ChapterTwo:IncorporationandOrganizationalStructureofaLimitedLiabilityCompany.6
SectionOneIncorporation.6
SectionTwoOrganizationalStructure.9
SectionThreeSpecialProvisionsonOne-PersonLimitedLiabilityCompanies.14
SectionFourSpecialProvisionsonWhollyState-ownedCompanies.15
ChapterThree:ShareTransferofaLimitedLiabilityCompany.16
ChapterFour:EstablishmentandOrganizationalStructureofaJointStockLimitedCompany.18
SectionOneEstablishment18
SectionTwoGeneralMeetingofShareholders.23
SectionThreeBoardofDirectorsandGeneralManager25
SectionFourBoardofSupervisors.27
ChapterFiveIssueandTransferofSharesofJointStockLimitedCompanies.28
SectionOneIssueofShares.28
SectionTwoAssignmentOfShares.31
ChapterSix:QualificationsandObligationsofDirectors,SupervisorsandSeniorOfficers.32
ChapterSeven:CompanyBonds.35
ChapterEight:FinancialandAccountingAffairsofCompany.36
ChapterNine:MergerandDivisionofCompany,IncreaseandDecreaseofRegisteredCapital38
ChapterTen:DissolutionandLiquidationofCompany.40
ChapterEleven:BranchofForeignCompany.42
ChapterTwelve:LegalLiabilities.43
ChapterThirteen:SupplementaryProvisions.47
ChapterOne:GeneralProvisions[page]
Article1
ThisLawisenactedinordertostandardizetheorganizationandactivitiesofcompanies,toprotectthelegitimaterightsandinterestsofcompanies,shareholdersandcreditors,tomaintainthesocio-economicorderandtopromotethedevelopmentofthesocialistmarketeconomy.
Article2
Article3
Acompanyisanenterpriselegalpersonthatshallenjoytherighttotheentireindependentpropertyofthelegalperson.Acompanyshallbeliableforitsdebtstotheextentofallitsassets.Inthecaseofalimitedliabilitycompany,shareholdersshallassumeliabilitytowardsthecompanytotheextentoftheirrespectivecapitalcontributions.Inthecaseofajointstocklimitedcompany,shareholdersshallassumeliabilitytowardsthecompanytotheextentoftheirrespectiveshareholdings.
Article4
Theshareholdersofacompanyshallenjoysuchrightsasbenefitingfromassetsofthecompany,makingmajordecisionsandselectingmanagerialpersonnelinaccordancewiththelaw.
Article5
Inconductingitsbusiness,acompanymustabidebylawsandadministrativerulesandregulations,observesocialmoralsandbusinessethics,conductbusinessesingoodfaith,subjectitselftothesupervisionofthegovernmentandthepublicandfulfillsocialresponsibilities.
Article6
Acompanyshallapplytothecompanyregistrationauthorityforestablishmentregistration.CompaniesmeetingtheconditionssetbythisLawshallberegisteredaslimitedliabilitycompaniesorjointstocklimitedcompanies;whilecompaniesfailingtomeettheconditionssetbythisLawshallnotberegisteredaslimitedliabilitycompaniesorjointstocklimitedcompanies.[page]
Wherelaws,administrativerulesandregulationsprovidethatincorporationofcompaniesmustbesubjecttoexaminationandapproval,theproceduresofexaminationandapprovalshallbecompletedaccordingtolawpriortotheregistrationofsuchcompanies.
Thepublicmayinquireaboutregistrationitemsfromthecompanyregistrationauthority.Thecompanyregistrationauthorityshallprovidesuchinquiryservice.
Article7
Thecompanyregistrationauthorityshallgrantregistrationandissueabusinesslicensetoacompanythatisestablishedinaccordancewiththelaw.Thedateoftheissuanceofthecompanybusinesslicenseshallbethedateoftheincorporationofthecompany.
Thebusinesslicenseshallspecifythenameanddomicileofthecompany,registeredcapital,paid-incapital,businessscope,thenameofthelegalrepresentative,etc.Intheeventofanychangetotheregistrationitemofthebusinesslicense,acompanyshallundergoalterationregistrationprocedureswiththecompanyregistrationauthorityinaccordancewiththelaw,afterwhichanewbusinesslicenseshallbeissuedtothecompany.
Article8
Article9
Ifalimitedliabilitycompanyistobeconvertedintoajointstocklimitedcompany,itshallsatisfytherequirementsforajointstocklimitedcompanystipulatedbythisLaw.Ifajointstocklimitedcompanyistobeconvertedintoalimitedliabilitycompany,itshallsatisfytherequirementsforalimitedliabilitycompanystipulatedbythisLaw.Wherealimitedliabilitycompanyisconvertedintoajointstocklimitedcompanyorviceversa,theclaimsanddebtsoftheoriginalcompanyshallbesucceededtobythecompanyintowhichitisconverted.[page]
Article10
Article11
Article12
Article13
Thelegalrepresentativeofacompanymayberepresentedbythechairman,executivedirectorormanagerofacompanyincompliancewithitsarticlesofassociationandregisteredinaccordancewiththelaw.Intheeventofanychangeofthelegalrepresentativeofacompany,suchchangeshallberegisteredinaccordancewiththelaw.
Article14
Acompanymayestablishbranches.Thecompany,inestablishingitsbranch(es),shallconductestablishmentregistrationprocedureswiththecompanyregistrationauthorityandobtainthebusinesslicense(s).Thebranchesshallnotpossessthestatusofenterpriselegalpersonsandwhosecivilliabilitiesshallbebornebythecompany.
Acompanymayestablishsubsidiaries,whichshallpossessthestatusofenterpriselegalpersons,andshallindependentlybearcivilliabilitiesinaccordancewiththelaw.
Article15
Acompanymayinvestinotherenterprises,however,unlessotherwisestipulatedbythelaw,thecompanymakingsuchinvestmentshallnotbearjointandseveralliabilityforthedebtsoftheenterpriseinwhichthecompanyinvests.[page]
Article16
Investmentsinotherenterprisesorprovisionsofsecuritybyacompanyshallbedeterminedbyitsboardofdirectors,shareholdersmeetingorgeneralmeetingofshareholdersincompliancewithitsarticlesofassociation.Wherethelimitoftheaggregateamountofinvestmentorsecurityextendedbyacompanyor,theamountofinvestmentorsecurityextendedineachcaseissetoutinthearticlesofassociation,theactualamountofinvestmentorsecurityshallnotexceedsuchlimit.Securityprovidedbyacompanytoitsshareholdersoractualcontrollershallbedeterminedbytheshareholdersmeetingorthegeneralmeetingofshareholdersofthecompany.
Theshareholdersdescribedintheprecedingparagraphortheshareholdersdominatedbytheactualcontrollerdescribedintheprecedingparagraphshallnotparticipateinthevotingprocessonthemattersdescribedintheprecedingparagraph.Thevoteonsuchmattersshallbeadoptedbymorethanhalfofalltheothershareholdersattendingthemeeting.
Article17
Companiesmustprotectthelawfulrightsandinterestsoftheirstaffandworkers,signlaborcontractswiththemandcoverthemwithsocialinsurancesinaccordancewiththelaw,andstrengthenlaborprotectionsoastoachievesafetyinproduction.
Companiesshallapplyvariousformstostrengthenprofessionaleducationandon-the-jobtrainingoftheirstaffandworkerssoastoimprovetheirskillsandcapabilities.
Article18
Companiesshall,throughthecongressoftheworkersandstaffmembersorotherforms,practicedemocraticmanagementinaccordancewiththeprovisionsoftheConstitutionandrelevantlaws.
Acompanyshallseekadvicesfromitstradeunionwhendiscussinganddecidinguponimportantissuesontherestructuringoroperationofthecompany,orformulatingimportantrulesandregulationsandshall,throughthecongressoftheworkersandstaffmembersorotherforms,seekadviceandsuggestionsfromitsstaffandworkers.
Article19
TheorganizationsoftheCommunistPartyofChinamaybeestablishedincompaniesandcarryouttheiractivitiesinaccordancewiththeConstitutionoftheCommunistPartyofChina.CompaniesshallprovidetheorganizationsoftheCommunistPartyofChinawithconditionsnecessaryforcarryingouttheiractivities.
Article20
Theshareholdersofacompanyshallexercisetheirshareholders’rightsincompliancewithlaws,administrativerulesandregulationsaswellasthearticlesofassociationofthecompany,shallnotabusetheirshareholders’rightstoinjuretheinterestsofthecompanyorothershareholders,ortakeadvantageofthecompany’sindependentstatusorthelimitedliabilityofshareholderstoinjuretheinterestsofthecompany’screditors.
Wheretheabuseofshareholders’rightscausesanylosstothecompanyorothershareholders,suchabusiveshareholdershallbeliableforcompensationinaccordancewiththelaw.
Whereshareholdersofacompanytakeadvantageofthecompany’sindependentstatusorthelimitedliabilityofshareholderstodisregarddebtsandseriouslyinjurestheinterestsofthecompany’screditors,suchshareholdersshallbearjointandseveralliabilityforthedebtsofthecompany.
Article21
Thecontrollingshareholders,actualcontrollers,directors,supervisorsorseniorofficersofacompanyshallnottakeadvantageoftheiraffiliationswithothersinanattempttoharmthecompany’sinterestsand,whereanylossesareincurredinviolationhereof,shallbeliableforcompensation.[page]
Article22
Anyresolutionagainstlawsandadministrativerulesandregulationsthatisadoptedbytheshareholdersmeeting,thegeneralmeetingofshareholdersortheboardofdirectorsofacompanyshallbenullandvoid.
Wheretheconveningofshareholdersmeeting,generalmeetingofshareholdersorboardofdirectorsofacompanyorthevotingmethodviolateslaws,administrativerulesandregulationsorthearticlesofassociationofthecompany,ortheresolutionthereofcontravenesthearticlesofassociationofthecompany,shareholdersmay,withinsixty(60)daysoftheresolution,applytothepeople’scourtforrevocation.
Whereshareholdersfilesuitinaccordancewiththeprovisionsoftheprecedingparagraph,apeople’scourtmay,atthecompany’srequest,ordertheshareholderstoproviderelevantsecurity.
Wherethecompanyhaseffectedalterationregistrationaccordingtotheresolutionofshareholdersmeeting,generalmeetingofshareholdersorboardofdirectors,thecompanyshall,afterthepeople’scourtdeclaressuchresolutionnullandvoidorrevokesthesame,shallapplytothecompanyregistrationauthorityforcancellationofitsalterationregistration.
ChapterTwo:IncorporationandOrganizationalStructureofaLimitedLiabilityCompany
SectionOneIncorporation
Article23
Thefollowingconditionsshallbefulfilledfortheincorporationofalimitedliabilitycompany:
(1)Thenumberofshareholdersconformstothestatutoryquorum;
(2)Thecapitalcontributionsoftheshareholdersreachthestatutoryminimumamountofcapital;
(3)Theshareholdershavejointlyformulatedthearticlesofassociationofthecompany;
(4)Thecompanyhasanameandanorganizationalstructureestablishedincompliancewiththerequirementsforalimitedliabilitycompany;and
(5)Thecompanyhasadomicile.[page]
Article24
Alimitedliabilitycompanyshallbeincorporatedbynotmorethanfifty(50)shareholders.
Article25
Thearticlesofassociationofalimitedliabilitycompanyshallspecifythefollowingparticulars:
(1)thenameanddomicileofthecompany;
(2)thescopeofbusinessofthecompany;
(3)theregisteredcapitalofthecompany;
(4)thenamesortitlesoftheshareholders;
(5)themethod,amountandtimeofcapitalcontributionsbytheshareholders;
(6)theorganizationofthecompany,itsmethodofcreation,functionsandpowersandthe
rulesofprocedure;
(7)thelegalrepresentativeofthecompany;
(8)otheritemswhichtheshareholdersdeemnecessarytobespecified.Shareholdersshallsignandexecutethearticleofassociationofthecompany.
Article26
Theregisteredcapitalofalimitedliabilitycompanyshallbetheamountofthepaid-upcapitalcontributionsofallitsshareholdersasregisteredwiththecompanyregistrationauthority.Theamountoftheinitialinvestmentcontributedbyallshareholdersshallnotbelowerthantwentypercent(20%)oftheregisteredcapitalortheminimumamountprescribedbythelaw,theremainingofwhichshallbefullypaidupwithintwoyearsoftheestablishmentofthecompany.Inthecaseofaninvestmentcompany,theremainingamountoftheregisteredcapitalmaybepaidupwithinfiveyearsoftheestablishmentofthecompany.TheminimumamountoftheregisteredcapitalofalimitedliabilitycompanyshallbeRMB30,000.Wherelawsandadministrativeregulationsprovideformorethantheminimumamount,suchprovisionsshallapply.
Article27
Exceptforassetsforbiddentobeusedascontributionbylawsandadministrativeregulations,ashareholdermaymakeitscapitalcontributionstoacompanyincurrencyorbycontributingsuchnon-currencypropertyasmaterialobjects,intellectualpropertyrightsandland-userightsthatcanbeevaluatedintheformofcurrencyandtransferredinaccordancewiththelaw.[page]
Thenon-currencypropertytobecontributedascapitalshallundergoanassetvaluationandverification,andshallnotbeovervaluedorundervalued.Wherethereareotherprovisionsoflawsandadministrativeregulationsonthevaluationandverificationofnon-currencyproperty,suchprovisionsshallapply.
Theamountofthecapitalcontributionsincurrencyshallnotbelowerthanthirtypercent(30%)oftheamountoftheregisteredcapitalofthelimitedliabilitycompany.
