareholders'
meeting or board of directors of the company that has violated any law
or administrative regulation shall be null and void.
Article 23 The establishment of a limited liability company shall
satisfy the following conditions: Article 24 A limited liability company shall be established by not more than 50 shareholders that have made capital contributions.
Article 25 A limited liability company shall state the following items
in its articles of association: Article 26 The registered capital of a limited liability company shall be the total amount of the capital contributions subscribed to by all the shareholders that have registered in the company registration authority. The amount of the initial capital contributions made by all shareholders shall be not less than 20% of the registered capital, nor less than the statutory minimum amount of registered capital, and the margin shall be paid off by the shareholders within 2 years as of the day when the company is established; as for an investment company, it may be paid off within 5 years. The minimum amount of registered capital of a limited liability company shall be RMB 30, 000 Yuan. If any law or administrative regulation prescribes a relatively higher minimum amount of registered capital of a limited liability company, the provisions of that law or administrative regulation shall be followed.
Article 27 A shareholder may make capital contributions in currency, in
kind or intellectual property right, land use right or other
non-monetary properties that may be assessed on the basis of currency
and may be transferred according to law, excluding the properties that
shall not be treated as capital contributions according to any law or
administrative regulation. Article 28 Every shareholder shall make full payment for the capital contribution it has subscribed to according to the articles of association. If a shareholder makes his/its capital contribution in currency, he shall deposit the full amount of such currency capital contribution into a temporary bank account opened for the limited liability company. If the capital contributions are made in non-monetary properties, the appropriate transfer procedures for the property rights therein shall be followed according to law. Where a shareholder fails to make his/its capital contribution as specified in the preceding paragraph, it shall not only make full payment to the company but also bear the liabilities for breach of the contract to the shareholders who have make full payment of capital contributions on schedule. Article 29 The capital contributions made by shareholders shall be checked by a lawfully established capital verification institution, which shall issue a certification. Article 30 After the initial capital contributions made by the shareholders for the first time have been checked by a lawfully established capital verification institution, the representative designated by all the shareholders or the agent entrusted by all the shareholders shall apply for establishment and registration with a company registration application, the articles of association, capital verification and other documents to the company registration authority. Article 31 After the establishment of a limited liability company, if the actual value of the capital contributions in non-monetary properties is found to be apparently lower than that provided for in the articles of association of the company, the balance shall be supplemented by the shareholder who has offered them, and the other shareholders of the company who have established the company shall bear joint liabilities.
Article 32 After the establishment of a limited liability company, every
shareholder shall be issued with a capital contribution certificate,
which shall specify the following:
Article 33 A limited liability company shall prepare a register of
shareholders, which shall specify the following:
Article 34 The shareholder shall be entitled to consult and copy the
articles of association, records of the shareholders' meetings,
resolutions of the meetings of the board of directors, resolutions of
the meetings of the board of supervisors, as well as financial reports.
Article 35 The shareholders shall distribute dividends in light of the percentages of capital contributions actually made by them, unless all shareholders agree that the dividends are not distributed on the percentages of capital contributions. Where the company is to increase its capital, its shareholders have the preemptive right to contribute to the increased amount on the basis of the same percentages of the old capital contributions they have made, unless all shareholders agree that they will not contribute to the increased amount of capital on the basis of the percentages of the old capital contributions they have made. Article 36 After the establishment of a company, no shareholder may illegally take away the contribution capital. Section 2 Organizational Structure Top Article 37 The shareholders' meeting of a limited liability company shall comprise all the shareholders. It shall be the authority of the company, and shall exercise its authorities according to this Law.
Article 38 The shareholders' meeting shall exercise the following
authorities: Article 39 The shareholders' meeting shall be convened and presided over by the shareholder who has made the largest percentage of capital contributions and shall exercise its authorities according to this Law. Article 40 The shareholders' meetings shall be classified into regular meetings and temporary meetings. The regular meetings shall be timely held in pursuance with the articles of association. Where a temporary meeting is proposed by the shareholders representing 1/10 of the voting rights or more, or by directors representing 1/3 of the voting rights or more, or by the board of supervisors, or by the supervisors of the company with no board of supervisors, a temporary meeting shall be held.
Article 41 Where a limited liability company has set up a board of
directors, the shareholders' meetings shall be convened by the board of
directors and presided over by the chairman of the board of directors.
