|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
Laws of the People's Republic of China |
[Database Search] [Name Search] [Noteup] [Help]
| Category | LEGAL PERSONS AND ECONOMIC ORGANIZATION | Organ of Promulgation | The State Council | Status of Effect | In Force |
| Date of Promulgation | 1999-12-25 | Effective Date | 1999-12-25 |
|
Decision of the Standing Committee of the National People's Congress Regarding the Revision of Company Law of the People's Republic of China |
|---|
Chapter I General Provisions
Chapter II Incorporation and Organizational Structure of
Limited Liability Companies
Section 1 Incorporation
Section 2 Organizational Structure
Section 3 Wholly State-owned Companies
Chapter III Incorporation and Organizational Structure of Joint
Stock Limited Companies
Section 1 Incorporation
Section 2 Shareholders' General Meetings
Section 3 Board of Directors, and Manager
Section 4 Supervisory Board
Chapter IV Issue and Transfer of Shares of Joint Stock Limited Companies
Section 1 Issue of Shares
Section 2 Transfer of Shares
Section 3 Listed Companies
Chapter V Company Bonds
Chapter VI Financial Affairs and Accounting of Companies
Chapter VII Merger and Division of Companies
Chapter VIII Bankruptcy, Dissolution and Liquidation of Companies
Chapter IX Branches of Foreign Companies
Chapter X Legal Liability
Chapter XI Supplementary Provisions Article 1 This Law is formulated in accordance with the Article 2 The term "company" mentioned in this Law refers to Article 3 A "limited liability company" or "joint stock In the case of a limited liability company, shareholders shall In the case of a joint stock limited company, its total Article 4 The shareholders of a company shall, in their A company shall enjoy the right to the entire property of the The ownership of State-owned assets in a company shall vest in Article 5 A company shall, with all its legal person assets, A company shall, under the macro-adjustment and control of the Article 6 An internal management mechanism shall be Article 7 State-owned enterprises restructured to form Article 8 Incorporation of limited liability companies or Where laws or administrative rules and regulations provide Article 9 A limited liability company established according to A joint stock limited company established according to this Article 10 A company's domicile shall be the place where its Article 11 Articles of association must be formulated in A company's scope of business shall be defined in its articles Companies shall engage in business activities within their Article 12 A company may invest in other limited liability In case a company, other than an investment company or a Article 13 A company may establish branches, which shall not A company may establish subsidiaries, which shall possess the Article 14 A company must, when engaging in business The legitimate rights and interests of companies shall be Article 15 Companies must protect the lawful rights and Companies shall apply various forms to strengthen professional Article 16 Company's staff and workers shall, in accordance Wholly State-owned companies and limited liability companies Article 17 The grass-root organizations of the Communist Party Article 18 The present Law shall apply to limited liability Section 1 Incorporation Article 19 The following conditions must be fulfilled for the (1) the number of shareholders conforms to the statutory (2) the capital contributions of the shareholders reach the (3) the shareholders have jointly formulated the articles of association of the company ; (4) the company has name and an organizational structure (5) there are fixed premises and necessary conditions for Article 20 A limited liability company shall be jointly State-authorized investment institutions or departments Article 21 If State-owned enterprises established prior to the The implementation procedures and specific measures for Article 22 The articles of association of limited liability (1) the name and domicile of the company; (2) the scope of business of the company; (3) the registered capital of the company; (4) the names or titles of the shareholders; (5) the rights and obligations of the shareholders; (6) the method and amount of capital contributions by the (7) the conditions for transfer of capital contributions by (8) the organization of the company, its method of creation, (9) the legal representative of the company; (10) the reasons for dissolution of the company and method of liquidation; and (11) other items which the shareholders deem necessary to be The shareholders shall sign and affix their seals to the Article 23 The registered capital of a limited liability The registered capital of a limited liability company shall be (1) RMB 500,000 yuan for a company engaged mainly in production (2) RMB 500,000 yuan for a company engaged mainly in commodity (3) RMB 300,000 yuan for a company engaged mainly in (4) RMB 100,000 yuan for a company engaged in science and Where the minimum registered capital of a limited liability Article 24 A shareholder may make its capital contributions to The investment in the form of industrial property rights and Article 25 Each shareholder shall make in full the amount of the capital contribution subscribed for under the articles of association
of the company. Where a shareholder makes its capital Shareholders failing to make the capital contributions they Article 26 After all shareholders have made their capital Article 27 After the total capital contributions of the Where the examination and approval of the relevant authorities The Company Registration Authority shall grant registration The date of the issuance of the company business license shall Article 28 Where, after the incorporation of a limited Article 29 Where branches are established simultaneously with Where a limited liability company establishes branches after Article 30 After a limited liability company has been A capital contribution certificate shall specify the following (1) the name of the company; (2) the registration date of the comany; (3) the registered capital of the company; (4) the name or title of the shareholder, the amount and date (5) the serial number of the capital contribution certificate A capital contribution certificate shall bear the seal of the Article 31 A limited liability company shall prepare a roster (1) the names or titles and domiciles of the shareholders; (2) the amounts of capital contributions of the shareholders; (3) the serial numbers of the capital contribution Article 32 A shareholder shall have the right to look up the Article 33 Shareholders shall draw dividends in proportion to Article 34 Once a company is registered, its shareholders may Article 35 The shareholders of a company may assign among Where a shareholder intends to assign its capital contribution Other shareholders shall, under identical terms, have priority Article 36 After a shareholder has assigned its capital Section 2 Organizational Structure Article 37 The shareholders' meeting of a limited liability Article 38 The shareholders' meeting shall exercise the (1) to decide on the business policy and investment plan of the company; (2) to elect and recall members of the board of directors and (3) to elect and recall supervisors appointed from among the (4) to examine and approve reports of the board of directors; (5) to examine and approve reports of the supervisory board or (6) to examine and approve the annual financial budget plan (7) to examine and approve plans for profit distribution of the company and plans for making up losses; (8) to adopt resolutions on the increase or reduction of the (9) to adopt resolutions on the issuance of company bonds; (10) to adopt resolutions on the assignment of capital (11) to adopt resolutions on matters such as the merger, (12) to amend the articles of association of the company. Article 39 The rules of deliberation and voting procedures of the shareholders' meeting shall, except where provided for by this Resolutions of the shareholders' meeting on the increase or Article 40 A company may amend its articles of association. A Article 41 Shareholders shall exercise their voting rights at Article 42 The first meeting of the shareholders of a company Article 43 Shareholders' meetings shall be divided into Regular shareholders' meetings shall be convened on time as Where a limited liability company has set up a board of directors, its shareholders' meetings shall be convened