Article28
Eachshareholdershallmakeinfulltheamountofthecapitalcontributionsubscribedforunderthearticlesofassociationofthecompany.Whereashareholdermakesitscapitalcontributionincurrency,itshalldepositthefullamountofsuchcapitalcontributionincurrencyinthebankaccountopenedbythelimitedliabilitycompanytobeestablished.Whereashareholdermakesitscapitalcontributionintheformofnon-currencyproperty,thepropertyrightsthereinshallbetransferredinaccordancewithlegallyprescribedprocedures.
Shareholdersfailingtomakefullcapitalcontributionstheyhavesubscribedforinaccordancewiththeprecedingparagraphshall,theyshall,inadditiontomakingthecontributionsinfull,beliableforbreachofcontracttowardstheshareholderswhohavemadefullcapitalcontributions.
Article29
Afterallshareholdershavemadetheircapitalcontributionsinfull,suchcontributionsmustbeverifiedbyastatutorycapitalverificationinstitutionwhichshallissuecapitalverificationcertificates.
Article30
Aftertheinitialcapitalcontributionsoftheshareholdershavebeenverifiedbyastatutorycapitalverificationinstitution,applicationshallbemadetothecompanyregistrationauthorityforregistrationoftheincorporationofthecompanybyarepresentativedesignatedbyalltheshareholdersorbyanagentjointlyentrustedbythem,whoshallsubmitsuchdocumentsasanapplicationforregistration,thearticlesofassociationandthecapitalverificationcertificate.[page]
Article31
Where,aftertheincorporationofalimitedliabilitycompany,itisdiscoveredthattheactualvalueofthenon-currencypropertycontributedascapitalisnotablylessthanthevaluestatedinthearticlesofassociation,theshareholdersthatmadesuchcontributionsshallmakeupthedifference.Thosewhoareshareholdersatthetimeoftheincorporationofthecompanyshallbearjointandseveralliabilitytherefor.
Article32
Afteralimitedliabilitycompanyhasbeenincorporated,itshallissuecapitalcontributioncertificatestoitsshareholders.
Acapitalcontributioncertificatesshallspecifythefollowingitems:
(1)thenameofthecompany;
(2)theregistrationdateofthecompany;
(4)thenameortitleoftheshareholder,theamountanddateofitscapitalcontribution;
(5)theserialnumberofthecapitalcontributioncertificateandthedateofitsverificationandissuance.Acapitalcontributioncertificateshallbearthesealofthecompanyonit.
Article33
Alimitedliabilitycompanyshallpreparearosterofitsshareholderswiththefollowingitemstherein:
(1)thenamesortitlesanddomicilesoftheshareholders;
(2)theamountsofcapitalcontributionsoftheshareholders;and
(3)theserialnumbersofthecapitalcontributioncertificates.
Theshareholdersrecordedintherosterofshareholdersmayclaimandexercisetherightofshareholdersonthestrengthoftherosterofshareholders.
Thecompanyshallregisterthenamesofshareholdersandtheamountofcapitalcontributionsoftheshareholderswiththecompanyregistrationauthorityand,intheeventofanychangethereof,applyforalterationregistration.Unlessdulyregistered,theabove-mentioneditemsandanychangesthereofshallnotbeadefenseagainstathirdparty.[page]
Article34
Ashareholdershallhavetherighttoviewthearticlesofassociation,theminutesofshareholdersmeetings,resolutionsofboardofdirectorsandboardofsupervisorsandthefinancialandaccountingreportsofthecompany.
Article35
Unlessotherwiseagreeduponbyallshareholders,shareholdersshalldrawdividendsinproportiontotheiractualcapitalcontributionsand,whereacompanyincreasescapital,shallhavepriorityinsubscriptionfornewsharesinproportiontotheiractualcontributions.
Article36
Onceacompanyisregistered,itsshareholdersshallnotwithdrawtheircapitalcontributions.
SectionTwoOrganizationalStructure
Article37
Theshareholdersmeetingofalimitedliabilitycompanyshallbecomposedofalltheshareholders.TheshareholdersmeetingshallbetheorganofpowerofthecompanyandshallexerciseitsfunctionsandpowersinaccordancewiththisLaw.
Article38
Theshareholdersmeetingshallexercisethefollowingfunctionsandpowers:
(1)todecideonthebusinesspolicyandinvestmentplanofthecompany;
(2)toelectandrecalldirectorsandsupervisorswhosepostsarenottakenbytherepresentativesofthestaffandworkers,andtodecideonmattersconcerningtheremunerationofdirectorsandsupervisors;[page]
(3)toexamineandapprovereportsoftheboardofdirectors;
(4)toexamineandapprovereportsofthesupervisoryboardorsupervisors;
(5)toexamineandapprovetheannualfinancialbudgetplanandfinalaccountsplanofthecompany;
(6)toexamineandapproveplansforprofitdistributionofthecompanyandplansformakinguplosses;
(7)toadoptresolutionsontheincreaseorreductionoftheregisteredcapitalofthecompany;
(8)toadoptresolutionsontheissuanceofcompanybonds;
(9)toadoptresolutionsonmatterssuchasthemerger,division,transformation,dissolutionandliquidationofthecompany;
(10)toamendthearticlesofassociationofthecompany;
(11)toexerciseotherfunctionsandpowersprovidedforinthearticlesofassociation.
Whereaunanimousconsentonthemattersdescribedaboveisachievedinwritingbyshareholders,thecompanymaydirectlymakedecisionsthatshallbesignedandexecutedbyallshareholdersinsteadofconveningashareholdersmeeting.
Article39
ThefirstmeetingoftheshareholdersofacompanyshallbeconvenedandpresidedoverbytheshareholderwhohasmadethebiggestcapitalcontributiontothecompanyandshallexerciseitsfunctionsandpowersinaccordancewiththisLaw.
Article40
Shareholdersmeetingsshallbedividedintoregularmeetingsandinterimmeetings.Regularshareholdersmeetingsshallbeconvenedontimeasstipulatedbythearticlesofassociationofthecompany.Interimshareholdersmeetingsmaybeconveneduponproposalmadebyshareholdersrepresentingmorethanone-tenthofvotingrightsorbymorethanone-thirdofdirectors,orattherequestofboardofsupervisorsorthesupervisorsofacompanyabsentaboardofsupervisors.
Article41
Wherealimitedliabilitycompanyhasaboardofdirectors,itsshareholdersmeetingshallbeconvenedbytheboardofdirectorsandpresidedoverbythechairmanoftheboard.Wherethechairmanoftheboardisunabletoordoesnotperformhisfunction,themeetingshallbepresidedoverbyavice-chairman.Wherethevice-chairmanisunabletoordoesnotperformhisfunction,themeetingshallbepresidedoverbyadirectorjointlynominatedbymorethanhalfofthedirectors.[page]
Wherealimitedliabilitycompanydoesnotformaboardofdirectors,theshareholdersmeetingsshallbeconvenedandpresidedoverbytheexecutivedirector.
Wheretheboardofdirectorsorexecutivedirectorcannotordoesnotperformitsfunction,theshareholdersmeetingshallbeconvenedandpresidedoverbytheboardofsupervisorsorthesupervisorintheabsenceofaboardofsupervisors.Wheretheboardofsupervisorsorsupervisorcannotordoesnotperformitsfunction,themeetingshallbeconvenedandpresidedoverbyshareholdersrepresentingmorethanone-tenthofthevotingrights.
Article42
Allshareholdersshallbenotifiedfifteen(15)dayspriortotheconveningofashareholdersmeeting,unlessotherwisestipulatedbythearticlesofassociationoragreeduponbyallshareholders.
Theshareholdersmeetingshallprepareminutesregardingthedecisionsonmattersconsideredatthemeeting,whichshallbesignedbytheshareholderspresentatthemeeting.
Article43
Shareholdersshallexercisetheirvotingrightsattheshareholdersmeetinginproportiontotheircapitalcontributions,unlessotherwisestipulatedbythearticlesofassociation.
Article44
ExceptasprovidedforinthisLaw,therulesofdeliberationandvotingproceduresoftheshareholdersmeetingshallbestipulatedbythearticlesofassociationofthecompany.
Resolutionsoftheshareholdersmeetingontheincreaseorreductionoftheregisteredcapital,thedivision,merger,dissolution,ortransformationofthecompanymustbeadoptedbyshareholdersofthecompanyrepresentingtwo-thirdsormoreofthevotingrights.
Article45
ExceptasotherwiseprovidedforinArticle51ofthisLaw,alimitedliabilitycompanyshallhaveaboardofdirectors,whichshallbecomposedofthreetothirteenmembers.ThemembersoftheboardofdirectorsofalimitedliabilitycompanyinvestedinandestablishedbytwoormoreState-ownedenterprises,orbytwoormoreotherState-ownedinvestmententitiesshallincluderepresentativesofthestaffandworkersofthecompany.Themembersoftheboardofdirectorsofotherlimitedliabilitycompaniesmayalsoincluderepresentativesofthestaffandworkers.Suchrepresentativesofthestaffandworkersshallbedemocraticallyelectedbytheworkersandstaffmembersofthecompanythroughthecongressesorassembliesofthestaffandworkersorotherforms.Aboardofdirectorsshallhaveachairmanandmayhaveavice-chairman.Themethodforthecreationofthechairmanandvice-chairmenshallbestipulatedinthearticlesofassociationofthecompany.[page]
Article46
Thetermofthedirectorsshallbeprescribedbythearticlesofassociation,providedthateachtermmaynotexceedthree(3)years.Adirectormaycontinuetoservehispostifheisre-electedupontheexpirationofhisterm.Whereanewelectisnotyetavailableuponexpirationofadirector’sterm,orthenumberofthedirectorsontheboardislessthanthequorumduetotheresignationofadirectorwithinhisterm,suchdirector,beforethenewelecttakeshisoffice,shallcontinuetheperformanceofhisdutiesinaccordancewithlaws,administrativeregulationsandthearticlesorassociation.
Article47
Theboardofdirectorsisaccountabletotheshareholdersmeetingandshallexercisethefollowingpowers:
(1)beingresponsibleforconveningshareholdersmeetingsandpresentingreportsthereto;
(2)implementingresolutionsadoptedbytheshareholdersmeeting;
(4)preparingannualfinancialbudgetplansandfinalaccountingplansofthecompany;
(5)preparingprofitdistributionplansandplanstocovercompanylosses;
(6)preparingplansforincreasingorreducingregisteredcapitalofthecompanyorissuingcompanybonds;
(7)draftingplansformerger,division,changeofcorporateformordissolutionofthecompany;
(10)formulatingthebasicmanagementschemeofthecompany;
(11)exercisingotherpowersstipulatedbythearticlesofassociation.
Article48
Ameetingoftheboardofdirectorsshallbeconvenedandpresidedoverbythechairman.Wherethechairmanisunabletoordoesnotperformhisduties,themeetingshallbeconvenedandpresidedoverbythevice-chairman.Wherethevice-chairmanisunabletoordoesnotperformhisduties,themeetingshallbeconvenedandpresidedoverbyadirectorjointlynominatedbymorethanhalfofthedirectors.[page]
Article49
ExceptasotherwiseprovidedforinthisLaw,therulesofdeliberationandvotingproceduresatthemeetingofboardofdirectorsshallbestipulatedbythearticlesofassociationofthecompany.
Theboardshallprepareminutesrelatingtothedecisionsonmattersconsideredatthemeeting,whichshallbesignedbythedirectorspresentatthemeeting.
Inthevotingprocess,onedirectorshallrepresentonevote.
Article50
Alimitedliabilitycompanyshallhaveageneralmanager,tobeappointedorremovedbytheboardofdirectors.Thegeneralmanagerisaccountabletotheboardandshallexercisethefollowingpowers:
(2)organizingtheimplementationofannualoperatingplansandinvestmentprogramsofthecompany;
(4)preparingthebasicmanagementschemeofthecompany;
(5)formulatingdetailedcompanyrules;
(6)recommendingtheappointmentorremovalofadeputymanagerandtheofficerinchargeoffinance;
(7)appointingandremovingofficersofthecompanyotherthanthosetobeappointedorremovedbytheboardofdirectors;
(8)exercisingotherpowersdelegatedbytheboardofdirectors.
Wherethearticlesofassociationstipulateotherwiseinrespectofthemanager’spowers,suchstipulationsshallprevail.Thegeneralmanagershallbepresentatboardmeetings.
Article51
Asmall-scaledlimitedliabilitycompanyoralimitedliabilitycompanywithonlyafewshareholdersmayhaveanexecutivedirectorwithoutestablishingaboardofdirectors.Theexecutivedirectormayserveconcurrentlyasthegeneralmanagerofthecompany.
Thepowersoftheexecutivedirectorshallbeprescribedinthearticlesofassociation.[page]
Article52
Adirectorandaseniorofficerofthecompanyshallnotserveconcurrentlyasasupervisor.
Article53
Eachtermofasupervisorshallbethree(3)years,andasupervisormaycontinuetoservehispostuponexpirationofhistermifheisre-elected.
Whereanewelectisnotyetavailableuponexpirationofasupervisor’sterm,orthenumberofthesupervisorsontheboardislessthanthequorumduetotheresignationofasupervisorwithinhisterm,suchsupervisor,beforethenewelecttakeshisoffice,shallcontinuetheperformanceofhisdutiesinaccordancewithlaws,administrativeregulationsandthearticlesorassociation.