If the chairman is unable or does not perform his duties, the meetings
thereof shall be presided over by the deputy chairman of the board of
directors. If the deputy chairman of the board of directors is unable or
does not perform his duties, the meetings shall be presided over by a
director jointly recommended by half or more of the directors. Where a
limited liability company has not set up the board of directors, the
shareholders' meetings shall be convened and presided over by the acting
director. Article 42 Every shareholder shall be notified 15 days before a shareholders' meeting is held, unless it is otherwise prescribed by the articles of association or it is otherwise stipulated by all the shareholders. A shareholders' meeting shall make records for the decisions on the matters discussed at the meeting. The shareholders who attend the meeting shall affix their signatures to the records. Article 43 The shareholders shall exercise their voting rights at the shareholders' meetings on the basis of their respective percentage of the capital contributions, unless it is otherwise stipulated by the articles of association. Article 44 The discussion methods and voting procedures of the shareholders' meeting shall be prescribed in the articles of association, unless it is otherwise provided for by this Law. A resolution made at a shareholders' meeting on amending the articles of association, increasing or reducing the registered capital, merger, split-up, dissolution or change of the company form shall be adopted by the shareholders representing 2 / 3 or more of the voting rights. Article 45 The board of directors established by a limited liability company shall comprise 3 up to 13 members, unless it is otherwise provided for in Article 51 of this Law. If a limited liability company established by 2 or more state-funded enterprises or other state-funded investors, the board of directors shall comprise the representatives of employees of this company. The board of directors of any other limited liability company may also comprise the representatives of employees of the company concerned. The employees' representatives who are to serve as the board of directors shall be democratically elected by the employees of the company through the general meeting of the representatives of employees, employees' meeting of the company or in any other way. The board of directors shall have one board chairman and may have one or more deputy chairman. The appointment of the chairman and deputy chairman shall be prescribed in the articles of association. Article 46 The terms of office of the directors shall be provided for in the articles of association, but each term of office shall not exceed 3 years. The directors may, after the expiry of their term of office, hold a consecutive term upon re-election. If no reelection is timely carried out after the expiry of the term of office of the directors, or if the number of the members of the board of directors is less than the quorum due to the resignation of some directors from the board of directors prior to the expiry of their term of office, the original directors shall, before the newly elected directors assume their posts, exercise the authorities of the directors according to laws, administrative regulations as well as the articles of association.
Article 47 The board of directors shall be responsible for the
shareholders' meeting and exercise the following authorities: Article 48 The meeting of the board of directors shall be convened and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable or does not perform his duties, the meeting may be convened or presided over by the deputy chairman of the board of directors. If the deputy chairman of the board of directors is unable or does not perform his duties, the meeting may be convened or presided over by a director jointly recommended by half or more of the directors.
Article 49 The discussion methods and voting procedures of the board of
directors shall be prescribed by the articles of association, unless it
is otherwise provided for by this Law. The board of directors shall make
records of the decisions on the matters discussed at the meetings
thereof. The shareholders who attend the meeting shall affix their
signatures to the records.
Article 50 A limited liability company may have a manager who shall be
hired or dismissed upon the decision of the board of directors. The
manager shall be responsible for the board of directors and shall
exercise the following authorities:
Article 51 As for a limited liability company with relatively less
shareholders or a relatively small limited liability company, it may
have an acting director and no board of directors. The acting director
may concurrently hold the post of the company's manger.
Article 52 A limited liability company may set up a board of
supervisors, which shall comprise at least 3 persons. A limited
liability company, which has relatively less shareholders or is
relatively small in scale, may have 1 or 2 supervisors, and does not
have to establish a board of supervisors. The board of supervisors shall
include representatives of shareholders and representatives of the
employees of the company at an appropriate ratio which shall be
specifically stimulated in the articles of association. The employees'
representatives, who are to serve as members of the board of
supervisors, shall be democratically elected by the employees of the
company through the meeting of the employees' representatives or
employees' meeting, or by any other means. The board of supervisors
shall have one chairman, who shall be elected by half or more of all the
supervisors. The chairman of the board of supervisors shall convene and
preside over the meetings of the board of supervisors. If the chairman
of the board of supervisors is unable to or does not perform his duties,
the supervisor recommended by half or more of the supervisors shall
convene and preside over the meetings of the board of supervisors. Article 53 Every term of office of the supervisors shall be 3 years. The supervisors may, after the expiry of their term of office, hold a consecutive term upon re-election. If no reelection is timely carried out after the expiry of the term of office of the supervisors, or the number of the members of the board of directors is less than the quorum due to the resignation of some directors from the board of supervisors prior to the expiry of their term of office, the original supervisors shall, before the newly elected supervisors assume their posts, exercise the authorities of the supervisors according to laws, administrative regulations as well as the articles of association.
Article 54 The board of supervisors or supervisor of a company with no
board of supervisors may exercise the following authorities:
Article 55 The supervisors may attend the meetings of the board of
directors as non-voting delegates, and may raise questions or
suggestions on the matters to be decided by the board of directors.
Article 56 The board of supervisors shall hold meetings at least once a
year. The supervisors may propose to hold temporary meetings of the
board of supervisors. Article 57 The expenses necessary for the board of supervisors or the supervisor of a company with no board of supervisors to perform its (his) duties shall be borne by the company. Section 3 Special Provisions on One-person Limited Liability Companies Top
Article 58 The provisions of this Section shall apply to the
establishment and organizational structure of a one-person limited
liability. As for any matter not prescribed in this Section, it shall be
subject to the provisions of Sections 1 and 2 of this Chapter.
Article 59 The minimum amount of registered capital of a one-person
limited liability company shall be RMB 100, 000 Yuan. The shareholder
shall, in a lump sum, pay the capital contribution as specified in the
articles of association.