by the Article 44 All shareholders shall be notified fifteen days The shareholders' meeting shall keep minutes of their Article 45 A limited liability company shall have a board of directors, which shall be composed of three to thirteen members. The members of the board of directors of a limited liability A board of directors shall have a chairman and one or two The chairman of the board of directors shall be the company's Article 46 The board of directors shall be responsible to the (1) to be responsible for convening shareholders' meetings and (2) to implement the resolutions of the shareholders' (3) to decide on the businesss plans and investment plans of the company; (4) to formulate the annual financial budget plan and final (5) to formulate plans for profit distribution and plans for (6) to formulate plans for the increase or reduction of the (7) to formulate plans for the merger, division, (8) to decide on the establishment of the company's internal (9) to appoint or dismiss the company's manager (general (10) to formulate the basic management system of the company. Article 47 The term of office of directors shall be stipulated The shareholders' meeting of a company may not unwarrantedly Article 48 Meetings of the board of directors shall be Article 49 The rules of deliberation and voting procedures of the board of directors shall, except where provided for by this All directors shall be notified ten days prior to the The board meeting shall keep minutes of decisions on matters Article 50 A limited liability company shall have a manager, (1) to be in charge of the production, operation and (2) to organize the implementation of the annual business (3) to draw up plans on the establishment of the internal (4) to draw up the basic management system of the company; (5) to formulate specific rules and regulations of the (6) to recommend the appointment or dismissal of the deputy (7) to appoint or dismiss management personnel other than (8) other functions and powers granted by the articles of association of the company and the board of directors. The manager shall attend meetings of the board of directors as Article 51 Where a limited liability company has a small The powers and functions of the executive director shall be Where a limited liability company does not have a board of directors, Article 52 A limited liability company with a relatively The supervisory board shall be composed of representatives of the shareholders and an appropriate proportion
of the staff and Where a limited liability company has a small number of shareholders and is comparatively small in scale,
it may have one Directors, the manager or personnel in charge of financial Article 53 The term of office of a supervisor shall be three Article 54 The supervisory board or the supervisors shall (1) to examine the financial affairs of the company; (2) to supervise the acts of the directors and the manager (3) to demand directors and the manager to make corrections if (4) to propose the convening of interim shareholders' (5) other functions and powers as stipulated in the articles The supervisors shall attend meetings of the board of directors as non-voting participants. Article 55 A company shall, in studying and deciding on issues Article 56 A company shall solicit the opinions and Article 57 None of the following persons may hold the position (1) a person without capacity or with restricted capacity for (2) a person who was sentenced to cirminal (3) a director, or factory head or manager who was personally (4) a legal representative of the company or enterprise that (5) a person with relatively large amount of personal debts Where a company elects or appoints a director or supervisor or Article 58 Government functionaries may not concurrently serve Article 59 Directors, supervisors and the manager of a company Directors, supervisors and the manager of a company shall not, Article 60 Directors and the manager of a company shall not Directors and the manager shall not deposit company assets in Directors and the manager shall not use company assets as Article 61 Directors and the manager shall not operate their Directors and the manager shall not enter into contracts or Article 62 Directors, supervisors and the manager shall not Article 63 Directors, supervisors and the manager shall be Section 3 Wholly State-owned Companies Article 64 A wholly State-owned company mentioned in this Law Companies which manufacture special products as determined by Article 65 The articles of association of a wholly State-owned Article 66 A wholly State-owned company shall not have a Article 67 The supervisory board of a wholly state-owned company Article 68 A wholly State-owned company shall have a board of directors, which shall exercise its functions and powers in The board of directors shall be composed of three to nine The board of directors shall have a chairman and may have a The chairman of the board of directors shall be the legal Article 69 A wholly State-owned company shall have a manager, A member of the board of directors may, subject to the consent Article 70 The chairman, vice-chairman and directors of the Article 71 Where a wholly State-owned company transfers its Article 72 Large-sized wholly Stated-owned companies with a Section 1 Incorporation Article 73 To incorporate a joint stock limited company, the (1) the number of sponsors shall conform to the statutory (2) the share capital subscribed for by the sponsors and (3) the issuance of shares and preparations for incorporation (4) the articles of association of the company shall be (5) the company shall have a name and an organizational (6) the company shall have a fixed site and the necessary Article 74 Joint stock limited companies may be incorporated "Incorporation by means of sponsorship" means incorporation of a company by means of subscription by the
sponsors for all the "Incorporation by means of share offer" means incorporation of a company by means of subscription by the
sponsors for a portion of the shares to be issued by the company and offer of the rest to the Article 75 To incorporate a joint stock limited company, there Where a State-owned enterprise is restructured as a joint Article 76 The sponsors of a joint stock limited company must Article 77 The incorporation of a joint stock limited company Article 78 The registered capital of a joint stock limited The minimum registered capital of a joint stock limited Article 79 The articles of association of a joint stock (1) the name and domicile of the company; (2) the scope of business of the company; (3) the method of incorporation of the company; (4) the total number of shares, the amount of each share and (5) the names or titles of the sponsors and the numbers of shares subscribed for by the sponsors; (6) the rights and obligations of the shareholders; (7) the compositition, functions and powers, the term of office and the deliberation rules of the board of