Article54
Theboardofsupervisorsorthesupervisor,asthecasemaybe,shallexercisethefollowingauthorities:[page]
(1)reviewingthefinancialaffairsofthecompany;
(2)monitoringtheactsofthedirectorsortheseniorofficersinthecourseofperformanceoftheirduties,andproposerecallofthedirectororseniorofficerinviolationoflaws,administrativeregulationsorthearticlesofassociation;
(3)requiringthedirectorsortheseniorofficerstomakerectificationwhenanyactthereofcausesharmtocompanyinterests;
(4)proposingforinterimmeetingsofshareholdersmeetings,conveneandpresideoverthemeetingwhentheboardofdirectorsdoesnotperformitsfunctiontoconveneandpresideoverashareholdersmeetingassetforthinthisLaw;
(5)submittingproposalsattheshareholdersmeeting;
(6)filingsuitagainstthedirectorsorseniorofficersofthecompanyinaccordancewiththeprovisionsofArticle152inthisLaw;
(7)exercisingotherauthoritiesprescribedbythearticlesofassociation.
Article55
Thesupervisorsmayattendboardmeetings,presentinquiryorproposalwithregardstotheissuestobedeterminedbytheboardofdirectors.
Theboardofsupervisorsorthesupervisorsofacompanythatdoesnothavetheboardmayconductinvestigationsupondiscoveryofanyunusualoperationsofthecompanyand,wherenecessary,engageanaccountingfirmtoassistinsuchinvestigationsattheexpenseofthecompany.
Article56
Theboardofsupervisorsshallhaveameetingatleastonceayear.Aninterimmeetingmaybeconvenedattherequestofsupervisors.
ExceptasprovidedforinthisLaw,therulesofdeliberationandvotingproceduresatthemeetingofboardofdirectorsshallbestipulatedbythearticlesofassociationofthecompany.
Theresolutionoftheboardofsupervisorsshallbeadoptedbymorethanhalfofallthesupervisors.Theboardshallprepareminutesrelatingtothedecisionsonmattersconsideredatthemeeting,whichshallbesignedbythesupervisorspresentatthemeeting.[page]
Article57
Reasonableexpensesnecessaryfortheboardofsupervisorsorsupervisorsofacompanythatdoesnothavetheboardtoperformtheirdutiesshallbebornebythecompany.
SectionThreeSpecialProvisionsonOne-PersonLimitedLiabilityCompanies
Article58
Theprovisionsunderthissectionshallgoverntheformationandtheorganizationalstructureofone-personlimitedliabilitycompanies.Wheretherearemattersthatarenotcoveredbythissection,theprovisionsofthefirsttwosectionsunderChapterOneshallapply.
Aone-personlimitedliabilitycompanyreferredtohereinmeansalimitedliabilitycompanywithasoleshareholderofeitheranaturalpersonoralegalperson.
Article59
Theminimumamountoftheregisteredcapitalofaone-personlimitedliabilitycompanyshallbeRMB100,000whichmustbefullypaidatthetimeofincorporation.
Naturalpersonsarepermittedtosetuponlyonesuchcompanyandthatcompanyisnotallowedtoinvestinotherone-personcompanies.
Article60
Inapplyingforregistrationofaone-personlimitedliabilitycompany,theproposedcompanyshallindicatewhethertheinvestorisanaturalpersonoralegalperson,andspecifyitinitsbusinesslicense.
Article61
Thearticlesofassociationofaone-personlimitedliabilitycompanyshallbeformulatedbyitsshareholder.
Article62
Aone-personlimitedliabilitycompanydoesnothaveshareholdersmeetings.TheshareholdershallmakethedecisionsetforthinArticle38(1)inwrittenform,signandmaintainitatthecompany’spremises.
Article63
Aone-personlimitedliabilitycompanyshallprepareitsfinancialandaccountingreportsattheendofeachfiscalyear,whichshallbereviewedbyanaccountingfirm.
Article64
Wheretheshareholderofaone-personlimitedliabilitycompanycannotprovethatthecompany’sassetsisindependentfromhisownproperty,suchshareholdershallbearjointandseveralliabilityforthedebtsofthecompany.[page]
SectionFourSpecialProvisionsonWhollyState-ownedCompanies
Article65
Theprovisionsunderthissectionshallgoverntheformationandtheorganizationalstructureofwhollystate-ownedcompanies.Wheretherearemattersthatarenotcoveredbythissection,theprovisionsofthefirsttwosectionsunderChapterOneshallapply.
Awhollystate-ownedcompanyreferredtohereinmeansalimitedliabilitycompanyestablishedthroughtheState’ssoleinvestmentbythestate-ownedassetssupervisionandadministrationauthorityentrustedbytheStateCouncilorlocalpeople’sgovernmenttoperformthecapitalcontributionfunctions.
Article66
Thearticlesofassociationofawhollystate-ownedcompanymaybeformulatedbythestate-ownedassetssupervisionandadministrationauthorityormaybepreparedbyitsboardofdirectorsandsubmittedtothestate-ownedassetssupervisionandadministrationauthorityforapproval.
Article67
Awhollystate-ownedcompanydoesnothaveshareholdersmeetings,andthestate-ownedassetssupervisionandadministrationauthorityshallexercisetheauthoritiesoftheshareholdersmeeting.Thestate-ownedassetssupervisionandadministrationauthoritymayauthorizetheboardofdirectorstoexercisepartoftheauthoritiesoftheshareholdersmeetingtodecideonmajorissuesofthecompany,providedthatmatterssuchasmerger,divisionordissolutionofthecompany,capitalincreaseorreductionbythecompany,andissueofcompanybondsmustbedecidedbythestate-ownedassetssupervisionandadministrationauthority.Themerger,division,dissolutionorapplicationforbankruptcyofkeywhollystate-ownedcompaniesshall,afterexaminationandverificationbythestate-ownedassetssupervisionandadministrationauthority,besubmittedtothepeople’sgovernmentatthesamelevelforapproval.Thekeywhollystate-ownedcompaniesreferredtohereinshallbedefinedinaccordancewiththeprovisionsoftheStateCouncil.[page]
Article68
Awhollystate-ownedcompanyshallhaveaboardofdirectors,whichshallexerciseitspowersandperformitsdutiesinaccordancewiththeprovisionsofArticle47andArticle67hereof.Thetermofthedirectorsshallnotexceedthree(3)years.Thereshallberepresentativesofthestaffandworkersontheboard.Themembersoftheboardshallbedesignatedbythestate-ownedassetssupervisionandadministrationauthority.However,representativesofthestaffandworkersontheboardshallbedemocraticallyelectedthroughthecongressesoftheworkersandstaffmembers.Theboardofdirectorsshallhaveachairmanandmayhaveavice-chairman.Thechairmanandvice-chairmanshallbeappointedbythestate-ownedassetssupervisionandadministrationauthorityfromamongtheboardmembers.
Article69
Awhollystate-ownedcompanyshallhaveageneralmanager,tobeappointedorremovedbytheboardofdirectors.ThegeneralmanagershallexercisehispowersandperformhisdutiesinaccordancewiththeprovisionsofArticle50hereof.Withtheapprovalofthestate-ownedassetssupervisionandadministrationauthority,aboardmembermayserveconcurrentlyasthegeneralmanager.
Article70
Absentapprovalbythestate-ownedassetssupervisionandadministrationauthority,thechairman,vice-chairman,adirector,oraseniorofficermaynotserveconcurrentlyforanyotherlimitedliabilitycompany,jointstocklimitedcompanyoranyotherbusinessorganization.
Article71
Theboardofsupervisorsofawhollystate-ownedcompanyshallhavenolessthanfive(5)members,andthenumberofthestaffandworker’srepresentativesontheboardshallbenolessthanonethirdoftheboardmembers,thespecificpercentageofwhichshallbedeterminedinthearticlesofassociation.
Thesupervisorsshallbedesignatedbythestate-ownedassetssupervisionandadministrationauthority,however,thestaffandworker’srepresentativesontheboardshallbedemocraticallyelectedthroughthecongressesofworkersandstaffmembers.Thechairmanoftheboardofsupervisorsshallbeappointedbythestate-ownedassetssupervisionandadministrationauthorityfromamongtheboardmembers.TheboardofsupervisorsshallexercisethepowersprescribedinArticle54(1),(2)and(3)hereofandotherpowersstipulatedbytheStateCouncil.[page]
ChapterThree:ShareTransferofaLimitedLiabilityCompany
Article72
Shareholdersofalimitedliabilitycompanymaytransferinwholeorparttheirrespectivesharesamongstthemselves.
Whereashareholdertransfershissharestoapersonotherthanashareholder,theconsentofmorethanhalfofallshareholdersshallberequired.Theshareholderwhointendstotransferhissharesshallnotifytheothershareholdersinwritingandseektheirapproval.Failurebythoseshareholderstomakeanyresponsewithinthirty(30)daysofthereceiptofthewrittennoticeshallbedeemedtobetheirconsenttosuchtransfer.Wheremorethanhalfoftheothershareholdersdonotconsenttothetransfer,suchshareholdersshallpurchasethesharestobetransferred.Failurebythoseshareholderstomakesuchpurchaseshallbedeemedtobetheirconsenttosuchtransfer.Wheretheshareholdersconsenttothesharetransfer,othershareholdersshallhavethepreemptiverighttopurchasethesharestobetransferredonequaltermsandconditions.Twoormoreoftheshareholdersexercisingthepreemptiverightofpurchaseshallnegotiateanddeterminetheproportionofthesharestobepurchasedrespectively.Failingsuch,thesharesshallbepurchasedinproportiontotheircapitalcontributionsatthetimeofsuchtransfer.
Wherethearticlesofassociationstipulateotherwise,suchstipulationsshallapply.
Article73
Thepeople’scourt,wherethesharesheldbyashareholderistransferredthroughenforcementproceduresprescribedbylaw,shallinformthecompanyandallofitsshareholders.Othershareholdersshallhavethepreemptiverighttopurchasesuchsharesonequaltermsandconditions.Failurebythoseshareholderstoexercisetherightoffirstrefusalwithintwenty(20)daysofthedateofcourtnoticeshallbedeemedtobeawaiverofthepreemptiverightofpurchase.
Article74
Thecompany,afterthesharetransferiscompletedpursuanttoArticle72andArticle73hereof,shallcancelthecapitalcontributioncertificateoftheoriginalshareholder,issuenewcertificatetothenewshareholderand,amendtherecordoftheshareholderandhiscapitalcontributioninthearticlesofassociationandtherosterofshareholders.Suchamendmentstothearticlesofassociationneednotbevotedforbyshareholdersmeetings.[page]
Article75
Theshareholdervotingagainstthedecisionoftheshareholdersmeetinginrespectofanyoneofthefollowingcircumstancesmayrequestthecompanytopurchasehissharesatreasonableprices:
(1)thecompanywillnotdistributedividendsforfiveconsecutiveyearsthoughthecompanyhasmadeprofitovertheseyearsandhasmetthedistributionrequirementsprescribedinthisLaw;
(2)intheeventofmerger,divisionorassignmentofthecompany’smajorassets;
(3)intheeventofexpiryofthecompanyoranyothercausesfordissolutionprescribedinthearticlesofassociation,theshareholdersmeetinghasadoptedaresolutiontoamendthearticlesofassociationtorenewthecompany.
Wheretheshareholdercannotreachasharepurchaseagreementwiththecompanywithinsixty(60)daysofthedateoftheresolution,theshareholdermayfilesuittothepeople’scourtwithinninety(90)daysofthedateoftheresolution.
Article76
Whereanaturalpersonshareholderdeceases,hisshareholder’sstatusmaybeinheritedbyhislegalheirunlessotherwisestipulatedinthearticlesofassociation.
ChapterFour:EstablishmentandOrganizationalStructureofaJointStockLimitedCompany
SectionOneEstablishment
Article77
Theestablishmentofajointstocklimitedcompanyissubjecttothefollowingconditions:
(1)Thenumberofsponsorsmeetslegalrequirement;
(2)Theamountofcapitalstockssubscribedforbythesponsorsandpubliclyplacedreachesthelegally-prescribedminimumcapitallevel;
(3)Theissueofitssharesandthepreparationforitsestablishmentcomplywiththelaw;
(4)Thesponsorspreparethearticlesofassociation,andsucharticlesofassociationofacompanyestablishedbypublicshareoffershallbeadoptedbytheestablishmentmeeting;
(5)Thereisacompanyname,andtheorganscomplyingwiththerequirementsforajointstocklimitedcompanyareestablished;[page]
(6)Thecompanyhasadomicile.
Article78
Ajointstocklimitedcompanymaybeestablishedeitherbysponsorshiporpublicshareoffer.
Establishmentbysponsorshipmeansestablishmentofthecompanythroughsubscriptionbythesponsorsforallthesharestobeissuedbythecompany.
Establishmentbypublicshareoffermeansestablishmentofthecompanythroughsubscriptionbysponsorsforpartofthesharestobeissuedbythecompany,andpublicortargetedplacementoftheremainingshares.
Article79
Inordertoestablishajointstocklimitedcompany,thereshallbenotfewerthantwobutnomorethantwohundredsponsors,halfofwhomshallbedomiciledinChina.
Article80
Sponsorsofajointstocklimitedcompanyshallberesponsibleforthepreparationoftheestablishmentofthecompanyandenterintoasponsor’sagreementtoclarifytherightsandobligationsduringtheincorporationofthecompany.