Article 60 A one-person limited liability company shall, in the company
registration, give a clear indication that it is solely-funded by one
natural person or one juridical person, and the same shall be specified
in the business license of the company. Article 62 A one-person limited liability company may not set up the board of directors. When the shareholders make a decision on any of the matters as listed in Article 38 of this Law, they shall make it in written form, and preserve it in the company after signed by the shareholders. Article 63 A one-person limited liability company shall make a financial statement at the end of every fiscal year, which shall be subject to the audit by an accounting firm. Article 64 If the shareholder of a one-person limited liability company is unable to prove that the property of the one-person limited liability company is independent from his own property, he shall bear joint liabilities for the debts of the company. Section 4 Special Provisions on Solely State-funded Companies Top
Article 65 The provisions of this Chapter shall apply to the
establishment and organizational structure of the solely state-owned
companies. Any matter not prescribed by this Chapter shall be subject to
the provisions of Sections 1 and 2 of this Chapter. Article 66 The articles of association of a solely state-owned company shall be formulated by the state-owned assets supervision and administration institution, or shall be drafted by the board of directors and then be reported to the state-owned assets supervision and administration institution for approval. Article 67 A solely state-owned company shall not set up the shareholders' meeting, and the functions of the shareholders' meeting shall be exercised by the state-owned assets supervision and administration institution. The state-owned assets supervision and administration institution may authorize the board of directors of the company to exercise some of the functions of the shareholders' meeting and decide on important matters of the company, excluding those that must be decided by the state-owned assets supervision and administration such as merger, split-up, dissolution of the company, increase or decrease of registered capital as well as the issuance of corporate bonds. The merger, split-up, dissolution or application for bankruptcy of an important solely state-owned company shall be subject to the examination of the state-owned assets supervision and administration institution, and then be reported to the people's government at the same level for approval. The term "important solely state-owned company" as mentioned in the preceding paragraph shall be determined according to the provisions of the State Council. Article 68 A solely state-owned company shall establish the board of directors, which shall exercise its functions according to Articles 47 and 67 of this Law. Every term of office of the directors shall not exceed 3 years. The board of directors shall comprise representatives of the employees. And the members of the board of directors shall be designated by the state-owned assets supervision and administration institution, but of whom the representatives of the employees shall be elected through the meeting of the representatives of the employees of the company. The board of directors shall have one chairman and may have a deputy chairman. The chairman and deputy chairman shall be designated by the state-owned assets supervision and administration institution from the members of the board of directors. Article 69 A solely state-owned company shall have a manager, who shall be hired or dismissed by the board of directors and exercise his authorities according to Article 50 of this Law. Upon consent of the state-owned assets supervision and administration institution, the members of the board of directors may concurrently hold the post of manager. Article 70 None of the chairman, deputy chairman, directors and senior managers of a solely state-owned company may concurrently hold a post in any other limited liability company, joint stock limited company or any other economic organization, unless it is permitted by the state-owned assets supervision and administration institution.
Article 71 The board of supervisors of a solely state-owned company
shall comprise at least 5 persons, of whom the employees'
representatives shall account for not less than 1/3, and the concrete
percentage shall be specified in the articles of association.
Article 72 All or some of the stock rights of the shareholders of a
limited liability company may be transferred between the shareholders.
Article 73 When the people's court transfers the stock rights of a shareholder in light of the mandatory enforcement procedures as provided for in laws, it shall notify the company and all the shareholders, and the other shareholders have a preemptive right under the same conditions. If any of the other shareholders fails to exercise their preemptive rights within 20 days after he/it receives the notice of the court, it shall be deemed to have waived his/its preemptive right. Article 74 After a company transfers its stock rights according to Articles 72 and 73 of this Law, it shall cancel the capital contribution certificate of the former shareholder, issue a capital contribution certificate to the new shareholder and modify the record on the shareholders and their capital contributions in the articles of association and the register of shareholders. And no voting of the shareholders' meeting is needed for the modification of the articles of association.
Article 75 Under any of the following circumstances, a shareholder, who
votes against the resolution of the shareholders' meeting, may request
the company to purchase its stock rights at a reasonable price:
Article 76 After the death of a natural person shareholder, his lawful
inheritor may inherit the shareholder's qualifications, unless it is
otherwise prescribed by the articles of association. Section 1 Establishment Top
Article 77 The establishment of a joint stock limited company shall meet
the following conditions: Article 78 A joint stock limited company may be established by ways of promotion or stock floatation. The establishment of a company by promotion means that the initiators establish a company by subscribing for all of the shares that should be issued by the company. The establishment of a company by stock floatation means that the initiators establish a company by subscribing for some of the shares that should be issued by the company and offering the remaining shares to the general public or to particular objects for subscription. Article 79 To establish a joint stock limited company, there shall be not less than 2 but not more than 200 initiators, of whom half or more shall have a domicile within the territory of China. Article 80 The initiators of a joint stock limited company shall undertake the preparatory work of the company. They shall conclude an agreement of initiators to clarify their respective rights and obligations during the course of establishing the company.
Article 81 Where a joint stock limited company is established by
promotion, its registered capital shall be the total capital stock
subscribed for by all the initiators as registered in the company
registration authority. The minimum amount of initial capital
contributions to be made by all initiators shall be not less than 20% of
the total registered capital, and the remaining amount shall be paid off
by the initiators within 2 years as of the day when the company is
established, while for an investment company, the remaining amount may
be paid off within 5 years. Before the registered capital is paid off,
no stock may be offered to others for subscription.
Article 82 The articles of association of a joint stock limited company
shall specify the following matters: Article 83 The form of capital contributions of initiators shall be subject to the provisions in Article 27 of this Law.