directors; (8) the legal representative of the company; (9) the composition, functions and powers, the term of office (10) methods for the distribution of the company's profit; (11) the reasons for dissolution of the company and (12) methods for notices and announcements of the company; and (13) other matters that the shareholders' general meeting Article 80 The sponsors may make their capital contributions The amount of capital contributions made by sponsors in the Article 81 Where a State-owned enterprise is restructured as Article 82 Where a joint stock limited company is incorporated After the sponsors make their capital contributions in full, Article 83 Where a joint stock limited company is incorporated Article 84 When offering shares to the general public for (1) the approval documents for the incorporation of the (2) the articles of association of the company; (3) a business forecast; (4) the names or titles of the sponsors, the number of shares (5) the prospectus on share offer; (6) the name and address of the bank accepting subscription (7) the name of the selling agencies and related agreements. The sponsors shall not offer shares to the general public Article 85 A joint stock limited company may, with the Article 86 The department of security administration under the If an approval is found to be inconsistent with the Article 87 A prospectus on share offer shall have the articles (1) the number of shares subscribed for by the sponsors; (2) the face value and the issue price of each share; (3) the total number of bearer shares issued; (4) the rights and obligations of the subscribers; and (5) the term of the share offer and a statement to the effect Article 88 Where shares are to be offered to the general Article 89 When sponsors offer shares to the public, the Article 90 Where shares are to be offered to the public, the The bank entrusted with collecting the subscription money Article 91 After payment in full of the subscription money for If the number of shares has not been fully subscribed for Article 92 The sponsors shall notify each subscriber of the The following functions and powers shall be exercised at an (1) to examine the sponsors' report on the preparation for the (2) to adopt the articles of association of the company; (3) to elect members of the board of directors; (4) to elect members of the supervisory board; (5) to examine and verify the expenses incurred in the (6) to examine and verify the valuation of the property used (7) to resolve not to incorporate the company in the event The resolution made at the inaugural meeting on the issues Article 93 Sponsors and subscribers may not withdraw their Article 94 The board of directors shall, within thirty days (1) the approval documents issued by the relevant department (2) the minutes of the inaugural meeting; (3) the articles of association of the company; (4) the financial audit report on the preparation of the (5) the capital verification (6) the names and domiciles of the members of the board of directors and the supervisory board; and (7) the name and domicile of the legal representative. Article 95 The Company Registration Authority shall, within The date of issuance of a company business licence shall be A joint stock limited company incorporated by means of share Article 96 Where branches are established simultaneously with Where branches are established after the incorporation of a Article 97 The sponsors of a joint stock limited company shall (1) in the event of the company failing to be incorporated, (2) in the event of the company failing to be incorporated, (3) in the event of the interests of the company being damaged Article 98 If a limited liability company is to be converted Article 99 Where a limited liability company is, after Article 100 Where a limited liability company is converted into a Article 101 A joint stock limited company shall keep its Section 2 Shareholders' General Meetings Article 102 A joint stock limited company shall form a Article 103 The shareholders' general meeting shall exercise (1) to decide upon policies on business operation and (2) to elect and replace members of the board of directors and (3) to elect and replace the supervisors who are (4) to examine and approve reports of the board of directors; (5) to examine and approve reports of the supervisory board; (6) to examine and approve plans of the company's fiscal (7) to examine and approve plans for company's profit (8) to make resolutions on the increase or reduction of the (9) to adopt resolutions on the issuance of company bonds; (10) to adopt resolutions on matters such as the merger, (11) to amend the articles of association of the company. Article 104 The annual meeting of the shareholders' general (1) if the number of directors is less than the number as (2) if the amount of the company's losses that have not been (3) if shareholders holding ten percent or more of the (4) if the board of directors deems it necessary; and (5) if the supervisory board proposes that such a meeting be Article 105 A shareholders' general meeting shall be convened Where bearer shares are to be issued, a public announcement Holders of bearer shares attending the shareholders' general Article 106 Shareholders attending a shareholders' general A resolution of the shareholders general meeting must be Article 107 Amendments to the articles of association of the Article 108 A shareholder may entrust a proxy to attend the Article 109 Resolutions on matters discussed at a Article 110 Shareholders shall have the right to examine the Article 111 Where a resolution of the shareholders' general Article 112 A joint stock limited company shall have a board The board of directors shall be responsible to the (1) to convene the shareholders' general meeting and to report (2) to implement resolutions passed at the shareholders' (3) to decide on the business operation plans and the (4) to formulate the fiscal financial budgets and the final (5) to formulate plans for the profit distribution and making (6) to formulate plans for increasing or reducing the (7) to formulate plans for the merger, division and (8) to decide on the establishment of the internal management (9) to engage or dismiss the manager and, upon recommendation (10) to formulate the basic managment system of the company. Article 113 The board of directors shall have one chairman and The chairman of the board shall be the legal representative of the company. Article 114 The chairman of the board shall exercise the (1) to preside over shareholders' general meetings, and to (2) to examine the implementation of resolutions of the board (3) to sign the shares and the bonds of the company. The vice-chairmen of the board shall assist the chairman of the board in his work and shall, upon designation
by the chairman, Article 115 The term of office of the directors shall be The shareholders' general meeting may not without reason Article 116 Meetings of the board of directors shall be held The notification method and time limit for giving notice of the convening of the interim meetings of the
board of directors may Article 117 A meeting of the board of directors shall be Article 118 Meetings of the boad of directors shall be Decisions on matters discussed at a meeting of the board of directors shall be minuted. Such minutes of the
meeting shall be Directors shall be responsible for resolutions passed by the Article 119 A joint stock limited company shall have a (1) to be in charge of the production, operation and (2) to organize the implementation of the annual business (3) to draft plans for the establishment of internal (4) to draft the basic management system of the company; (5) to formulate specific rules and regulations of the (6) to propose the appointment or dismissal of deputy (7) to appoint or dismiss management personnel, except those (8) to exercise other functions and powers authorized by the The manager shall attend meetings of the boared of directors Article 120 If necessary, the board of directors may authorize The board of directors may decide that one of its members Article 121 A company shall solicit in advance the opinions of the trade union and its staff and workers in studying and deciding Article 122 A company shall solicit the opinions and Article 123 Directors and managers shall abide by the articles Provisions of Articles 57 to 63 of this Law regarding persons Section 4 Supervisory Board Article 124 A joint stock limited company shall have a The supervisory board shall be composed of shareholders' Directors, managers and responsible persons in charge of the Article 125 The term of office of the supervisors shall be Article 126 A supervisory board shall exercise the following (1) to examine the financial affairs of the company; (2) to supervise the acts of the directors and the manager violating (3) to demand directors or the manager to make corrections if (4) to propose the convening of interim shareholders' general (5) other functions and powers provided for in the articles of association of the company. Supervisors shall attend meetings of the board