Article81
Theregisteredcapitalofajointstocklimitedcompanyestablishedbypublicshareoffershallbethetotalamountofsharecapitalsubscribedforbyallthesponsorsandregisteredwiththecompanyregistrationauthority.Theinitialcapitalcontributionofallthesponsorsshallnotbelessthantwentypercent(20%)oftheregisteredcapital,theremainingofwhichshallbepaidinfullwithintwo(2)yearsoftheestablishmentofthecompany.Intheeventofaninvestmentcompany,theremainingpartoftheregisteredcapitalmaybefullypaidwithinfive(5)yearsoftheestablishmentofthecompany.Priortoafullcontributiontotheregisteredcapital,sponsorsshallnotofferthesharestoothers.
Theregisteredcapitalofajointstocklimitedcompanyestablishedbysponsorshipshallbetheactualtotalamountofsharecapitalthatispaidupandregisteredwiththecompanyregistrationauthority.TheminimumamountoftheregisteredcapitalofajointstocklimitedcompanyshallbeRMB5,000,000.Wherethereisahigherleveloftheminimumamountstipulatedbylawsandadministrativeregulations,suchstipulationsshallapply.[page]
Article82
Thearticlesofassociationofajointstocklimitedcompanyshallsetforththefollowing:
(1)itsnameanddomicile;
(2)itsbusinessscope;
(3)themethodforitsestablishment;
(4)thetotalnumberofsharesofthecompany,thevalueofeachshare,andtheregisteredcapitalofthecompany;
(5)thenamesofthesponsors,thenumberofsharestheyhavesubscribedfor,theformandtimeofcapitalcontribution;
(6)thecompositionoftheboardofdirectors,itsauthorities,term,andrulesofconductingbusiness;
(7)itslegalrepresentative;
(8)thecompositionoftheboardofsupervisors,itsauthorities,term,andrulesofconductingbusiness;
(9)themethodforcompanyprofitdistribution;
(10)thecausesforitsdissolutionandthemethodforitsliquidation;
(11)themethodforgivingnoticeandmakingpublicannouncement;
(12)othermatterswhichthegeneralmeetingofshareholdersdeemsnecessarytoprovidefor.
Article83
TheprovisionsofArticle27hereinshallapplytotheformofsponsor’scapitalcontribution.
Article84
Intheeventofestablishingajointstocklimitedcompanybysponsorship,thesponsorsshallfullysubscribeinwritingforthesharestobeissuedasprescribedinthearticlesofassociation.Intheeventofalumpsumpayment,theinvestmentshallbefullypaidupinduetime.Intheeventofpaymentininstallments,theinitialcontributionshallbepaidupinduetime.Intheeventofcontributionsinformofnon-currencyproperty,thepropertyrightsthereinshallbetransferredinaccordancewithlegallyprescribedprocedures.
Sponsorsfailingtomakethecapitalcontributionpursuanttotheprecedingparagraphshallbearthebreachliabilityinaccordancewiththesponsor’sagreement.
Upontheinitialcontributionofthesharecapitalwhichthesponsorshavesubscribedfor,theyshallelectmemberstotheboardofdirectorsandtheboardofsupervisors,andtheboardofdirectorsshallapplyforestablishmentregistrationbysubmittingthearticlesofassociation,thecapitalverificationcertificateissuedbyalegallyestablishedcapitalinspectionorganizationandotherdocumentsrequiredbylawsandadministrativeregulationstothecompanyregistrationauthority.[page]
Article85
Inthecaseofestablishingajointstocklimitedcompanybypublicshareoffer,thesharessubscribedforbythesponsorsshallbenotlessthanthirtyfivepercent(35%)ofthetotalsharesofthecompany.Wherelawsandadministrativeregulationsstipulateotherwise,suchstipulationsshallapply.
Article86
Inapublicshareoffer,thesponsorsshallmaketheprospectusavailabletothepublicandpreparethesharesubscriptionform.ThesharesubscriptionformshallcontaintheitemslistedinArticle87,andasubscribershallfillinthefollowing:thenumberofsharessubscribedfor,theamountofshareproceeds,andhisorherdomicile,andshallsignorimpresshischopontheform.Asubscribershallpaytheshareproceedsaccordingtothenumberofshareshehassubscribedfor.
Article87
Theprospectusshallbeaccompaniedwiththearticlesofassociationpreparedbythesponsors,andshallsetforththefollowing:
(1)thenumberofsharessubscribedforbythesponsors;
(2)theparvalueandissuingpriceofeachshare;
(3)thetotalnumberofbearersharecertificatesissued;
(4)thepurposeofthefundraised;
(5)therightsandobligationsofthesubscribers;
(6)thecommencingtimeandexpirationtimeoftheshareoffer,andastatementthatintheeventtheshareshavenotbeplacedinfullupontheexpirationtime,thesubscribersmayrevoketheirsharesubscriptions.
Article88
Article89
Whenconductingpublicshareoffer,thesponsorsshallexecuteanagreementwithabankfordepositofshareproceeds.
Thedepositorybankshallcollectandholdtheshareproceedsinaccordancewiththeagreement,andissuereceiptstosubscriberswhohavepaidtheirshareproceeds,andisobligatedtoprovidetotherelevantauthorityacertificateforreceiptofshareproceeds.[page]
Article90
Aftertheproceedsfromissueofthesharesarepaidinfull,thesharecapitalshallbeverifiedbyalegally-prescribedcapitalverificationinstitutionandacertificateshallbeissuedthereby.Withinthirty(30)days,thesponsorsshallconveneandpresideovertheestablishmentmeeting,whichiscomposedofthesubscribers.
Iftheissuedsharesarenotfullyplaceduponexpirationofthetimelimitprescribedintheprospectus,orthesponsorsfailtoholdtheestablishmentmeetingwithinthirty(30)daysoffullpaymentoftheproceedsfromissueoftheshares,thesubscribersmaydemandthatthesponsorsreturntheshareproceeds.
Article91
Thesponsorsshallnotifyeachsubscriberofthedateoftheestablishmentmeetingormakeapublicannouncementforsuchmeetingfifteen(15)daysinadvance.Theestablishmentmeetingmaynotbeheldunlessattendedbysubscribersrepresentingatleasthalfoftheshares.
Theestablishmentmeetingshallexercisethefollowingauthorities:
(1)consideringthereportonpre-establishmentactivitiespreparedbythesponsors;
(2)adoptingthearticlesofassociation;
(3)electingmembersoftheboardofdirectors;
(4)electingmembersoftheboardofsupervisors;
(5)verifyingexpensesincurredfortheestablishmentofthecompany;
(6)verifyingthevalueoftheassetscontributedbythesponsorsinlieuofshareproceeds;
Aresolutionadoptedattheestablishmentmeetingonanyofthemattersmentionedintheprecedingparagraphrequiresaffirmativevotesbysubscriberspresentatthemeetingrepresentingmorethanhalfofthevotingrights.
Article92
Uponpaymentoftheshareproceedsordeliveryoftheitemsascontributionofsharecapitalinlieuofshareproceeds,thesponsorsandsubscribersmaynotwithdrawtheirsharecapital,exceptwherethesharesissuedarenotfullyplacedintime,thesponsorsfailtoholdtheestablishmentmeetingintime,ortheestablishmentmeetingadoptsaresolutionnottoestablishthecompany.[page]
Article93
Withinthirty(30)daysofthecompletionoftheestablishmentmeeting,theboardofdirectorsshallapplyforestablishmentregistrationbysubmittingtothecompanyregistrationauthoritythefollowing:
(1)thecompanyregistrationapplication;
(2)theminutesoftheestablishmentmeeting;
(3)thearticlesofassociation;
(4)thecapitalverificationcertificate;
(5)theengagementlettersandidentitycertificatesofthelegalrepresentative,directorsandsupervisors;
(6)thelegalperson’squalificationcertificateofsponsorsoridentitycertificateofnaturalpersons;
(7)thecompany’scertificateofdomicile.
TheverificationdocumentsissuedbythesecuritiesregulatorydepartmentundertheStateCouncilshallbesubmittedtothecompanyregistrationauthorityintheeventofpublicshareofferbyajointstocklimitedcompanyestablishedbypublicshareoffer.
Article94
Sponsorsfailingtocontributeinfullaftertheestablishmentofajointstocklimitedcompanyshallmakeuptherestofthecontribution.Othersponsorsshallbearjointandseveralliabilityforsuchcontribution.
Wheretheactualvalueofthenon-currencypropertycontribution,aftertheestablishmentofajointstocklimitedcompany,isfoundtobeobviouslylowerthantheamountprescribedinthearticlesofassociationofthecompany,thesponsormakingsuchcontributionshallmakeupthebalanceandothersponsorsshallbearjointandseveralliabilitytherefor.
Article95
Thesponsorsofajointstocklimitedcompanyshallbearliabilitiesasfollows:
(1)intheeventoffailuretoestablishthecompany,beingjointlyandseverallyliableforthedebtsandexpensesincurredasaresultofthepre-establishmentactivities;
(2)intheeventoffailuretoestablishthecompany,beingjointlyandseverallyliableforthereturnofshareproceedspaidbythesubscribers,togetherwiththeinterestthereonasiftheyhavebeendepositedinabankforalikeperiod.[page]
Article96
Article97
Article98
SectionTwoGeneralMeetingofShareholders
Article99
Article100
TheprovisionssetforthinArticle38(2)withregardstothefunctionsoftheshareholdersmeetingofalimitedliabilitycompanyshallapplytothegeneralmeetingofshareholdersofajointstocklimitedcompany.
Article101
Thegeneralmeetingofshareholdersshallholdanannualmeetingeachyear.Aninterimgeneralmeetingoftheshareholdersshallbeheldwithintwo(2)monthsupontheoccurrenceofanyofthefollowingcircumstances:[page]
(1)Thenumberofdirectorsfallsbelowthenumberprescribedhereinorbelowtwo-thirdsofthenumberprescribedinthearticlesofassociation;
(4)Theboardofdirectorsdeemsnecessary;
(5)Theboardofsupervisorsproposesforsuchameeting;
(6)Othercircumstancesprovidedforinthearticlesofassociation.
Article102
Ageneralmeetingofshareholdersshallbeconvenedbytheboardofdirectorsandshallbepresidedoverbythechairmanoftheboard.Wherethechairmanisunabletoordoesnotperformhisduties,themeetingshallbepresidedoverbythevice-chairman.Wherethevicechairmanisunabletoordoesnotperformhisduties,themeetingshallbepresidedoverbyadirectorjointlyappointedbyamajorityofallthedirectors.
Wheretheboardofdirectorsisunabletoordoesnotperformthedutiestoconveneageneralmeetingofshareholders,themeetingshallbecalledandpresidedoverbytheboardofsupervisorsinatimelymanner.Wheretheboardofsupervisorsisunabletoordoesnotperformthedutiestocallandpresideoverageneralmeetingofshareholders,theshareholdersindividuallyorjointlyholdingtenpercent(10%)ofthesharesofthecompanyforconsecutiveninety(90)daysormoremay,atitsowndiscretion,conveneandpresideoverageneralmeetingofshareholders.
Article103
Inordertoholdageneralmeetingofshareholders,noticeconcerningthetime,venueandmatterstobeconsideredatthemeetingshallbegiventoeachshareholdertwentydaysinadvance.Intheeventofaninterimmeetingofshareholders,thenoticemaybegivenfifteendaysinadvance.Wherethecompanyhasissuedbearersharecertificates,apublicnoticeconcerningthetime,venueandmatterstobeconsideredatthemeetingshallbemadethirtydayspriortothemeeting.[page]
Shareholdersindividuallyorjointlyholdingthreepercent(3%)ofthesharesofthecompanymay,tendayspriortothegeneralmeetingofshareholders,submitatemporarywrittenproposaltotheboardofdirectors.Theboardofdirectorsshall,withintwodaysafterreceiptoftheproposal,informothershareholdersandsubmittheproposaltothegeneralmeetingofshareholdersfordeliberation.Theitemscontainedintheproposalshallfallwithinthescopeofpowersexercisedbythegeneralmeetingofshareholdersandcleartopicandspecificmatterstobeconsideredshallbeincluded.Thegeneralmeetingofshareholdersshallnotdecideonanymattersthatarenotspecifiedinaforesaidnotices.Wheretheholdersofbearersharesattendthegeneralmeetingofshareholders,theyshalldeposittheshareswiththecompanyfive(5)daysearlierbeforethedateofthemeetinguptilltheclosingdateofthemeeting.
Article104
Whenashareholderattendsthegeneralmeetingofshareholders,eachshareheholdsisentitledtoonevote.However,theshareheldbythecompanyitselfshallnothavethevotingright.Aresolutionadoptedbythegeneralmeetingofshareholdersrequiresaffirmativevotesbyamajorityofthevotesheldbyshareholdersattendingthemeeting.Theresolutionwithregardstoamendmenttothearticlesofassociation,increaseordecreaseofregisteredcapital,merger,divisionordissolutionofthecompanyorchangeoftheformofthecompanyrequiresaffirmativevotesbyatleasttwo-thirdsofthevotesheldbyshareholdersattendingthemeeting.
Article105
WhereitisstipulatedinthisLaworthearticlesofassociationthattheassignmentorreceiptofthecompany’smajorassetsorprovisionofsecurityshallbedeterminedatthegeneralmeetingofshareholders,theboardofdirectorsshall,inatimelymanner,convenethegeneralmeetingofshareholdersthatwillvoteonaforesaidmatters.
Article106[page]
Thegeneralmeetingofshareholdersshalladoptaccumulativevotingsystemwhenvotingontheelectionofdirectorsorsupervisorsinaccordancewiththearticlesofassociationortheresolutionadoptedbytheshareholders’generalmeeting.Theaccumulativevotingsystemreferredtohereinmeansthatintheelectionofthedirectorsorsupervisorsatthegeneralmeeting,thenumberofvotesattachedtoeachshareheldbya
shareholdershallbeequaltothenumberofcandidates.Ashareholdercanmultiplyhisvotingsharesbythenumberofcandidatesandvotethemallforonepersonfordirectororsupervisor.