Article 84 When establishing a joint stock limited company by promotion,
the initiators shall subscribe, in writing, for the full amount of
shares prescribed in the articles of association. In the case of paying
the capital contributions at one time, the initiators shall make the
payment in a lump sum; in the case of paying the capital contributions
by installments, the initiators shall make the down payment immediately.
In the case of making capital contributions in non-monetary properties,
the initiators shall go through the procedures for the transfer of
property rights according to law. Article 85 For a joint stock limited company established by stock flotation, the shares subscribed for by the initiators shall not be less than 35 % of the total shares. However, if it is otherwise provided for by any law or administrative regulation, such law or administrative regulation shall prevail. Article 86 When raising shares in the public, the initiators shall publish a prospectus and prepare share subscription forms. The share subscription form shall involve the items listed in Article 87, and a subscriber shall fill in the number and amount of shares he subscribes for and his domicile, and shall affix his signature or seal thereto. The subscriber shall pay the shares pursuant to the number of shares he has subscribed for.
Article 87 The prospectus shall be accompanied by the articles of
association formulated by the initiators and shall state the following: Article 88 The public offer shares shall be underwritten by a lawfully established securities company, and an underwriting agreement shall be concluded.
Article 89 As for the public offer shares, the initiators shall sign an
agreement with the receiving bank. Article 90 After the full payment for the public offer shares, they shall be verified by a lawfully established capital verification institution, and a certification shall be issued thereby. The initiators shall hold a company establishment meeting within 30 days, which shall comprise the subscribers. If the public offer shares are not fully subscribed for at the expiration of the time limit prescribed in the prospectus, or the initiators fail to hold an establishment meeting within 30 days after the full payment for the public offer shares, the subscribers may demand the initiators to make repayments for the public offer shares plus an interest calculated at the bank deposit interest rate for the same period.
Article 91 The initiators shall notify every subscriber of the date of
the establishment meeting or make a public announcement on the meeting
15 days in advance. The establishment meeting may not be held, unless
subscribers representing at least half of the shares appear. The
establishment meeting shall exercise the following authorities: Article 92 The initiators and subscribers shall not withdraw their share capital after making payments for the shares they have subscribed for or after making capital contributions by using non-monetary properties, unless the public offer shares have not been fully subscribed within the time limit, the initiators fail to convene the establishment meeting within the time limit or the establishment meeting has decided not to set up the company.
Article 93 The board of directors shall, within 30 days after the
establishment meeting ends, file an application for registration with
the company registration authority and submit the following documents to
it: Article 94 After the establishment of a joint stock limited company, if any of the initiators fails to make full payment for the capital contributions as provided for in the articles of association, it shall make up the arrears, and the other initiators shall bear joint liabilities. After the establishment of a joint stock limited company, if it is found that the actual value of the non-monetary properties used as capital contributions for the establishment of the company is obviously lower than that as prescribed in the articles of association, the initiator who has made the capital contribution shall make up the balance, and the other initiators shall bear joint liabilities.
Article 95 The initiators of a joint stock limited company shall bear
the following responsibilities: Article 96 Where a limited liability company is changed into a joint stock limited company, the total amount of the paid-in capital shall be not less than the total amount of the net assets. Where a limited liability company is changed into a joint stock limited company, the public offer stocks issued for the purpose of increasing the capital shall comply with the law. Article 97 A joint stock limited company shall prepare and keep in the company the articles of association, register of the shareholders, counterfoil of corporate bonds, records of the shareholders' meetings, records of the meetings of the board of directors, records of the meetings of the board of supervisors, and financial reports. Article 98 The shareholders shall be entitled to refer to the articles of association, register of the shareholders, counterfoil of corporate bonds, records of the shareholders' meeting meetings, records of the meetings of the board of directors, records of the meetings of the board of supervisors and financial reports, and may bring forward proposals or raise questions about the business operation of the company. Section 2 Shareholders' Meeting Top Article 99 The shareholders' meeting of a joint stock limited company shall comprise all the shareholders. It is the company's organ of power, which shall exercise its authorities according to law. Article 100 The provisions regarding the authorities of the shareholders' meeting of a limited liability company as prescribed in the first paragraph of Article 38 of this law shall apply to the shareholders' meeting of a joint stock limited company.
Article 101 An annual session of the shareholders' meeting shall be held
each year. Under any of the following circumstances, a temporary
shareholders' meeting shall be held within 2 months:
Article 102 A session of the shareholders' meeting shall be convened by
the board of directors and be presided over by the chairman of the board
of directors. If the chairman is unable or fails to perform his duties,
the meetings thereof shall be presided over by the deputy chairman of
the board of directors. If the deputy chairman of the board of directors
is unable or fails to perform his duties, the meetings shall be presided
over by a director jointly recommended by half or more of the directors.