of directors as Article 127 The articles of association of the company shall Article 128 A supervisor shall faithfully perform his duties Provisions of Articles 57 to 59 and Articles 62 to 63 of this Section 1 Issue of Shares Article 129 The capital of a joint stock limited company shall The shares of the company shall take the form of share Article 130 The issue of shares shall be in compliance with Shares of the same issue shall be issued on the same Article 131 Shares may be issued at or above par but not below Shares to be issued above par shall be subjected to the The premiums generated from issuing shares above par shall be Specific measures for the administration of issue of shares Article 132 Share certificates may be in paper form or in such The following main particulars shall be clearly stated on a (1) the name of the company; (2) the date of registration of the company's incorporation; (3) the class of the shares, the par value and the number of shares represented by the certificate; and (4) the serial number of the share certificate. A share certificate shall be signed by the chairman of the In the case of share certificates owned by sponsors, the words Article 133 Shares issued by a company to sponsors, a Shares issued to the general public may be either registered Article 134 Where registered shares are issued, the company (1) the names or titles, and domiciles of the shareholders; (2) the number of shares held by each shareholder; (3) the serial numbers of the share certificates held by each (4) the date on which each shareholder obtained his shares. Where bearer shares are issued, the company shall keep a Article 135 The State Council may formulate separate Article 136 A joint stock limited company shall formally Article 137 To issue new shares, a company must satisfy the (1) shares of the previous issue must have fully been (2) the company has been continuously profitable for the last (3) the company is not found to have false records in the (4) the forecast profit rate of the company can reach the A company's distribution of new shares from the current year's Article 138 Where a company issues new shares, resolutions on (1) the class and number of the new shares; (2) the issue price of the new shares; (3) the opening and closing dates of the new share issue; and (4) the class and number of new shares issued to existing Article 139 After the shareholders' general meeting adopts a Article 140 When a company obtains the approval to issue new When a company issues new shares openly to the public, the new Article 141 Where a company issues new shares, it may Article 142 Where the new share issue of a company is fully Section 2 Transfer of Shares Article 143 Shares held by shareholders may be transferred in Article 144 Transfer of shares by shareholders shall be Article 145 Registered shares shall be transferred by means of endorsement by the shareholders or by such other means as provided When registered shares are transferred, the company shall No registration of modification to the roster of shareholders Article 146 Transfer of bearer shares shall become effective Article 147 Shares held by the sponsors of a company shall not Directors, supervisors and the manager shall declare their Article 148 The State-authorized investment institution may Article 149 A company may not purchase its own shares except A company must cancel the shares purchased by the company A company may not accept its own shares as the subject matter Article 150 Where registered share certificates are stolen, After the voidness has been declared by a people's court in Section 3 Listed Companies Article 151 A listed company mentioned in this Law refers to Article 152 Where a joint stock limited company applies to (1) the shares have already been issued to the general public (2) the total amount of the company's share capital reaches (3) the company must have been in operation for three years (4) the number of shareholders holding shares at the face (5) the company must have no records of involvement in serious (6) other conditions as stipulated by the State Council. Article 153 Where a joint stock limited company applies to The State Council or the department of security administration Where an application for the listing and trading of shares has Article 154 Shares of an approved listed company shall be Article 155 Upon approval of the department of security Article 156 A listed company must, in compliance with the Article 157 The department of security administration under (1) the total share capital and the distribution of share (2) the company has failed to make public its financial (3) the company is involved in major illegal acts; or (4) the company has incurred losses for the past three Article 158 Where any of the circumstances stipulated in item Where a company decides to dissolve itself, is ordered by a Article 159 A joint stock limited company, a wholly Article 160 Company bonds mentioned in this Law mean Article 161 To issue company bonds, the following conditions (1) for a joint stock limited company, the value of its net (2) the accumulated value of the bonds issued may not exceed (3) the average distributable profits for the past three years (4) the funds to be raised must be invested in accordance with (5) the interest rate for the bonds shall not exceed the (6) other conditions as stipulated by the State Council. Funds raised through the issue of company bonds must be used Article 162 In any of the following circumstances, a company (1) if the company bonds of the previous issue have not been (2) if it is a fact that the company has defaulted on, or Article 163 For a joint stock limited company and a limited For a wholly State-owned company to issue company bonds, a Where a resolution or decision is made in accordance with the Article 164 The scale of the company bond issues shall be The department of security administration under the State If an approval that has been granted is found not to be in Article 165 Where a company applies to the department of security administration under the State Council for issuing company (1) the registration certificate of the company; (2) the articles of association of the company; (3) the method of offer of the company bonds; and (4) an asset valuation report and an asset verification Article 166 After an application for the issue of company The method of offer of company bonds shall specify the (1) the name of the company; (2) the total amount of the bonds and their par value; (3) the interest rate of the bonds; (4) the time limit for and the method of the repayment (5) the beginning and ending dates of the bond issue; (6) the amount of the net assets of the company; (7) the total amount of the undue bonds issued by the company; (8) the selling agency of the company bonds. Article 167 Company bonds issued by a company must cleary Article 168 Company bonds may be divided into registered bonds Article 169 A company issuing company bonds shall prepare the When registered company bonds are issued, the counterfoils of bonds shall specify the following: (1) the name or title and domicile of the bondholder; (2) the date on which the holder acquired the bonds and their (3) the total amount of the bonds, the par value, the interest (4) the issuing date of the bonds. Where bearer company bonds are issued, the counterfoils of the Article 170 Company bonds may be transferred. The transfer The price for the transfer of the company bonds shall be Article 171 Registered bonds shall be transferred by means of endorsement by the bondholder or by other means provided for by the Where registered bonds are transferred, the name and domicile Where bearer bonds are transferred, the transfer becomes Article 172 Upon adoption of a resolution by the shareholders' The issue of company bonds convertible into shares shall be In issuing company bonds convertible into shares, the words Article 173 A company that issues company bonds convertible Article 174 A company shall establish its financial and Article 175 At the end of each fiscal year, a company shall The financial and accounting report shall include the (1) a balance sheet; (2) a