Article107
Ashareholdermayattendageneralmeetingofshareholdersbyproxy,theproxyholdershallpresenttheproxystatementissuedbytheshareholdertothecompany,andshallexercisehisvotingrightstotheextentauthorizedbytheproxy.
Article108
Thegeneralmeetingofshareholdersshallprepareminutesregardingthedecisionsonmattersconsideredatthemeeting,whichshallbesignedbythechairmanofthemeetinganddirectorsattendingthemeeting.Theminutesshallbemaintainedtogetherwiththerecordcontainingsignaturesoftheshareholdersattendingthemeetingandtheproxystatements.
SectionThreeBoardofDirectorsandGeneralManager
Article109
Ajointstocklimitedcompanyshallhaveaboardofdirectors,whichshallbecomposedofnotfewerthanfivebutnotmorethannineteenmembers.
Themembersoftheboardofdirectorsshallincluderepresentativesofthestaffandworkersofthecompany.Suchrepresentativesofthestaffandworkersshallbedemocraticallyelectedbythestaffandworkersofthecompanythroughthecongressesorassembliesoftheworkersandstaffmembersorotherforms.
TheprovisionsofArticle46onthetermofdirectorsofalimitedliabilitycompanyshallapplytothatofthedirectorsofajointstocklimitedcompany.[page]
TheprovisionsofArticle47onthefunctionsandpowersoftheboardofdirectorsofalimitedliabilitycompanyshallapplytothatoftheboardofdirectorsofajointstocklimitedcompany.
Article110
Theboardofdirectorsshallhaveachairman,andmayhaveoneortwovice-chairmen.Thechairmanandvice-chairmanshallbeelectedbytheboardofdirectorsthroughaffirmativevotesbymorethanhalfofallthedirectors.
Thechairmanshallconveneandpresideovermeetingsoftheboardofdirectorsandsupervisetheimplementationofresolutionsadoptedbytheboardofdirectors.Thevice-chairmanshallassistthechairmaninhiswork.Wherethechairmanisunabletoordoesnotexercisehisauthorities,thevice-chairmanappointedbythechairmanshallexercisesuchauthoritiesinhiscapacity.Wherethevicechairmanisunabletoordoesnotexercisehisauthorities,adirectorjointlynominatedbymorethanhalfofallthedirectorsshallexercisesuchauthorities.
Article111
Theboardofdirectorsshallholdmeetingsatleasttwiceayear,andnoticeshallbegiventoalldirectorsandsupervisorstendaysinadvance.Shareholdersrepresentingonetenthofvotingrights,oronethirdormoreofallthedirectorsorsupervisorsmayproposetohaveaninterimmeetingoftheboard.TheChairman,withintendaysafterreceiptofsuchproposal,mayconveneandpresideoverameetingoftheboard.Whereaninterimmeetingoftheboardofdirectorsistobeheld,themethodandtimelimitfornotificationforconveningtheinterimmeetingmaybeprescribedseparately.
Article112
Ameetingoftheboardofdirectorsmaynotbeheldunlessattendedbymorethanhalfofthedirectors.Aresolutionadoptedbytheboardofdirectorsrequiresaffirmativevotesbymorethanhalfofallthedirectors.
Inthevotingprocedures,onedirectorshallrepresentonevote.
Article113
[page]
Ameetingoftheboardofdirectorsshallbeattendedbyeachdirectorinperson.Whereadirectorisunabletoattendthemeetingforcause,hemayissueawrittenproxyentrustinganotherdirectortoattendonhisbehalf,andtheproxyshallsetforththescopeofauthorization.
Theboardofdirectorsshallprepareminutesregardingthedecisionsonmattersconsideredatthemeeting,whichshallbesignedbythedirectorsattendingthemeetingandthepersonpreparingtheminutes.
Thedirectorsshallberesponsibleforresolutionsadoptedbytheboardofdirectors.Wherearesolutionoftheboardviolatesanynationalstatutes,administrativeregulationsorthearticlesofassociation,andcausesthecompanytoincurseriousloss,thosedirectorsparticipatingintheadoptionoftheresolutionareliabletothecompanyfordamages.Provided,however,ifadirectorisproventohavedissentedatthevoteadoptingsuchresolutionandsuchdissensionwasnotedintheminutes,thenthedirectormaybeexemptfromliability.
Article114
Ajointstocklimitedcompanyshallhaveageneralmanager,tobeappointedorremovedbytheboard.
TheprovisionsofArticle50onthefunctionsandpowersofthemanagerofalimitedliabilitycompanyshallapplytothemanagerofajointstocklimitedcompany.
Article115
Theboardofdirectorsofthecompanymaydecidethataboardmemberistoserveconcurrentlyasthegeneralmanager.
Article116
Ajointstocklimitedcompanymustnotdirectly,orthroughitsaffiliatecompanies,borrowmoneyfromitsdirectors,supervisorsorseniorofficers.
Article117
Ajointstocklimitedcompanyshalldiscloseonregularbasistheremunerationofitsdirectors,supervisorsandseniorofficers.
SectionFourBoardofSupervisors
Article118
Ajointstocklimitedcompanyshallhaveaboardofsupervisors,whichshallbecomposedofnotfewerthanthree(3)members.[page]
Adirectorandaseniorofficermaynotserveconcurrentlyasasupervisor.
TheprovisionsofArticle52onthetermofthesupervisorofalimitedliabilitycompanyshallapplytothesupervisorofajointstocklimitedcompany.
Article119
TheprovisionsofArticle54andArticle55onthefunctionsandpowersoftheboardofsupervisorsofalimitedliabilitycompanyshallapplytotheboardofthesupervisorsofajointstocklimitedcompany.
Reasonableexpensesnecessaryforsupervisorstoperformancetheirdutiesshallbebornebythecompany.
Article120
Theboardofsupervisorsshallconveneameetingatleasteverysixmonths.Aninterimmeetingoftheboardmaybecalledattherequestofsupervisors.
Therulesofdeliberationandvotingproceduresfortheboardofsupervisorsshallbestipulatedbythearticlesofassociationofthecompany.
Theboardofsupervisorsshallprepareaminuteofthemeetingsignedbyallsupervisorsattendingthemeeting.[page]
SectionFourSpecialProvisionsontheStructureofaListedCompany
Article121
Alistedcompanyreferredtohereinmeansajointstocklimitedcompanywhosesharesarelistedandtradedonasecuritiesexchange.
Article122
Anypurchaseorsaleofmajorassetswithinoneyearorprovisionofasecurityinanamountinexcessofthirtypercent(30%)ofthetotalassetsbyalistedcompanyshallbedeliberatedanddeterminedatageneralmeetingofshareholdersandtheresolutionadoptedbysuchameetingrequiresaffirmativevotesbyshareholdersrepresentingtwo-thirdsofthevotingrights.
Article123
AlistedcompanyshallhaveindependentdirectorsthespecificmethodofwhichshallbedeterminedbytheStateCouncil.
Article124
Alistedcompanyshallhaveasecretaryoftheboardofdirectorswhoseresponsibilitiesincludethepreparationofthegeneralmeetingofshareholdersandmeetingsoftheboardofdirectors,maintenanceofdocuments,sharemanagementaswellasrelevantmattersconcerninginformationdisclosure.
Article125
Thedirectorofalistedcompanyaffiliatedwiththeenterpriseinvolvedinthemattersdiscussedbytheboardofdirectorsshallnotexercisehisown,orrepresentotherdirectorstoexercisevotingrightforsuchmatters.Themeetingoftheboardofdirectorsmaybeheldoncemorethanhalfoftheunaffiliateddirectorswillbepresent.Theresolutionmadebythemeetingoftheboardshallbeadoptedbymorethanhalfofallsuchdirectors.Wheretherearenotmorethanthree(3)unaffiliateddirectors,therelevantmattersshallbeforwardedtothegeneralmeetingofshareholdersfordeliberation.
ChapterFiveIssueandTransferofSharesofJointStockLimitedCompanies
SectionOneIssueofShares
Article126
Thecapitalofajointstocklimitedcompanyshallbedividedintoshares,andallthesharesshallbeofequalvalue.[page]
Sharesofthecompanyarerepresentedbysharecertificates.Asharecertificateisacertificateissuedbythecompanycertifyingtheshareheldbyashareholder.
Article127
Whensharesareissued,theprinciplesofopenness,fairness,andequityshallbefollowed,andeachshareinthesameclassmusthavethesamerightsandreceivethesameinterests.
Forsharesissuedatthesametime,eachshareshallbeissuedonthesameconditionsandatthesameprice.Allentitiesorindividualssubscribingforsharesshallpaythesamepriceforeachshare.
Article128
Theissuingpricepersharemaybeatparvalue,oraboveparvalue,butmaynotbebelowparvalue.
Article129
AsharecertificateshallbeinpaperformorinotherformsprescribedbythesecuritiesregulatoryauthorityundertheStateCouncil.
Asharecertificateshallsetforththefollowingmajoritems:
(3)theclassandparvalueofthesharesandthenumberofsharesrepresented;
(4)theserialnumberofthesharecertificate.
Article130
Sharecertificatesissuedbythecompanymaybeintheformofeitherregisteredsharecertificatesorbearersharecertificates.
Sharecertificatesissuedbythecompanytoitssponsorsorlegalpersonsshallberegisteredsharecertificatesbearingthenamesofsuchsponsorsorlegalpersons,andmaynotberegisteredunderanyothernamesorinthenamesoftheirlegalrepresentatives.
Article131
Acompanyissuingregisteredsharecertificatesshallmaintainarecordofshareholders,whichshallsetforththefollowing:[page]
(1)thenameanddomicileofeachshareholder;
(2)thenumberofsharesheldbyeachshareholder;
(3)theserialnumbersofsharecertificatesheldbyeachshareholder;
(4)thedateonwhicheachshareholderacquiredhisshares.
Acompanyissuingbearersharecertificatesshallrecordthenumberofsuchsharecertificates,theirserialnumbersandtheirissuingdates.
Article132
Article133
Uponregistrationandestablishment,ajointstocklimitedcompanyshallpromptlydeliverthesharecertificatestoitsshareholdersofficially.Priortoregistrationandestablishment,thecompanymaynotdeliveranysharecertificatetoitsshareholders.
Article134
Whereacompanyistoissuenewshares,thegeneralmeetingofshareholdersortheboardofdirectorsshalladoptaresolutionconcerningthefollowinginaccordancewiththearticlesofassociation:
(1)theclassesandnumberofthenewshares;
(2)theissuingpriceofthenewshares;
(3)thecommencingandendingdatesofissuanceofthenewshares;
(4)theclassesandnumberofnewsharesissuedtotheexistingshareholders.
Article135
WhenacompanyisapprovedbythesecuritiessupervisionandadministrationdepartmentundertheStateCounciltoissuenewsharestothepublic,itshallmakepublictheprospectusfortheissueofnewshares,itsfinancialandaccountingstatements,andshallpreparethesubscriptionform.
TheprovisionsofArticle88andArticle89shallapplytotheissueofnewshares.
Article136
Inissuingnewshares,acompanymaydeterminethepricingschemeinlightofthebusinessoperationandfinancialconditionsofthecompany.
Article137[page]
SectionTwoAssignmentOfShares
Article138
Sharesheldbyashareholdermaybeassignedinaccordancewiththelaw.
Article139
AssignmentofsharesbyashareholdermustbecarriedoutatalawfullyestablishedsecuritiesexchangeorinothermannersstipulatedbytheStateCouncil.
Article140
Alterationregistrationfortherecordofshareholdersreferredtointheprecedingparagraphshallnotbecarriedoutforaperiodoftwentydayspriortotheholdingofageneralmeetingofshareholders,orfivedayspriortotherecorddateforthepurposeofdividenddistributiondeterminedbythecompany.However,wheresuchchangeofshareholdersisotherwisestipulatedbythelaw,suchstipulationsshallapply.
Article141
Assignmentofbearersharecertificatestakeseffectupondeliverythereofbytheshareholdertotheassignee.
Article142
Article143
Acompanymaynotpurchaseitsownshares,exceptinthefollowingcases:
(2)mergingwithanothercompanyholdingsharesofthecompany;
(3)grantingincentivesharestothestaffandworkersofthecompany;
(4)requestingthecompanytopurchaseitsownshareswhereshareholdersofthecompanyopposethedecisiononmergeordivisionofthecompanymadeatageneralmeetingofshareholders.
Aresolutionshallbeadoptedbyageneralmeetingofshareholdersintheeventofapurchaseasdescribedintheaboveitemsfrom(1)through(3).Theoriginalshares,afterthecompanyhaspurchaseditsownsharesinthecaseasdescribedinitem(1),shallbecancelledwithintendaysofsuchpurchase.Inthecasesasdescribedinitem(2)and(4),thesharesshallbetransferredorcanceledwithinsixmonthsofsuchpurchase.
Thesharesofthecompanypurchasedbyitselfinthecaseasdescribedinitem(3)shallnotexceedfivepercent(5%)ofthetotalsharesissuedbythecompany.Thefundforsuchpurchaseshallbepaidoutoftheafter-taxprofitsofthecompanyandthesharespurchasedshallbetransferredtothestaffandworkerswithinoneyearofsuchpurchase.
Thecompanymaynotacceptitsownsharesasthecollateralunderasecurityarrangement.