Article 103 As for a shareholders' meeting to be held, a notice shall be
given to every shareholder 20 days in advance, which shall state the
time and place of the meeting as well as the matters to be deliberated
at the meeting. As for a temporary meeting of the shareholders' meeting,
a notice shall be given to every shareholder 15 days in advance. As for
the issue of unregistered stocks, the time and place of the meeting as
well as the matters to be deliberated at the meeting shall be announced
30 days in advance. Article 104 When a shareholder attends the shareholders' meeting, he shall have one voting right for each share he holds. However, the company has no voting right for its own shares it holds. When any resolution is to be made by the shareholders' meeting, it shall be adopted by shareholders representing more than half of the voting rights of the shareholders in presence. However, when the shareholders' meeting makes a decision to modify the articles of association or to increase or reduce the registered capital, or a resolution about the merger, split-up, dissolution or change of the company form, the resolution shall be adopted by shareholders representing 2/3 or more of the voting rights of the shareholders in presence. Article 105 For the important matters such as company transfer, being assignee of any important asset or providing guarantee for any other person, which shall be decided through the shareholders' meeting under this Law and the articles of association, the board of directors shall timely call a shareholders' meeting for voting. Article 106 When the shareholders' meeting elects directors or supervisors, it may, according to the articles of association or resolution of the shareholders' meeting, adopt a cumulative voting system. The term "cumulative voting system" as mentioned in this Law refers to a system of voting by shareholders for the election of directors or supervisors at a session of the shareholders' meeting in which the shareholder can multiply his voting rights by the number of candidates and vote them all for one candidate for director or supervisor. Article 107 A shareholder may entrust an agent to attend a shareholders' meeting. The agent shall present a power of attorney issued by the shareholder to the company, and shall exercise his voting rights within the authorization scope. Article 108 The shareholders' meeting shall prepare records regarding the decisions on the matters discussed by it. The chairman of the meeting and the directors in presence shall affix their signatures to the records, which shall be preserved together with the book of signatures of the shareholders in presence as well as the power of attorney thereof. Section 3 The Board of Directors and Manager Top
Article 109 A joint stock limited company shall set up a board of
directors, which shall comprise 5-19 persons. Article 110 The board of directors shall have one chairman, and may have a deputy chairman. The chairman and deputy chairmen shall be elected by more than half of all the directors. The chairman of the board of directors shall convene and preside over the meetings of the board of directors and examine the implementation of the resolutions of the board of directors. The deputy chairman shall assist the chairman to work. If the chairman is unable or fails to perform his duties, the deputy chairman shall perform such duties. If the deputy chairman of the board of directors is unable or fails to perform his duties, the director who is jointly recommended by half or more of the directors shall perform such duties. Article 111 The board of directors shall convene at least two meetings every year, and shall notice all directors and supervisors 10 days before it holds a meeting. The shareholders representing 1/10 or more of the voting rights, or 1/3 of the directors, or the board of supervisors may bring forward a proposal on holding a temporary meeting of the board of directors. The chairman of the board of directors shall, within 10 days after he receives such a proposal, convene and preside over a meeting of the board of directors. If the board of directors holds a temporary meeting, it may separately decide the method and time limit for the notification on convening meetings of the board of directors.
Article 112 No meeting of the board of directors may be held, unless
more than half of the directors are present. When the board of directors
makes a resolution, it shall be adopted by more than half of all the
directors.
Article 113 The directors shall attend in person the meetings of the
board of directors. Where any director is unable to attend the meeting
for a certain reason, he may, by issuing a written power of attorney,
entrust another director to attend the meeting on his behalf, and the
scope of authorization shall be stated in the power of attorney.
Article 114 A joint stock limited company may have a manager, who shall
be hired or dismissed by the board of directors. Article 115 The board of directors of a company may decide to appoint a member of the board of directors to concurrently take the post of the manager. Article 116 No company may, directly or via its subsidiary, lend money to any of its directors, supervisors or senior managers. Article 117 A company shall regularly disclose to its shareholders the information about remunerations obtained by the directors, supervisors and senior managers from the company. Section 4 the Board of Supervisors Top
Article 118 A joint stock limited company shall set up a board of
supervisors, which shall comprise at least 3 persons. Article 119 The provisions of Articles 54 and 55 of this Law on the functions of a limited liability company shall apply to that of the board of supervisors of a joint stock limited company. The expenses necessary for the board of supervisors to exercise its authorities shall be borne by the company.
Article 120 The board of supervisors shall hold at least one meeting
every 6 months. The supervisors may propose to convene temporary
meetings of the board of supervisors. The discussion methods and voting
procedures of the board of supervisors shall be prescribed in the
articles of association, unless it is otherwise provided for by this
Law. Section 5 Special Provisions on the Organizational Structure of a Listed Company Top Article 121 The term "listed company" as mentioned in this Law refers to the joint stock limited companies whose stocks are listed and traded in a stock exchange. Article 122 Where a listed company purchases or sells any important assets, or provides a guarantee of which the amount exceeds 30% of its total assets, a resolution shall be made by the shareholders' meeting and adopted by shareholders representing 2/3 of the voting rights of the shareholders in presence. Article 123 A listed company shall have independent directors. And the concrete measures shall be formulated by the State Council. Article 124 A listed company may have a secretary of the board of directors, who shall be responsible for the preparation of the sessions of shareholders' meeting and meetings of the board of directors, preservation of documents, management of the company's stock rights, information disclosure, and etc.
Article 125 Where any of the directors has any relationship with the
enterprise involved in the matter to be discussed at the meeting of the
board of directors, he shall not vote on this resolution, nor may he
vote on behalf of any other person. The meeting of the board of
directors shall not be held unless more than half of the unrelated
directors are present at the meeting. A resolution of the board of
directors shall be adopted by more than half of the unrelated directors.