profit and loss statement; (3) a statement on changes in the financial position of the (4) a statement explaining the financial situation of the (5) a statement regarding the distribution of profits. Article 176 A limited liability company shall send the A joint stock limited company shall make the financial and A joint stock limited company incorporated by means of share Article 177 When a company distributes the annual after-tax Where the statutory common reserve fund is insufficient to After making its allocation to the statutory common reserve fund After a company makes up its losses and makes allocations to Where the shareholders' meeting or the board of directors Article 178 The premium income derived from issuing shares Article 179 A company's common reserve fund shall be used to If a joint stock limited company converts its common reserve Article 180 The statutory common welfare fund retained by a Article 181 A company shall not have any other account books No account may be opened in the name of any individual for Article 182 The merger or division of a company shall require Article 183 The merger or division of a joint stock limited Article 184 The merger of a company may take the form of merger by absorption or merger by new establishment. When a company absorbs another, it is an absorption merger, When companies merge, the parties to a merger shall sign a The claims and debts of the parties to a merger shall be Article 185 Where a company proceeds into a division, its Where a company decides to divide itself, it shall formulate The debts prior to the division of a company shall be assumed Article 186 Where a company intends to reduce its registered The company shall inform its creditors of the planned After the reduction of capital, the amount of a company's Article 187 Where a limited liability company increases its Where a joint stock limited company issues new shares to Article 188 Where the merger or division of a company involves Where a company increases or reduces its registered capital, Article 189 Where a company is declared bankrupt according to Article 190 Where one of the following circumstances occurs, (1) the term of operation as stipulated by the articles of association of the company expires or other reasons
for dissolution (2) the shareholdrs' meeting resolves to dissolve the company; (3) dissolution is necessary as a result of the merger or Article 191 Where a company is dissolved in accordance with Article 192 Where a company is ordered to be closed down in Article 193 During liquidation, a liquidation committee shall (1) to check up on the company's assets, and separately (2) to notify creditors by notice or announcement; (3) to dispose of and liquidate the company's unfinished (4) to pay off taxes owed by the company; (5) to clear up claims and debts; (6) to dispose of, after paying off the debts of the company, (7) to participate in civil lawsuits on behalf of the company. Article 194 A liquidation committee shall inform the creditors When declaring his claims, a creditor shall specify the Article 195 After the liquidation committee has checked up on Where the assets of the company are sufficient to pay off the The remaining assets of a company after paying off all the During liquidation, a company may not engage in new business Article 196 If a company is liquidated due to tis dissolution After the people's court has ruled to declare the company Article 197 After the completion of liquidation, the Article 198 Members of a liquidation committee shall be Members of a liquidation committee shall not accept bribes or Members of a liquidation committee who cause losses to the Article 199 A foreign company may, in accordance with this A foreign company mentioned in this Law means a company Article 200 A foreign company that intends to establish a Measures for examining and approving the establishment of branches of foreign companies shall be formulated
separately by the Article 201 A foreign company that establishes a branch within Where a minimum amount of operational funds is required for a Article 202 A branch of a foreign company shall clearly The branch shall keep at its domicile a copy of the articles Article 203 A foreign company is a foreign legal person, so A foreign company shall bear civil liability for the Article 204 The business activities engaged in within the Article 205 Where a foreign company dissolves its branch Article 206 Where a company obtains its registration by making Article 207 Where a company issues shares or company bonds by Article 208 Where a sponsor or a shareholder makes a false Article 209 Where a sponsor or a shareholder of a company Article 210 Where a company issues shares or company bonds Article 211 Where a company violates the provisions of this Whoever deposits the assets of a company in a personal account Article 212 Where a company submits to the shareholders and Article 213 Where this Law is violated by converting the Article 214 Where a director, a supervisor or the manager of a company takes advantage of his position and powers to accept Where a director or the manager misappropriates company funds Where a director or the manager violates the provisions of this Law by providing company assets as a guarantee
for personal Article 215 Where a director or the manager violates the Article 216 Where a company fails to make allocations to its Article 217 Where a company fails to issue a notice or make an Where a company, in the process of its liquidation, conceals Article 218 Where a liquidation committee fails to submit a Where a member of the liquidation committee takes advantage of his position and power to practise favouritism
for personal gains, Article 219 Where an institution in charge of asset valuation, Where an institution in charge of asset valuation, capital Article 220 Where a relevant department in charge authorized Article 221 Where the department security administration under Article 222 Where the Company Registration Authority approves Article 223 Where departments at a level higher than the Article 224 Where a company that has not registered according Article 225 Where a company fails to commence its business Where a company fails to apply for modification registration Article 226 Where a foreign company, in violation of the Article 227 Where a relevant department in charge performing Article 228 Where a company violating the provisions of this Article 229 Companies registered and incorporated in To a joint stock limited company of new technological achievements, Article 230 This Law shall enter into force as of July 1,
AsianLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
Chapter I General Provisions
Constitution of the People's Republic of China in order to meet the
needs of establishing a modern enterprise system, to standardize
the organization and activities of companies, to protect the
legitimate rights and interests of companies, shareholders and
creditors, to maintain social and economic order and to promote the
development of the socialist market economy.
a limited liability company or a joint stock limited company
incorporated within the territory of the People's Republic of China
in accordance with this Law.
limited company" is an enterprise legal person.
assume liability towards the company to the extent of their
respective capital contributions, and the company shall be liable
for its debts to the extent of all its assets.
capital shall be divided into equal shares, shareholders shall
assume liability towards the company to the extent of their
respective shareholdings, and the company shall be liable for its
debts to the extent of all its assets.
capacity of contributors of capital, enjoy such rights of owners as
benefitting from assets of the company, making major decisions and
selecting managerial personnel in accordance with the amount of their respective capital investment in the company.
legal person formed by the investments of the shareholders and
shall possess civil rights and bear the civil liabilities in
accordance with the law.
the State.
operate independently and be responsible for its own profits and
losses according to law.