Article144
Article145
Thesharesofacompanyapprovedforlistingshallbelistedinaccordancewithlaws,administrativeregulationsandtradingrulessetforthbyastockexchange.[page]
Article146
Alistedcompanyshallmakepublicitsfinancialconditionsandoperatingconditionsinaccordancewiththerelevantlawsandadministrativeregulations,andshallmakepublicitsfinancialandaccountingreportssemiannuallyineachfiscalyear.
ChapterSix:QualificationsandObligationsofDirectors,SupervisorsandSeniorOfficers
Article147
Apersoninanyofthefollowingcategoriesmaynotserveasadirector,supervisor,orthegeneralmanagerofacompany:
(1)withoutcivilcapacityorwithlimitedcivilcapacity;
(2)havingbeensentencedtoprisonforthefollowingcrimes,andcompletionofthesentencebeinglessthanfiveyearsago:embezzlement,bribery,conversionofproperty,misappropriationofproperty,sabotageofsocialeconomicorder;orhavingbeendeprivedofpoliticalrightsasaresultofacriminalconviction,andcompletionofsuchsanctionbeinglessthanfiveyearsago;
(3)havingservedasadirector,thefactorychief,orthegeneralmanagerofacompanyorenterprisewhichunderwentbankruptcyliquidationasaresultofmismanagement,andbeingpersonallyresponsibleforsuchbankruptcy,andcompletionofthebankruptcyliquidationbeinglessthanthreeyearsago;
(4)havingservedasthelegalrepresentativeofacompanyorenterprisewhosebusinesslicensewasrevokedduetoitsviolationoflaw,andbeingpersonallyresponsibleforsuchrevocation,andsuchrevocationoccurringlessthanthreeyearsago;
(5)indefaultofpersonaldebtofasignificantamount.
Ifthecompanyelectsorappointsadirectororsupervisororemploystheseniorofficerinviolationoftheaboveparagraph,suchelection,appointmentoremploymentisinvalid.Thecompanyshallremovethedirector,supervisororseniorofficeroncethecircumstancesdescribedinitem(1)occur.
Article148
Adirector,supervisor,orthegeneralmanagershallabidebylaws,administrativeregulationsandarticlesofassociationofthecompanyandshallhavethefiduciaryanddiligentdutiestothecompany.[page]
Adirector,supervisor,ortheseniorofficermaynotabusetheirauthoritiesbyacceptingbribesorgeneratingotherillegalincome,andmaynotconvertcompanyproperty.
Article149
Thedirectorandseniorofficer:
(1)maynotmisappropriatecompanyfunds;
(3)maynotloancompanyfundstootherpeopleorgivecompanyassetsassecurityforthedebtofanyotherindividualwithouttheapprovaloftheshareholdersmeeting,generalmeetingofshareholdersortheboardofdirectorsinviolationofthearticlesofassociation;
(4)maynotexecuteanycontractorengageinanytransactionwiththecompanyinviolationofthearticlesofassociationorwithouttheapprovaloftheshareholdersmeetingorthegeneralmeetingofshareholders;
(6)maynotacceptandpossessthecommissionspaidbyothersfortransactionsconductedwiththecompany;
(7)maynotdisclosecompanyconfidentialinformationwithoutauthorization;
(8)maynotengageinotheractivitiesinviolationofhisfiduciaryduties.
Article150
Ifadirector,supervisorortheseniorofficercausesdetrimenttothecompanywhileperforminghisdutiesinviolationoflaws,administrativeregulationsorthearticlesofassociation,heshallbeliableforthelosssocaused.
Article151
Wheretheshareholdersmeetingorthegeneralmeetingofshareholdersrequiresadirector,supervisorortheseniorofficertobepresentatmeetings,theyshallbepresentatmeetingsandanswertheinquiriesofshareholders.[page]
Adirectororseniorofficershallprovidetheboardofsupervisorsorthesupervisorsofalimitedliabilitycompanywithoutaboardofsupervisorswithgenuinedocumentsandinformationandshallnotobstructtheboardofsupervisorsorsupervisorsfromperformingduties.
Article152
WhereadirectororseniorofficerisinvolvedinthecircumstanceasdescribedinArticle150,theshareholdersofalimitedliabilitycompanyorajointstocklimitedcompanythatindividuallyorjointlyholdonepercent(1%)ofthetotalsharesforconsecutive180daysmayrequestinwritingtheboardofsupervisorsorthesupervisorsofalimitedliabilitycompanywithoutaboardofsupervisorstofilesuitbeforeapeople’scourt.WhereasupervisorisinvolvedinthecircumstanceasdescribedinArticle150,aforesaidshareholdersmayrequestinwritingtheboardofdirectorsortheexecutivedirectorofalimitedliabilitycompanywithoutaboardofdirectorstofilesuitbeforeapeople’scourt.
Wheretheboardofsupervisorsorthesupervisorsofalimitedliabilitycompanywithoutaboardofsupervisors,ortheboardofdirectorsortheexecutivedirectorrefusestofilesuitafterreceiptofthewrittenrequestmentionedabove,ordoesnotfilesuitwithinthirtydaysofthereceiptofthesame,orcomesacrossanemergencywhere,ifnoimmediateactionsaretaken,thecompany’sinterestsshallbeincurablyimpaired,thentheshareholdersmay,fortheinterestofthecompanyandontheirownbehalf,directlyfilesuitbeforeapeople’scourt.
Wherethecompany’slegalrightsandinterestsareviolatedbyothersandintheeventofanylossesincurred,theshareholdersdefinedinthefirstprecedingparagraphmayfilesuitbeforeapeople’scourtinaccordancewiththefirsttwoprecedingparagraphs.
Article153
Whereadirectororseniorofficerviolateslaws,administrativeregistrationsorthearticlesofassociation,orinfringesupontherightsandinterestsoftheshareholders,theshareholdersmayfilesuitbeforeapeople’scourt.[page]
ChapterSeven:CompanyBonds
Article154
Companybondsreferredtohereinmeansaformofsecuritywhichisissuedbyacompanyinaccordancewithlegallyprescribedprocedure,andwhichprovidesthattheprincipalthereofandinterestthereonshallbepaidatspecifiedtimes.TheissueofcompanybondsshallmeettherequirementssetforthbytheSecuritiesLawofthePeople’sRepublicofChina.
Article155
UponapprovalofanapplicationforcompanybondsissuegrantedbytherelevantdepartmentauthorizedbytheStateCouncil,theplanforcompanybondsoffershallbemadepublic.Theplanforcompanybondsoffershallsetforththefollowingmajoritems:
(2)thepurposeofthefundraised;
(3)thetotalvalueofthebondsandtheparvalueofeachbond;
(4)thedeterminationmethodoftherateofinterestonthebonds;
(5)thetimelimitandmethodforpaymentoftheprincipalofandinterestonthebonds;
(6)thesecurityinformationconcerningthebonds;
(7)theprice,thecommencingandendingdateofthebondsissue;
(8)thenetassetsvalueofthecompany;
(9)thetotalvalueofissuedandoutstandingcompanybonds;
(10)theunderwriterofthecompanybonds.
Article156
Article157
Companybondsmaybeclassifiedaseitherregisteredbondsorbearerbonds.
Article158
Ifacompanyhasissuedbonds,itshallmaintainarecordofbondholders.
(1)thenameanddomicileofeachbondholder;
(2)thedatesonwhichthebondholdersacquiredthebondsandtheserialnumbersofthebondcertificates;
(3)thetotalvalueofthebonds,theparvalueofeachbond,theinterestthereon,thetermthereofandmethodforpaymentofprincipalandinterest;
(4)thedateofissueofthebonds.
Article159
Intheeventofregisteredbonds,securitiesregistrationandsettlementorganizationsshallestablishrelevantrulesandregulationsforthebondsregistration,deposit,interestpaymentandbondredemption.
Article160
Companybondsmaybeassigned,thepriceofwhichshallbeagreeduponbetweentheassignorandtheassignee.
Wherethecompanybondsarelistedandtradedatasecuritiesexchange,theassignmentofthebondsshallbeconductedinaccordancewiththetradingrulesofthesecuritiesexchange.
Article161
Assignmentofbearerbondstakeseffectupondeliverythereofbythebondholdertotheassigneeatalawfullyestablishedsecuritiesexchange.
Article162
Article163
Whereconvertiblecompanybondsareissued,thecompanyshallexchangeitssharesforthebondsheldbythebondholdersusingtheprescribedmethodofconversion,providedthatthebondholdershavetheoptiononwhetherornottoconverttheirbonds.
ChapterEight:FinancialandAccountingAffairsofCompany
Article164
Acompanyshallestablishitsfinancialandaccountingsysteminaccordancewiththerelevantnationalstatutes,administrativeregulationsandthestipulationsofthefinanceauthorityundertheStateCouncil.
Article165
Acompanyshallprepareitsfinancialandaccountingreportsattheendofeachfiscalyear,whichshallbeauditedbyanaccountingfirminaccordancewiththelaw.Thefinancialandaccountingreportsshallbecompliedpursuanttorelevantlaws,administrativeregulationsandrelevantregulationssetforthbythefinanceauthorityundertheStateCouncil.
Article166
Alimitedliabilitycompanyshalldeliveritsfinancialandaccountingreportstoeachshareholderwithinthetimelimitprescribedbythearticlesofassociation.
Ajointstocklimitedcompanyestablishedthroughpublicshareoffershallmakepublicitsfinancialandaccountingreports.
Article167
Afterallocationtothestatutoryreservefundhasbeenmadefromtheafter-taxprofitofthecompany,anduponadoptionofaresolutionbytheshareholdersmeetingorthegeneralmeetingofshareholders,allocationmaybemadetothediscretionaryreservefund.
Afterthecompanyhascovereditslosses,andmadeallocationtothereservefunds,theremainderoftheprofitshallbedistributedtotheshareholdersinaccordancewiththeprovisionsofArticle35inthecaseofalimitedliabilitycompany,andinproportiontotheirshareholdingsinthecaseofajointstocklimitedcompanyunlessotherwisestipulatedinitsarticlesofassociation.
Iftheshareholdersmeeting,thegeneralmeetingofshareholdersortheboardofdirectors,inviolationoftheprecedingparagraph,distributesprofittotheshareholdersbeforecoveringcompanylossesandmakingallocationtocompanystatutoryreservefund,theprofitsodistributedmustbereturnedtothecompany.Thesharesofthecompanyheldbythecompanyitselfshallnotbegrantedprofitdistribution.
Article168
Thepremiumreceivedbyajointstocklimitedcompanythroughissuanceofsharesatpricesaboveparvalue,aswellasotherincomestobeallocatedtothecapitalreservefundasstipulatedbythefinanceauthorityundertheStateCouncil,shallbeallocatedtothecapitalreservefund.
Article169
Uponconversionofstatutoryreservefundintocapital,theamountremaininginthestatutoryreservefundmaynotfallbelowtwenty-fivepercent(25%)oftheregisteredcapital.
Article170
Engagementordismissalofanaccountingfirmtoberesponsiblefortheauditofthefinancialandaccountingreportsofacompanyshallbedeterminedbytheshareholdersmeeting,thegeneralmeetingofshareholdersortheboardofdirectorsinaccordancewiththearticlesofassociation.[page]
Whentheshareholdersmeeting,thegeneralmeetingofshareholdersortheboardofdirectorsvotesonthematterofdismissalofanaccountingfirm,thesaidfirmshallbegiventhechancetostateitsopinions.
Article171
Thecompanyshallprovidetheaccountingfirmwithtrueandcompleteaccountingcertificates,books,financialandaccountingreportsandotheraccountingmaterialsandmustnotrefusetoprovideorconcealsuchdocuments,orreportdeceitfully.
Article172
ChapterNine:MergerandDivisionofCompany,IncreaseandDecreaseofRegisteredCapital
Article173
Companiesmaybemergedbyabsorptionandmergerbyconsolidation.
Onecompanyabsorbinganothercompanyismergerbyabsorption,andthecompanybeingabsorbedshallbedissolved.Mergeroftwoormorecompaniesthroughestablishmentofanewcompanyisaconsolidation,andthecompaniesbeingconsolidatedshallbedissolved.
Article174
Inamergerofcompanies,thecompaniesshallexecuteamergeragreement,andpreparetheirrespectivebalancesheetsandschedulesofassets.Thecompaniesshallnotifytheircreditorswithintendaysofadoptionofmergerresolutions,andshallpublishanoticeinanewspaperwithinthirtydays.Creditorsareentitledtoclaimfullpaymentofthedebtsofthecompaniesorrequiretheprovisionofappropriateassuranceswithinthirtydaysofreceiptofthenotice,orwithinforty-fivedaysofpublicationofthefirstnoticeifsuchcreditorsdidnotreceivethenotice.
Article175
Article176
Whereacompanyistoundergodivision,itsassetsshallbedividedaccordingly.
Individingthecompany,abalancesheetandascheduleofassetsshallbeprepared.Thecompanyshallnotifyitscreditorswithintendaysofadoptionofadivisionresolution,andshallpublishanoticeinanewspaperwithinthirtydays.
Article177
Thecompanyresultingfromthedivisionshallbearjointliabilitiesforthedebtsofthecompanypriortoitsdivisionexceptotherwisestipulatedinawrittenagreementconcludedbeforethedivisionbyandbetweenthecompanyanditscreditor.
Article178
Whereacompanyneedstoreduceitsregisteredcapital,abalancesheetandascheduleofassetsmustbeprepared.
Article179
Whenalimitedliabilitycompanyistoincreaseitsregisteredcapital,aftersubscriptionforthenewlyincreasedcapital,theshareholdersshallmakecapitalcontributioninaccordancewiththeprovisionshereofconcerningcapitalcontributionfortheestablishmentofalimitedliabilitycompany.