If the number of unrelated directors in presence is less than 3 persons,
the matter shall be submitted to the shareholders' meeting of the listed
company for deliberation. Section 1 Issuance of Shares Top
Article 126 The capital of a joint stock limited company shall be
divided into shares, and all the shares shall be of equal value. Article 127 The issuance of shares shall comply with the principle of fairness and impartiality, and the shares of the same class shall have the same rights and benefits. The stocks issued at the same time shall be equal in price and shall be subject to the same conditions. The price of each share purchased by any organization or individual shall be the same. Article 128 The stocks may be issued at a price equal to or above the par value, but not below the par value.
Article 129 The stocks shall be in paper form or in other forms
prescribed by the securities Article 130 The stocks issued by a company may be registered stocks or unregistered stocks. The stocks issued to initiators or juridical persons shall be registered stocks, which shall state the names of such initiators or juridical persons, and shall not be registered in any other person's name or the name of any representative.
Article 131 A company that issues registered stocks shall prepare a
register of shareholders, which shall state the following: Article 132 The State Counsil can make other regulations on other kinds of share issued by corporation in line with stipulations other than the law.(国务院可以对公司发行本法规定以外的其他种类的股份，另行作出规定) Article 133 After a joint stock limited company is established, it shall formally deliver the stocks to the shareholders. No company may deliver any stock to the shareholders prior to its establishment.
Article 134 Where a company intends to issue new stocks, it shall, under
its articles of association, make a resolution on the following matters
through the shareholders' meeting or the board of directors: Article 135 When a company publicly issues new stocks upon approval of the securities regulatory institution of the State Council, it shall publish a new stock prospectus and its financial reports, and shall make a stock subscription form. The provisions of Articles 88 and 89 of this Law shall apply to the public offering of new stocks of a company. Article 136 When a company issues new stocks, it may make a pricing plan in light of its business operation and financial status. Article 137 After a company raises enough capital, it shall go through the modification registration in the company registration authority, and make an public announcement. Section 2 Transfer of Shares Top Article 138 The shares held by the stockholders may be transferred according to law. Article 139 Where a stockholder intends to transfer its shares, it shall transfer its shares in a lawfully established stock exchange or by any other means as prescribed by the State Council. Article 140 The transfer of a registered stock shall be effected by the stockholder's endorsement or by any other means stipulated by relevant laws or administrative regulations. After the transfer, the company shall record the name and domicile of the transferee in the register of shareholders. Within 20 days before a meeting of shareholders is held, or within 5 days prior to the benchmark date decided by the company for the distribution of dividends, no modification registration may be made to the register of shareholders as mentioned in the preceding paragraph. However, if any law otherwise provides for the modification registration of the register of shareholders of listed companies, the latter shall prevail. Article 141 The transfer of an unregistered stock becomes valid as soon as the stockholder delivers the stock to the transferee. Article 142 The shares of a company held by the initiators of this company shall not be transferred within 1 year as of the day of establishment of the company. The shares issued before the company publicly issues shares shall not be transferred within 1 year as of the day when the stocks of the company get listed and are traded in a stock exchange. The directors, supervisors and senior managers of the company shall declare to the company the shares held by them and the changes thereof. During the term of office, the shares transferred by any of them each year shall not exceed 25% of the total shares of the company he holds. The shares of the company held by the aforesaid persons shall not be transferred within 1 year as of the day when the stocks of the company get listed and are traded in a stock exchange. After any of the aforesaid persons is removed from his post, he shall not transfer the shares of the company he holds. The articles of association may have other restrictions on the transfer of shares held by the directors, supervisors and senior managers.
Article 143 A company shall not purchase its own shares, except for any
of the following circumstances:
Article 144 In case any registered stocks are stolen, lost or destroyed,
the shareholder may request the people's court to declare these stocks
invalid in light of the public notice procedure prescribed in the Civil
Procedural Law of the People's Republic of China. After the people's
court has invalidated these stocks, the shareholder may file an
application to the company for issuance of new stocks.
Article 147 Anyone who is under any of the following circumstances shall
not take the post of a director, supervisor or senior manager of a
company: Article 148 The directors, supervisors and senior managers shall comply with laws, administrative regulations and the articles of association. They shall bear the obligations of fidelity and diligence to the company. No director, supervisor or senior manager may take any bribe or other illegal gains by taking the advantage of his authorities, or encroach on the properties of the company.
Article 149 No director or senior manager may have any of the following
acts: Article 150 Where any director, supervisor or senior manager violates laws, administrative regulations or the articles of association during the course of performing his duties, if any loss is caused to the company, he shall make compensation.
Article 151 If the shareholder's meeting or shareholders' meeting
demands a director, supervisor or senior manager to attend the meeting
as a non-voting delegate, he shall do so and shall answer the
shareholders' inquiries.
Article 152 Where a director or senior manager is under the circumstance
as stated in Article 150 of this Law, the shareholder(s) of the limited
liability company or joint stock limited company separately or
aggregately holding 1% or more of the total shares of the company may
require the board of supervisors or the supervisor of the limited
liability company with no board of supervisors in writing to file a
lawsuit in the people's court. If the supervisor is under the
circumstance as stated in Article 150 of this Law, the aforesaid
shareholder(s) may require the board of directors or the acting director
of the limited liability company with no board of directors to in
writing lodge a lawsuit in the people's court.