State, organize its production and operation independently in
accordance with market demand for the purpose of raising economic
benefits and labour productivity and maintaining and increasing the
value of its assets.
implemented within companies, which is characterized by clear
definition of powers and responsibilities, scientific management
and combination of encouragement and restraint.
companies must transform their operating mechanism, gradually
produce an inventory of their assets and verify their funds,
delimit their property rights, clear off their claims and debts,
evaluate their assets and establish a standard internal management
mechanism in accordance with the conditions and requirements set by
laws, administrative rules and regulations.
joint stock limited companies must meet the conditions stipulated
by the present Law. Companies meeting the conditions set by this
Law shall be registered as limited liability companies or joint
stock limited companies; while companies failing to meet the
conditions set by this Law shall not be registered as limited
liability companies or joint stock limited companies.
that incorporation of companies must be subject to examination and
approval, the procedures of examination and approval shall be
completed according to law prior to the registration of such
companies.
this Law must clearly indicate the words "limited liability
company" in its name.
Law must clearly indicate the words "joint stock limited company"
in its name.
main administrative organization is located.
accordance with this Law when a company is incorporated. A
company's articles of association shall have binding force on the
company, its shareholders, directors, supervisors and managers.
of association and registered in accordance with the law. Items
within the company's "scope of business" that are subject to
restrictions under laws, administrative rules and regulations shall
be approved in accordance with the law.
registered scope of business. A company may change its scope of business by amending its articles of association in accordance with
statutory procedures and making such amendments registered with the
Company Registration Authority.
companies or joint stock limited companies and shall assume
liability towards the company so invested in to the extent of such
capital contributions.
holding company as specified by the State Council, invests in other
limited liability companies or joint stock limited companies, the
aggregated amount of such investments shall not exceed fifty
percent of its net assets; after the initial investment, the
increase therein resulting from capitalization of the profit
derived from the company invested in shall not be included.
possess the status of enterprise legal persons and whose civil
liabilities shall be borne by the company.
status of enterprise legal perons, and shall independently bear
civil liabilities according to law.
activities, abide by the law, observe professional ethics,
strengthen the construction of socialist culture and ideology and
accept supervision of the government and the public.
protected by the law and shall be inviolable.
interests of their staff and workers, and strengthen labour
protection so as to achieve safety in production.
education and on-the-job training of their staff and workers so as
to improve their quality.
with the law, organize a trade union to carry out the trade union
activities and protect the lawful rights and interests of the staff
and workers. The company shall provide its trade union with
conditions necessary for carrying out its activities.
invested in and established by two or more State-owned enterprises
or by two or more other State-owned investment entities shall,
through staff and workers' congresses or other forms, practise
democratic management in accordance with the provisions of the
Constitution and relevant laws.
of China in companies shall carry out their activities in
accordance with the Constitution of the Communist Party of China.
companies with foreign investment. Where laws concerning
Chinese-foreign equity joint ventures, Chinese-foreign contractual
joint ventures and foreign-funded enterprises provides otherwise,
such provision shall prevail.
Chapter II Incorporation and Organizational Structure
of Limited Liability Companies
incorporation of a limited liability company:
number;
statutory minimum amount of capital;
established in compliance with the requirements for a limited
liability company; and
production and operation.
invested in and incorporated by not less than two and not more than
fifty shareholders.
authorized by the State may independently invest in and establish
wholly State-owned limited liability companies.
implementation of this Law comply with the conditions stipulated in
this Law for the incorporation of limited liability companies, they
may, in the case of enterprises with a single investing entity, be
restructured as wholly State-owned limited liability companies in
accordance with this Law, or in the case of enterprises with
multiple investing entities, be restructured as limited liability
companies as specified in the first paragraph of the preceding
Article.
restructuring State-owned enterprises as companies shall be
formulated separately by the State Council.
companies shall specify the following particulars:
shareholders;
shareholders;
functions and powers and the rules of procedure;
specified.
company's articles of association.
company shall be the amount of the paid-up capital contributions of all its shareholders as registered with the Company Registration
Authority.
no less than the following minima:
and operation;
wholesale;
commercial retailing; and
technology development, consultancy or services.
company in specified trades needs to be higher than those
stipulated in the preceding paragraph, it shall be stipulated by
the laws and administrative rules and regulations separately.
a company in currency or by contributing material objects,
industrial property rights, non-patented technology and land use
rights at their appraised value. The material objects, industrial
property rights, non-patented technology or land use rights to be
contributed as capital must undergo an asset valuation and
verification, and shall not be overvalued or undervalued. The
appraisal and valuation of land use rights shall be handled in
accordance with the laws and administrative rules and regulations.
non-patented technology at their appraised value shall not exceed
twenty percent of the registered capital of a limited liability
company, except where special State regulations inrespect of the
application of high and new technological achievement provide
otherwise.
contribution in currency, it shall deposit the full amount of such
capital contribution in crurrency in the interim bank account
opened by the limited liability company to be established. Where a
shareholder makes its capital contribution in the form of material
objects, industrial property rights, non-patented technology or
land use rights, the transfer procedures for the property rights
shall be handled in accordance with the law.
subscribed for in accordance with the preceding paragraph shall be
liable for breach of contract towards the shareholders who have
made in full their capital contributions.
contributions in full, such contributions must be verified by a
statutory capital verification institution which shall issue
capital verification certificates.
shareholders have been verified by a statutory capital verification
institution, application shall be made to the Company Registration
Authority for registration of the incorporation of the company by
a representative designated by all the shareholders or by an agent
jointly entrusted by them, who shall submit such documents as an
application for registration, the articles of association and the
capital verification certificate.