Article180
Inthecaseofmergerordivisionofacompany,whereanyregistereditemrequireschange,amendmentregistrationshallbecarriedoutwiththecompanyregistrationauthorityinaccordancewiththelaw;wherethecompanyisdissolved,companyde-registrationshallbecarriedoutinaccordancewiththelaw;whereanewcompanyisestablished,establishmentregistrationshallbecarriedoutinaccordancewiththelaw.
Whereacompanyistoincreaseorreduceitsregisteredcapital,aamendmentregistrationshallbecarriedoutwiththecompanyregistrationauthorityinaccordancewiththelaw.
ChapterTen:DissolutionandLiquidationofCompany
Article181Acompanymaybedissolvedforanyoneofthefollowingreasons:
(2)theshareholdersmeetingorthegeneralmeetingofshareholdershasadoptedaresolutionfordissolution;
(3)dissolutionisrequiredduetomergerordivisionofthecompany;
(4)thebusinesslicenseofthecompanyisrevokedbylaw,orthecompanyisorderedtoterminateorcancelled;
(5)thecompanyisdissolvedbythepeople’scourtinaccordancewiththeprovisionsofArticle183.
Article182
WhereacompanyisinvolvedinthecircumstancedescribedintheaboveArticle181(1),thecompanymayamenditsarticlesofassociationtocontinueitsexistence.Theamendmenttothearticlesofassociationshallbeadoptedbytwothirdsormoreofallvotingshareholdersinthecaseofalimitedliabilitycompany.Intheeventofajointstocklimitedcompany,theamendmentrequiresaffirmativevotesbyatleasttwo-thirdsofthevotesheldbyshareholdersattendingthegeneralmeetingofshareholders.
Article183
Wherethereareseriousdifficultiesintheoperationofacompanyandthecompany’scontinuancewilldefinitelycausesignificantlossestoshareholders’interests,however,suchscenariocannotbesolvedthroughotherchannels,then,shareholdersrepresenting10%ofallthevotesmayrequestthepeople’scourttodissolvethecompany.[page]
Article184
Article185
Theliquidationcommitteeshallexercisethefollowingauthoritiesinthecourseofliquidation:
(2)notifyingcreditorsthroughnoticeorpublicannouncement;
(4)makingfullpaymentoftaxesowedandthetaxesincurredduringliquidation;
(6)disposingoftheremainingassetsafterfullpaymentofcompanydebts;
(7)participatingincivilactionsonbehalfofthecompany.
Article186
Article187
Afterpaymentofliquidatingexpenses,paymentofwagesandexpensesforlaborinsuranceoftheworkers,paymentoftaxesowed,andpaymentofcompanydebtsaremade,theremainingassetsshallbedistributedtotheshareholdersinproportiontotheirsharesofcapitalcontributioninthecaseofalimitedliabilitycompany,andinproportiontotheirshareholdingsinthecaseofajointstocklimitedcompany.Inthecourseofliquidation,thecompanycontinuesitsexistencebutshallnotconductanybusinessactivitiesirrelevanttotheliquidation.Beforepaymentshavebeenmadeinaccordancewiththeprecedingregulations,theassetsofthecompanyshallnotbedistributedtotheshareholders.
Article188
Article189
Article190
Membersoftheliquidationcommitteeshallfaithfullyperformtheirdutiesandcarryouttheirliquidatingobligationsinaccordancewiththelaw.
Membersoftheliquidationcommitteemaynotabusetheirauthoritiesbyacceptingbribesorreceivingotherillegalincome,andmaynotmisappropriatecompanyassets.
Acommitteememberwhocauseslosstothecompanyoritscreditorsduetohisintentionalmisconductorgrossnegligenceshallbeliablefordamages.
Article191
ChapterEleven:BranchofForeignCompany
Article192
AforeigncompanyreferredtohereinmeansacompanyregisteredandestablishedoutsideChinaunderforeignlaws.
Article193
InordertoestablishabranchwithinChina,aforeigncompanymustsubmitanapplicationtotheChineseauthorityincharge,togetherwiththerelevantdocumentssuchasitsarticlesofassociation,thecompanyregistrationcertificateissuedinitshomecountry,etc.Uponapproval,itshallcarryoutregistrationwiththecompanyregistrationauthorityandbeissuedabusinesslicense.
TheexaminationandapprovalprocedureforbranchesofforeigncompaniesshallbeseparatelyprescribedbytheStateCouncil.
Article194
InordertoestablishabranchwithinChina,aforeigncompanymustappointarepresentativeoragentinchargeofsuchbranchwithinChina,andfunditsbranchasappropriateinlightofthenatureofitsintendedbusiness.Whereoperationofcertainbranchesofforeigncompaniesissubjecttoaminimumleveloffunding,suchlevelshallbeprescribedbytheStateCouncilseparately.
Article195
Thebranchofaforeigncompanyshallidentifythenationalityandformofliabilityinitsname.[page]
Thebranchofaforeigncompanyshallmaintainthearticlesofassociationofsuchforeigncompanyonitspremises.
Article196
Aforeigncompanyisaforeignlegalperson,anditsbranchestablishedwithinChinadoesnothavethestatusofaChineselegalperson.
AforeigncompanyshallbearcivilliabilitiesinrespectofthebusinessconductedbyitsbranchwithinChina.
Article197
WhileconductingbusinesswithinChina,thebranchofaforeigncompanyestablishedafterapprovalmustabidebyChineselaw,andmaynotharmthepublicinterestofChina,anditslawfulrightsandinterestsareprotectedbyChineselaw.
Article198
WhenaforeigncompanycancelsitsbranchwithinChina,suchcompanymustfullyrepaythedebtsthereofinaccordancewiththelawandcarryoutliquidationinaccordancewiththeprovisionshereofconcerningcompanyliquidationprocedure.Thecompanymaynottransfertheassetsofsuchbranchabroadpriortofullrepaymentofitsdebts.
ChapterTwelve:LegalLiabilities
Article199
Inthecaseofcompanyregistration,whereanapplicantobtainscompanyregistrationinviolationhereofbymakingfalsestatementofregisteredcapital,submittingfalsecertificatesorbyconcealingmaterialfactsthroughotherfraudulentmeans,thecompanyshallbeorderedtomakerectification,andintheeventfalsestatementsofregisteredcapitalweremade,thecompanyshallbefinednotlessthanfivepercent(5%)butnotmorethanfifteenpercent(15%)oftheamountofregisteredcapitalfalselystated;thecompanysubmittingfalsecertificatesorconcealingmaterialfactsshallbefinednotlessthanRMB50,000butnotmorethanRMB500,000;wherethecircumstancesareserious,thecompanyregistrationshallberevokedorthebusinesslicenseofthecompanyshallbecancelled.
Article200
Wherethesponsorsorshareholdersfalsifycapitalcontributionbyfailingtopaymoney,todeliverordelayinthedeliveryofcurrencyornon-currencyproperty,theyshallbeorderedbythecompanyregistrationauthoritytomakerectification,andsuchpersonsshallbefinednotlessthanfivepercent(5%)butnotmorethanfifteenpercent(15%)oftheamountofcapitalcontributionfalsified.[page]
Article201
Wherethesponsorsorshareholdersofacompanywithdrawtheircapitalcontributionaftertheestablishmentofthecompany,theyshallbeorderedbythecompanyregistrationauthoritytomakerectification,andsuchpersonsshallbefinednotlessthanfivepercent(5%)butnotmorethanfifteenpercent(15%)oftheamountofcapitalcontributionwithdrawn.
Article202
Whereacompany,inviolationhereof,establishesanothersetofaccountingbooksbesidesthoseprescribedbylaw,itshallbeorderedbythecompanyregistrationauthoritytomakerectification,andthecompanyshallbefinednotlessthanRMB50,000butnotmorethanRMB500,000.
Article203
Whereacompanyprovidestoitsshareholdersandthepublicfinancialandaccountingreportswhicharefalseorwhichconcealmaterialfacts,afineofnotlessthanRMB30,000butnotmorethanRMB300,000shallbeimposedbyrelevantauthorityonthesupervisordirectlyinchargeandtheotherperson(s)directlyresponsible.
Article204
Whereacompanyfailstomakeallocationtothestatutoryreservefundinaccordanceherewith,suchcompanyshallbeorderedbythefinanceauthorityofthepeople’sgovernmentatthelevelofcountyorhighertomakefullallocationtotherequiredfunds,andafineofnotmorethanRMB200,000maybeleviedonthecompany.
Article205
Whereacompanyfailstonotifycreditorsthroughnoticeorpublicannouncementinaccordanceherewithwhilecarryingoutmerger,division,reductionofregisteredcapital,orliquidation,itshallbeorderedbythecompanyregistrationauthoritytomakerectification,andthecompanyshallbefinednotlessthanRMB10,000butnotmorethanRMB100,000.
Whereinthecourseofliquidation,thecompanyconcealsitsassets,makesfalsestatementsinitsbalancesheetorscheduleofassets,ordistributescompanyassetspriortofullrepaymentofcompanydebts,itshallbeorderedtomakerectification,andthecompanyshallbefinednotlessthanfivepercent(5%)butnotmorethantenpercent(10%)ofthevalueoftheconcealedassets,orthevalueoftheassetsdistributedpriortofullrepaymentofcompanydebts.AfineofnotlessthanRMB10,000butnotmorethanRMB100,000shallbeimposedonthesupervisordirectlyinchargeandtheotherperson(s)directlyresponsible.Wheresuchactionconstitutesacrime,criminalliabilityshallbeimposedinaccordancewiththelaw.[page]
Article206
Wherethecompanyengagesinanybusinessactivitiesunrelatedtotheliquidation,itshallbewarnedbythecompanyregistrationauthorityanditsincomederivedtherefromshallbeconfiscated.
Article207
Wheretheliquidationcommitteefailstosubmittheliquidatingreporttothecompanyregistrationauthorityinaccordanceherewith,orconcealsanymaterialfactormakesanymaterialomissionintheliquidatingreportsubmitted,itshallbeorderedbythecompanyregistrationauthoritytomakerectification.
Whereamemberoftheliquidationcommitteeabuseshisauthoritytoengageinfraudulentactivityforprivategain,toobtainillegalincomeorconvertcompanyassets,suchmembershallbeorderedtoreturnthecompanyassets,andtheillegalincomeshallbeconfiscated,andsuchmembermaybefinednotlessthantwotimesbutnotmorethanfivetimestheillegalincome.
Article208
Whereaninstitutionconductingassetsappraisal,capitalverification,ortestingandverificationprovidesafalsecertificate,theillegalincomesoderivedshallbeconfiscated,andafineofnotlessthantwotimesbutnotmorethanfivetimestheillegalincomeshallbeimposed,andtherelevantauthorityinchargemayordersuchinstitutiontoceaseoperation,andrevokethequalificationcertificatesofthepersonsdirectlyresponsible.Wheresuchactionconstitutesacrime,criminalliabilityshallbeimposedinaccordancewiththelaw.
Whereaninstitutionconductingassetsappraisal,capitalverificationortestingandverificationprovidesareportwithmaterialomissionduetoitsnegligence,itshallbeorderedtomakerectification,andwherethecircumstanceisrelativelyserious,afineofnotlessthantwotimesbutnotmorethanfivetimestheincomesoderivedshallbeimposed,andtherelevantauthorityinchargemayordersuchinstitutiontoceaseoperation,andrevokethequalificationcertificatesofthepersonsdirectlyresponsible.[page]
Wheretheappraisalreport,capitalverificationreportorverificationissuedbyaninstitutionconductingassetsappraisal,capitalverificationortestingandverificationdoesnotcomplywiththefactwhichhascausedlossestothecompany’screditors,theinstitutionconductingassetsappraisal,capitalverificationortestingandverificationshall,unlesstheycanprovetheyhavenofault,makecompensationswithintherangeofamountindiscordwiththefact.
Article209
Wherethecompanyregistrationauthoritygrantsregistrationtoanapplicationwhichfailstomeettherequirementsprescribedhereinor,refusestograntregistrationtoanapplicationwhichmeetstherequirementsprescribedherein,administrativepenaltyshallbeimposedonthesupervisordirectlyinchargeandtheotherperson(s)directlyresponsibleinaccordancewiththelaw.
Article210
Wherethedepartmentinchargeofthecompanyregistrationauthoritycompelsittograntregistrationtoanapplicationwhichfailstomeettherequirementsprescribedherein,orengagesincoverupforanillegalregistration,administrativepenaltyshallbeimposedonthesupervisordirectlyinchargeandtheotherperson(s)directlyresponsibleinaccordancewiththelaw.
Article211
Whereanentitypassesitselfoffasalimitedliabilitycompanyorjointstocklimitedcompanywhilenotregisteredassuchinaccordancewiththelaw,oranentitypassesitselfoffasabranchcompanyofalimitedliabilitycompanyorjointstocklimitedcompanywhilenotregisteredassuchinaccordancewiththelaw,itshallbeorderedbythecompanyregistrationauthoritytomakerectificationorsuchentityshallbecloseddown,andafineofnotmorethanRMB100,000maybeimposed.
Article212
Whereacompanyfailstocommenceoperationformorethan6monthswithoutpropercause,orsuspendsoperationonitsownwithoutpropercauseformorethan6consecutivemonthsaftercommencementofoperation,thecompanyregistrationauthorityshallrevokeitscompanybusinesslicense.[page]
Wherethecompanyfailstocarryoutamendmentregistrationinaccordanceherewithwhenaregistereditemofthecompanyhaschanged,itshallbeorderedtoregisterwithinaprescribedtimelimit,andwherethecompanyhasnotcarriedoutregistrationafterexpirationofthetimelimit,afineofnotlessthanRMB10,000butnotmorethanRMB100,000shallbeimposed.