Article 153 If any director or senior manager damages the shareholders'
interests by violating any law, administrative regulation or the
articles of association, the shareholders may lodge a lawsuit in the
people's court. Article 154 The term "corporate bonds" as mentioned in this Law refers to the securities that are issued by a company according to the statutory procedures with guaranteed payment of the principal plus interest by a specified future date. To issue corporate bonds, a company shall meet the issuance requirements of the Securities Law of the People's Republic of China.
Article 155 After an application for issuing corporate bonds is approved
by the department authorized by the State Council, the company shall
publish its bond issuance plan, which shall mainly state the following
items: Article 156 The physical bonds issued by a company shall state the name of company, par value, interest rate, time limit for repayment, and etc., and shall bear the signature of the legal representative and the seal of the company. Article 157 The corporate bonds may be registered or unregistered bonds.
Article 158 A company shall prepare and keep the counterfoils of
corporate bonds. If the company issues registered corporate bonds, the
counterfoils thereof shall state the following items: Article 159 The registration and settlement institutions of registered corporate bonds shall establish bylaws on the registration, preservation, interest payment and acceptance of bonds.
Article 160 The corporate bonds may be transferred. The transfer price
shall be negotiated by the transferor and transferee. Article 161 The transfer of registered corporate bonds shall be effected by the bondholder's endorsement or by other methods prescribed by the relevant laws and administrative regulations. In the case of transfer of registered bonds, the company shall record the name and domicile of the transferee in the counterfoil of corporate bonds. The transfer of unregistered corporate bonds takes effect as soon as the bondholder delivers the bonds to the transferee. Article 162 A listed company may, upon the resolution of the shareholders' meeting, issue corporate bonds that may be converted into stocks and shall work out concrete conversion measures in the corporate bond issuance plan. To issue corporate bonds that may be converted into stocks, the listed company shall file an application with the securities regulatory institution for examination and approval. The corporate bonds that may be converted into stocks shall be marked with the words "convertible corporate bonds", and the number of convertible company bonds shall be specified in the company's records of bondholders.
Article 163 Where any convertible company bonds is issued, the company
shall exchange its stocks for the bonds held by the bondholders in the
prescribed method of conversion, provided that the bondholders have the
option on whether or not to convert their bonds. Article 164 A company shall establish its own financial and accounting bylaws according to laws, administrative regulations and provisions of the treasury department of the State Council. Article 165 A company shall, after the end of each fiscal year, formulate a financial report, and shall have it checked by an accounting firm. The financial report shall be work out according to laws, administrative regulations and provisions of the treasury department of the State Council. Article 166 A limited liability company shall submit the financial report to every shareholder within the time limit as prescribed in the articles of association. The financial report of a joint stock limited company shall be ready for the consultation of the shareholders at the company 20 days before the annual meeting of the shareholders is held. A joint stock limited company of public offer stocks shall make a public announcement of its financial report.
Article 167 Where a company distributes its aftertax profits of the
current year, it shall draw 10 percent of the profits as the company's
statutory common reserve. The company may stop drawing if the
accumulative balance of the common reserve has already accounted for
over 50 percent of the company's registered capital. Article 168 The premium of a joint stock limited company from the issuance of stocks at a price above the par value of the stocks, and other incomes listed in the capital accumulation fund according to provisions of the treasury department of the State Council shall be listed as the capital accumulation funds of the company.
Article 169 The capital accumulation funds of the company shall be used
for making up losses, expanding the production and business scale or
increasing the registered capital of the company. But the capital
accumulation funds shall not be used for making up the company's losses.
Article 170 Where a company plans to hire or dismiss any accounting firm to undertake the auditing of the company, a resolution shall be made by the shareholders' meeting or shareholders' assembly or the board of directors according to the provisions of the articles of association. Where the shareholders' meeting or shareholders' assembly or the board of directors adopts a voting on the dismissal of any accounting firm, it shall allow the accounting firm to state its own opinions. Article 171 A company shall provide to the accounting firm it hires truthful and complete accounting vouchers, account books, financial and accounting statements and other accounting materials, and may not refuse to do so or conceal any of them or make any false statements.
Article 172 Except for the statutory account books, a company shall not
set up other account books. Article 173 The merger of a company may be effected by way of merger or consolidation. In the case of merger, a company absorbs any other company and the absorbed company is dissolved; in the case of consolidation, two or more companies combine together for the establishment of a new one, and the existing ones are dissolved. Article 174 As for a corporate merger, both parties to the merger shall conclude an agreement with each other and formulate balance sheets and checklists of properties. The companies involved shall, within ten days as of making the decision of merger, notify the creditors, and shall make a public announcement on a newspaper within 30 days. The creditors may, within 30 days as of the receipt of the notice or within 45 days as of the issuance of the public announcement if it fails to receive a notice, require the company to clear off its debts or to provide corresponding guarantees. Article 175 In the case of a merger, the credits and debts of the companies involved shall be succeeded by the company that survives the merger or by the newly established company. Article 176 As for the split-up of a company, the properties thereof shall be divided accordingly, and balance sheets and checklists of properties shall be worked out. The company shall, within 10 days as of the day when the decision of split-up is made, notice the creditors and shall make a public announcement on a newspaper within 30 days. Article 177 The post-split companies shall bear joint liabilities for the debts of the former company before it is split up, unless it is otherwise prescribed by the company and the creditors before the split-up with regard to the clearance of debts in written agreement.