is required by the laws or administrative rules and regulations,
the approval documents shall be submitted on application for
registration of incorporation.
and issue a business licence to a company that meets the
requirements stipulated in this Law; the Company Registration
Authority shall not register a company failing to meet the
requirements stipulated in this Law.
be the date of the incorporation of a limited liability company.
liability company, it is discovered that the actual value of the
material objects, industrial property rights, non-patented
technology or land use rights contributed as capital is notably
less than the value stated in the articles of association, the
shareholders that made such contributions shall make up the
discrepancy. Those who are shareholders at the time of the
incorporation of the company shall bear joint and several liability
therefor.
the incorporation of a limited liability company, application for
registration of the branches established shall be made to, and
business licences obtained from the Company Registration Authority.
its incorporation, the company's legal representatiive shall apply
for the registration to, and obtain business licences from the
Company Registration Authority.
incorporated, it shall issue capital contribution certificates to
its shareholders.
items:
of its capital contribution; and
and the date of its verification and issuance.
company on it.
of its shareholders with the following items therein:
and
certificates.
minutes of shareholders' meetings and the financial and accounting
reports of the company.
their capital contributions. Where a company increases capital, the
existing shareholders shall have priority in subscription for new
shares.
not withdraw their capital contributions.
themselves all or part of their capital contributions.
to persons who are not shareholders, the consent of over half of all the shareholders must be secured. Those shareholders
disapproving the assignment shall purchase the capital contribution
to be assigned. If such shareholders do not make the purchase, they
shall be deemed to have consented to the assignment.
in purchasing the capital contribution to be assigned with the
consent of the shareholders.
contribution according to law, the company shall record the name or
title and domicile of the consignee and the amount of the capital
contribution assigned in the roster of the shareholders.
company shall be composed of all the shareholders. The
shareholders' meeting shall be the organ of power of the company
and shall exercise its functions and powers in accordance with this
Law.
following functions and powers:
to decide on matters concerning the remuneration of directors;
shareholders' representatives, and to decide on matters concerning
the remuneration of supervisors;
supervisors;
and final accounts plan of the company;
registered capital of the company;
contribution by a shareholder to a person other than the
shareholders;
division, transformation, dissolution and liquidation of the
company; and
Law, be stipulated by the articles of association of the company.
reduction of the registered capital, the division, merger,
dissolution, or transformation of the company must be adopted by
shareholders of the company representing two-thirds or more of the
voting rights.
resolution on the amendment of the articles of association must be
adopted by shareholders of the company representing two-thirds or
more of the voting rights.
the shareholders' meeting in proportion to their capital
contributions.
shall be convened and presided over by the shareholder who has made
the biggest capital contribution to the company and shall exercise
its functions and powers in accordance with this Law.
regular meetings and interim meetings.
stipulated by the articles of association of the company. Interim
shareholders' meetings may be convened upon proposal made by
shareholders representing one-fourth or more of the voting rights,
or, by one-third or more of directors or supervisors.
board of directors and presided over by the chairman of the board.
Where special circumstances preclude the chairman of the board from
performing his function, the meeting shall be presided over by a
vice-chairman or a director of the board designated by the
chairman.
prior to the convening of a shareholders' meeting.
decisions on matters discussed at it; the shareholders present at
the meeting shall sign the minutes.
company invested in and established by two or more State-owned
enterprises, or by two or more other State-owned investment
entities shall include representatives of the staff and workers of the company. Such representatives of the staff and workers shall
be
democratically elected by the staff and workers of the company.
vice-chairmen. The method for the creation of the chairman and
vice-chairmen shall be stipulated in the articles of association of the company.
legal representative.
shareholders' meeting, and exercise the following functions and
powers:
to report on its work to the shareholders' meetings;
meetings;
accounts plan of the company;
making up losses of the company;
registered capital of the company;
transformation and dissolution of the company;
management organs;
manager) (hereinafter referred to as "manager"), and, upon
recommendation of the manager, to appoint and dismiss the company's
deputy manager(s) and persons in charge of the financial affairs of the company, and to decide on matters concerning their
remuneration; and
by the articles of association of the company but may not exceed
three years. A director may, if reelected upon expiration of his
term of office, serve consecutive terms.
dismiss a director of the board prior to the expiration of his term
of office.
convened and presided over by the chairman of the board. Where
special circumstances preclude the chairman from performing his
function, the meeting shall be convened and presided over by a
vice-chairman or a director of the board designated by the
chairman. One-third or more of the members of the board of directors may propose the convening of a meeting of the board of directors.
Law, be stipulated by the articles of association of the company.
convening of a board meeting.
discussed at it; directors present at the meeting shall sign the
minutes.
who shall be appointed or dismissed by the board of directors. The
manager shall be responsible to the board of directors and shall
exercise the following functions and powers:
management of the company, and to organize the implementation of the resolutions of the board of directors;
plans and investment plans of the company;
management organs of the company;
company;
manager(s) and of persons in charge of the financial affairs of the
company;
those to be appointed or dismissed by the board of directors; and
a non-voting attendant.
number of shareholders and is comparatively small in scale, it may
have an executive director instead of a board of directors. The
executive director may concurrently serve as the manager of the
company.
stipulated by the articles of association of the company with
reference to Article 46 of this Law.
the executive director shall be the legal representative of the company.
large-scale business shall have a supervisory board composed of no
less than three members. The supervisory board shall elect a
convener from among its members.
workers of the company. The exact proportion shall be stipulated in
the articles of association. The representatives of the staff and
workers in the supervisory board shall be democratically elected by
the staff and workers of the company.
or two supervisors.
affairs of the company may not concurrently serve as supervisors.
years. A supervisor may, if reelected upon expiration of his term
of office, serve consecutive terms.
exercise the following functions and powers:
violating the laws, administrative rules and regulations or the
articles of association of the company during the performance of their functions;
any of their acts is found to have damaged the interests of the
company;
meetings; and
of association of the company.