Article213
Where,inviolationhereof,aforeigncompanyestablishesabranchwithinChinawithoutapproval,itshallbeorderedtomakerectification,orsuchbranchshallbeorderedtoterminate,andafineofnotlessthanRMB50,000butnotmorethanRMB200,000maybeimposed.
Article214
Whereacompanyconductsillegalactivitiesjeopardizingthenationalsecurityandsocialpublicinterests,thebusinesslicenseofsuchcompanyshallberevoked.
Article215
WhereacompanyviolatesofthisLaw,andisthereforeliableforcivildamagesaswellasforanadministrativefineorcriminalfine,anditsassetsarenotsufficienttocoverboth,itsassetsshallfirstbeusedtocoverthecivilliabilityfordamages.
Article216
WhereanyviolationofthisLawconstitutesacrime,criminalliabilityshallbeimposedinaccordancewiththelaw.
ChapterThirteen:SupplementaryProvisions
Article217
ForthepurposeofthisLaw,thedefinitionsofthefollowingtermsare:
(1)SeniorOfficerreferredtohereinmeansthemanager,deputymanager,personinchargeoffinancialaffairs,secretaryoftheboardofdirectorsofalistedcompanyoranyotherpersonnelsoappointedinthearticleofassociationofthecompany.
(2)ControllingShareholderreferredtohereinmeanstheshareholderwhichamountofcapitalcontributionaccountsformorethanfiftypercent(50%)ofthetotalamountofcapitalofalimitedliabilitycompanyor,theshareholderwithmorethanfiftypercent(50%)ofthetotalamountofsharecapitalofajointstocklimitedcompanyor,theshareholderofeitheralimitedliabilitycompanyorajointstocklimitedcompanywhich,byvirtueofitsvotingrightrepresentedbyitscapitalcontributionorshareholding,hasasignificantimpactonthedecisionofshareholdersmeetingorthegeneralmeetingofshareholdersregardlessofapercentagelowerthanfiftypercentasaforementioned.[page]
(3)ActualControllerreferredtohereinmeansapersonwhoisnotashareholderofthecompanybuthasvirtualcontrolovercorporateactionsthroughinvestmentin,agreementorotherarrangementswiththecompany.
(4)Affiliationreferredtohereinmeanstheconnectionbetweenacontrollingshareholder,actualcontroller,director,supervisororseniorofficerofacompanyandtheenterprisescontrolledbythem,directlyorindirectly,oranyotherkindsofrelationshipsthatarelikelytocausediversionofthecompany’sinterests.Notwithstandingtheforegoing,companieswhichmajorityofsharesarecontrolledbythestatearenotnecessarilyaffiliatedwithoneanothersimplybecausethemajorityoftheirsharesarecommonlycontrolledbythestate.
Article218
ThisLawshallbeapplicabletoforeign-investedlimitedliabilitycompaniesandjointstocklimitedcompanies.Wherethelawsonenterpriseswithforeigninvestmentprovideotherwise,suchprovisionsshallapply.
Article219
ThisLawshallbecomeeffectiveonJanuary1,2006.
SectionFourSpecialProvisionsonWhollyState-ownedCompanies.15[page]
ChapterOne:GeneralProvisions
Acompanyisanenterpriselegalpersonthatshallenjoytherighttotheentireindependentpropertyofthelegalperson.Acompanyshallbeliableforitsdebtstotheextentofallitsassets.Inthecaseofalimitedliabilitycompany,shareholdersshallassumeliabilitytowardsthecompanytotheextentoftheirrespectivecapitalcontributions.Inthecaseofajointstocklimitedcompany,shareholdersshallassumeliabilitytowardsthecompanytotheextentoftheirrespectiveshareholdings.[page]
Acompanyshallapplytothecompanyregistrationauthorityforestablishmentregistration.CompaniesmeetingtheconditionssetbythisLawshallberegisteredaslimitedliabilitycompaniesorjointstocklimitedcompanies;whilecompaniesfailingtomeettheconditionssetbythisLawshallnotberegisteredaslimitedliabilitycompaniesorjointstocklimitedcompanies.
Thebusinesslicenseshallspecifythenameanddomicileofthecompany,registeredcapital,paid-incapital,businessscope,thenameofthelegalrepresentative,etc.Intheeventofanychangetotheregistrationitemofthebusinesslicense,acompanyshallundergoalterationregistrationprocedureswiththecompanyregistrationauthorityinaccordancewiththelaw,afterwhichanewbusinesslicenseshallbeissuedtothecompany.[page]
Ifalimitedliabilitycompanyistobeconvertedintoajointstocklimitedcompany,itshallsatisfytherequirementsforajointstocklimitedcompanystipulatedbythisLaw.Ifajointstocklimitedcompanyistobeconvertedintoalimitedliabilitycompany,itshallsatisfytherequirementsforalimitedliabilitycompanystipulatedbythisLaw.Wherealimitedliabilitycompanyisconvertedintoajointstocklimitedcompanyorviceversa,theclaimsanddebtsoftheoriginalcompanyshallbesucceededtobythecompanyintowhichitisconverted.
Thelegalrepresentativeofacompanymayberepresentedbythechairman,executivedirectorormanagerofacompanyincompliancewithitsarticlesofassociationandregisteredinaccordancewiththelaw.Intheeventofanychangeofthelegalrepresentativeofacompany,suchchangeshallberegisteredinaccordancewiththelaw.[page]
Acompanymayinvestinotherenterprises,however,unlessotherwisestipulatedbythelaw,thecompanymakingsuchinvestmentshallnotbearjointandseveralliabilityforthedebtsoftheenterpriseinwhichthecompanyinvests.
Companiesmustprotectthelawfulrightsandinterestsoftheirstaffandworkers,signlaborcontractswiththemandcoverthemwithsocialinsurancesinaccordancewiththelaw,andstrengthenlaborprotectionsoastoachievesafetyinproduction.[page]
Theshareholdersofacompanyshallexercisetheirshareholders’rightsincompliancewithlaws,administrativerulesandregulationsaswellasthearticlesofassociationofthecompany,shallnotabusetheirshareholders’rightstoinjuretheinterestsofthecompanyorothershareholders,ortakeadvantageofthecompany’sindependentstatusorthelimitedliabilityofshareholderstoinjuretheinterestsofthecompany’screditors.[page]
Thecontrollingshareholders,actualcontrollers,directors,supervisorsorseniorofficersofacompanyshallnottakeadvantageoftheiraffiliationswithothersinanattempttoharmthecompany’sinterestsand,whereanylossesareincurredinviolationhereof,shallbeliableforcompensation.
Wherethecompanyhaseffectedalterationregistrationaccordingtotheresolutionofshareholdersmeeting,generalmeetingofshareholdersorboardofdirectors,thecompanyshall,afterthepeople’scourtdeclaressuchresolutionnullandvoidorrevokesthesame,shallapplytothecompanyregistrationauthorityforcancellationofitsalterationregistration.[page]
(5)Thecompanyhasadomicile.
Theregisteredcapitalofalimitedliabilitycompanyshallbetheamountofthepaid-upcapitalcontributionsofallitsshareholdersasregisteredwiththecompanyregistrationauthority.Theamountoftheinitialinvestmentcontributedbyallshareholdersshallnotbelowerthantwentypercent(20%)oftheregisteredcapitalortheminimumamountprescribedbythelaw,theremainingofwhichshallbefullypaidupwithintwoyearsoftheestablishmentofthecompany.Inthecaseofaninvestmentcompany,theremainingamountoftheregisteredcapitalmaybepaidupwithinfiveyearsoftheestablishmentofthecompany.TheminimumamountoftheregisteredcapitalofalimitedliabilitycompanyshallbeRMB30,000.Wherelawsandadministrativeregulationsprovideformorethantheminimumamount,suchprovisionsshallapply.[page]
Exceptforassetsforbiddentobeusedascontributionbylawsandadministrativeregulations,ashareholdermaymakeitscapitalcontributionstoacompanyincurrencyorbycontributingsuchnon-currencypropertyasmaterialobjects,intellectualpropertyrightsandland-userightsthatcanbeevaluatedintheformofcurrencyandtransferredinaccordancewiththelaw.
Afterallshareholdershavemadetheircapitalcontributionsinfull,suchcontributionsmustbeverifiedbyastatutorycapitalverificationinstitutionwhichshallissuecapitalverificationcertificates.[page]
Aftertheinitialcapitalcontributionsoftheshareholdershavebeenverifiedbyastatutorycapitalverificationinstitution,applicationshallbemadetothecompanyregistrationauthorityforregistrationoftheincorporationofthecompanybyarepresentativedesignatedbyalltheshareholdersorbyanagentjointlyentrustedbythem,whoshallsubmitsuchdocumentsasanapplicationforregistration,thearticlesofassociationandthecapitalverificationcertificate.
(3)theserialnumbersofthecapitalcontributioncertificates.[page]
Thecompanyshallregisterthenamesofshareholdersandtheamountofcapitalcontributionsoftheshareholderswiththecompanyregistrationauthorityand,intheeventofanychangethereof,applyforalterationregistration.Unlessdulyregistered,theabove-mentioneditemsandanychangesthereofshallnotbeadefenseagainstathirdparty.
Theshareholdersmeetingofalimitedliabilitycompanyshallbecomposedofalltheshareholders.TheshareholdersmeetingshallbetheorganofpowerofthecompanyandshallexerciseitsfunctionsandpowersinaccordancewiththisLaw.[page]
(2)toelectandrecalldirectorsandsupervisorswhosepostsarenottakenbytherepresentativesofthestaffandworkers,andtodecideonmattersconcerningtheremunerationofdirectorsandsupervisors;
Shareholdersmeetingsshallbedividedintoregularmeetingsandinterimmeetings.Regularshareholdersmeetingsshallbeconvenedontimeasstipulatedbythearticlesofassociationofthecompany.Interimshareholdersmeetingsmaybeconveneduponproposalmadebyshareholdersrepresentingmorethanone-tenthofvotingrightsorbymorethanone-thirdofdirectors,orattherequestofboardofsupervisorsorthesupervisorsofacompanyabsentaboardofsupervisors.[page]
Wherealimitedliabilitycompanyhasaboardofdirectors,itsshareholdersmeetingshallbeconvenedbytheboardofdirectorsandpresidedoverbythechairmanoftheboard.Wherethechairmanoftheboardisunabletoordoesnotperformhisfunction,themeetingshallbepresidedoverbyavice-chairman.Wherethevice-chairmanisunabletoordoesnotperformhisfunction,themeetingshallbepresidedoverbyadirectorjointlynominatedbymorethanhalfofthedirectors.
Resolutionsoftheshareholdersmeetingontheincreaseorreductionoftheregisteredcapital,thedivision,merger,dissolution,ortransformationofthecompanymustbeadoptedbyshareholdersofthecompanyrepresentingtwo-thirdsormoreofthevotingrights.[page]
ExceptasotherwiseprovidedforinArticle51ofthisLaw,alimitedliabilitycompanyshallhaveaboardofdirectors,whichshallbecomposedofthreetothirteenmembers.ThemembersoftheboardofdirectorsofalimitedliabilitycompanyinvestedinandestablishedbytwoormoreState-ownedenterprises,orbytwoormoreotherState-ownedinvestmententitiesshallincluderepresentativesofthestaffandworkersofthecompany.Themembersoftheboardofdirectorsofotherlimitedliabilitycompaniesmayalsoincluderepresentativesofthestaffandworkers.Suchrepresentativesofthestaffandworkersshallbedemocraticallyelectedbytheworkersandstaffmembersofthecompanythroughthecongressesorassembliesofthestaffandworkersorotherforms.Aboardofdirectorsshallhaveachairmanandmayhaveavice-chairman.Themethodforthecreationofthechairmanandvice-chairmenshallbestipulatedinthearticlesofassociationofthecompany.
Ameetingoftheboardofdirectorsshallbeconvenedandpresidedoverbythechairman.Wherethechairmanisunabletoordoesnotperformhisduties,themeetingshallbeconvenedandpresidedoverbythevice-chairman.Wherethevice-chairmanisunabletoordoesnotperformhisduties,themeetingshallbeconvenedandpresidedoverbyadirectorjointlynominatedbymorethanhalfofthedirectors.
Alimitedliabilitycompanyshallhaveageneralmanager,tobeappointedorremovedbytheboardofdirectors.Thegeneralmanagerisaccountabletotheboardandshallexercisethefollowingpowers:[page]
Thepowersoftheexecutivedirectorshallbeprescribedinthearticlesofassociation.
Theboardofsupervisorsorthesupervisor,asthecasemaybe,shallexercisethefollowingauthorities:
Theboardofsupervisorsorthesupervisorsofacompanythatdoesnothavetheboardmayconductinvestigationsupondiscoveryofanyunusualoperationsofthecompanyand,wherenecessary,engageanaccountingfirmtoassistinsuchinvestigationsattheexpenseofthecompany.[page]
Theresolutionoftheboardofsupervisorsshallbeadoptedbymorethanhalfofallthesupervisors.Theboardshallprepareminutesrelatingtothedecisionsonmattersconsideredatthemeeting,whichshallbesignedbythesupervisorspresentatthemeeting.
Wheretheshareholderofaone-personlimitedliabilitycompanycannotprovethatthecompany’sassetsisindependentfromhisownproperty,suchshareholdershallbearjointandseveralliabilityforthedebtsofthecompany.