Article 178 Where a company finds it necessary to reduce its registered
capital, it must work out balance sheets and checklists of properties.
Article 179 Where a limited liability company increases its registered capital, the capital contributions of the shareholders for the increased amount shall be subject to the relevant provisions of the present Law regarding the capital contributions for the establishment of a limited liability company. Where a joint stock limited company issues new stocks for increasing its registered capital, the subscription for new stocks by shareholders shall be subject to the relevant provisions of the present Law regarding the payment of stock money for the establishment of a joint stock limited company.
Article 180 Where any of the registered items is changed during the
process of merger or split-up of a company, the company shall go through
modification registration with the company registration authority. If it
is dissolved, it shall be deregistered according to law. If any new
company is established, it shall go through the procedures for company
establishment according to law.
Article 181 A company may be dissolved under any of the following
circumstances: Article 182 Where any of the circumstances as prescribed in Article 181 (1) of this Law occurs, a company may continue to exist by modifying its articles of association. To modifying its articles of association according to the provisions of the preceding paragraph, the consent of the shareholders who hold two thirds or more of the voting rights shall be obtained if it is a limited liability company, and the consent of two thirds or more of the voting rights the shareholders who attend the meeting of the shareholders shall be obtained if it is a joint stock limited company.
Article 183 Where a company meets any serious difficulty during its
operation or management so that the interests of the shareholders will
be subject to heavy loss if it continues to exist and it cannot be
solved by any other means, the shareholders who hold ten percent or more
of the voting rights of all the shareholders of the company may plead
the people's court to dissolve the company.
Article 185 The liquidation group may exercise the following functions
during the process of liquidation:
Article 186 The liquidation group shall, within ten days as of its
formation, notify the creditors, and shall make a public announcement
within 60 days on newspapers. Creditors shall, within thirty days as of
the receipt of a notice or within 45 days as of the issuance of the
public announcement in the case of failing to receiving a notice,
declare credits against the liquidation group.
Article 187 The liquidation group shall, after liquidating the
properties of the company and producing balance sheets and checklists of
properties, make a plan of liquidation, and report it to the
shareholders' meeting or the shareholders' assembly or the people's
court for confirmation. Article 188 If the liquidation group finds that the properties of the company is not sufficient for clearing off the debts after liquidating the properties of the company and producing balance sheets and checklists of properties, it shall file an application to the people's court for bankruptcy. Once the people's court makes a judge declaring the bankruptcy of the company, the liquidation group shall hand over the liquidation matters to the people's court. Article 189 After liquidation of the company is completed, the liquidation group shall formulate a liquidation report, which shall be submitted to the shareholders' meeting or the shareholders' assembly or the people's court for confirmation and shall be submitted to the company registration authority for writing off the registration of the company. It shall also make a public announcement on its termination.
Article 190 The members of the liquidation group shall devote themselves
to their duties and fulfill their obligations of liquidation according
to law.
Article 191 Where a company is declared bankrupt according to law, it
shall carry out a bankruptcy liquidation in accordance with the
provisions concerning bankruptcy liquidation. Article 192 The term "foreign company" as mentioned in this Law refers to a company established outside of the territory of China according to any foreign law.
Article 193 A foreign company, which plans to establish any branch
within the territory of China, shall submit an application with the
competent authority of China, and shall submit relevant documents such
as the articles of incorporation, the company registration certificate
as issued by the country of establishment and etc.. Upon the approval,
it shall go through registration formalities with the company
registration authority according to law and obtain a business license.
Article 194 Where a foreign company establishes any branch within the territory of China, it must appoint a representative or an agent within the territory of China to take charge of the branch, and shall allocate to the branch corresponding funds for the business activities it is engaged in.
Article 195 The branch of any foreign company shall indicate in its name
the nationality and the form of liability of the foreign company
concerned.
Article 196 The branch of a foreign company established within the
territory of China does not have the status of a juridical person. Article 197 The branches of foreign companies which are established upon approval shall accord with the laws of China when undertaking their business activities within the territory of China, and may not injure the social public interests of China, and the lawful rights and interests thereof shall be protected by Chinese law.
Article 198 Where a foreign company relinquishes any of its branches
within the territory of China, it shall clear off the debts thereof
according to law, and shall carry out a liquidation in accordance with
the provisions of this Law on the procedures for the liquidation of
companies. Before the debts are cleared off, it may not transfer any of
the properties of the branch out of China. Article 199 Where anyone, in violation of the provisions of this Law, obtains the registration of a company by making a false report of his register capital, submitting false materials or by any other fraudulent means so as to conceal important facts, he shall be ordered by the company registration authority to make corrections. In the case of making a false report of his register capital, he shall be fined not less than 5% but not more than 15% of the fabricated registered capital; in the case of submitting false materials or by any other fraudulent means so as to conceal important facts, he shall be fined not less than 5,000 Yuan but not more than 50,000 Yuan; if the circumstances are serious, the company registration certificate shall be revoked or the business license shall be cancelled. Article 200 Any of the initiators or shareholders of a company, who makes any false capital contribution, or fails to |