involving the personal interests of its staff and workers such as
their salaries, welfare, safety in production, labour protection
and labour insurance, solicit in advance the opinions of the trade
union and the staff and workers of the company. And representatives
of the trade union or of the staff and workers shall be invited to
attend relevant meetings as non-voting participants.
suggestions of the trade union and the staff and workers of the
company when studying and deciding on major issues concerning
production and operation, and formulating important rules and
regulations.
of director, supervisor or manager of a company:
civil acts;
punishment for the crime of embezzlement, bribery, seizure of property or misappropriation of property or for undermining the
social economic order, where not more than five years have elapsed
since the expiration of the enforcement period; or a person who,
was deprived of his political rights for committing a crime, where
not more than five years have elapsed since the expiration of the
enforcement period;
responsible for the bankruptcy liquidation of the company or
enterprise due to mismanagement, where not more than three years
have elapsed since the date of completion of the bankruptcy
liquidation;
had the business license revoked for violating the law, where such
representative bear individual liability therefor and not more than
three years have elapsed since the date of revocation of the
business license; and
that have fallen due but haven't been settled.
engages the manager in violation of the preceding paragraph, such
election, appointment or engagement shall be invalid.
as directors, supervisors or managers of companies.
shall comply with the articles of association of the company,
faithfully perform their duties and maintain the interests of the
company and shall not take advantage of their position, functions
and powers in the company to seek personal gains.
by taking advantage of their functions and powers, accept bribes or
other unlawful incomes, nor may they misappropriate the property of the company.
misappropriate company funds or lend company funds to others.
their own personal accounts or in personal accounts of other
individuals.
security for the personal debts of shareholders of the company or
of other individuals.
own in or operate for others the same category of business as the
company they are serving or, engage in activities which damage the
interests of the company. If a director or the manager engages in
such business or activities, the incomes derived therefrom shall
belong to the company.
conduct transactions with the company except as provided for in the
articles of association or approved by the shareholders' meeting.
disclose any company secrets except as provided for by the law or
approved by the shareholders' meeting.
liable for compensation, if they violate the laws, administrative
rules and regulations or the articles of association in performance
of their duties and thus cause damage to the company.
means a limited liability company invested in and established
solely by the State-authorized investment institution or a
department authorized by the State.
the State Council or companies that belong to the category of specialized trades shall adopt the form of wholly State-owned
companies.
company shall be formulated by the State-authorized investment
institution or a department authorized by the State in accordance
with this Law, or be formulated by the board of directors of the
company and submitted for the approval of the relevant
State-authorized investment institution or the department
authorized by the State.
shareholders' meeting. The State-authorized investment institution
or the department authorized by the State shall authorize the board
of directors of the company to exercise part of the functions and
powers of the shareholders meeting and to make decisions on
important matters of the company. However, the merger, division,
dissolution, increase and reduction of capital, and issuance of company bonds must be decided by the State-authorized investment
institution or by the department authorized by the State.
is composed of the staff appointed by the State Council or the organs
and departments authorized by the State Council, and it includes the
participation of representatives of the staff and workers of the
company. A supervisory board is composed of no less than three members.
A supervisory board shall exercise the functions and powers provided by
the first and second items of paragraph 1 of Article 54 of this Law and
other functions and powers provided by the State Council". "Supervisors
shall attend the meeting of a supervisory board as non-voting
participants". "Directors, managers and responsible persons in charge of
the financial affairs of the company may not serve concurrently as
supervisors".
accordance with the provisions of Article 46 and Article 66 of this
Law. Each term of office of the board of directors shall be three
years.
members, who shall be appointed and replaced by the
State-authorized investment institution or by the department
authorized by the State in accordance with the term of office of the board of directors. The board of directors shall include
representatives of the staff and workers of the company. The
representatives of the staff and workers on the board of directors
shall be democratically elected by the staff and workers of the
company.
vice-chairman, if necessary. The chairman and vice-chairman shall
be designated by the State-authorized investment institution or the
department authorized by the State from among members of the board
of directors.
representative of the company.
who shall be engaged and dismissed by the board of directors. The
manager shall exercise his functions and powers in accordance with
the provisions of Article 50 of this Law.
of the State-authorized investment institution or the department
authorized by the State, serve concurrently as manager.
board, or the manager of a wholly State-owned company may not,
without the consent of the State-authorized investment institution
or the department authorized by the State, serve concurrently as
responsible persons in other limited liability companies,
joint-stock limited companies or other business organizations.
assets, the procedures for examination and approval, and the
transfer of property rights shall be handled by the
State-authorized investment institution or the department
authorized by the State in accordance with the laws and
administrative rules and regulations.
sound business management system and relatively successful
operations may be authorized by the State Council to exercise the
rights of asset owners.
Chapter III Incorporation and Organizational Structure
of Joint Stock Limited Companies
following conditions must be satisfied:
number;
raised from the general public shall reach the statutory minimum
amount of capital;
shall be in conformity with the provisions of the law;
formulated by the sponsors and adopted at the inaugural meeting;
structure required for the incorporation of a joint stock limited
company; and
conditions for production and operation.
by means of sponsorship or by means of share offer.
shares to be issued by the company.
general public.
shall be five or more sponsors, of which more than half must have
their domicile within the territory of the People's Republic of China.
stock limited company, there may be less than five sponsors,
however, such a company shall be incorporated by means of share
offer.
subscribe in accordance with this Law for the shares to be
subscribed for by them, and shall undertake the matters concerning
the preparation for the incorporation of the company.
must be subject to the approval of a department authorized by the
State Council or of a people's government at the provincial level.
company shall be the total amount of paid-up share capital as
registered with the Company Registration Authority.
company shall be RMB 10,000,000 yuan. If the minimum registered
capital of a joint stock limited company needs to be higher than
the aforesaid amount, it shall be stipulated separately by the
laws, or administrative rules and regulations.
limited company shall specify the following items:
the registered capital of the company;
and the deliberation rules of the supervisory board;
liquidation method;
deems necessary to be specified.
in cash, or with material objects, industrial property rights,
non-patented technology or land use rights at their appraised
value. Material objects, industrial property rights, non-patented
technology or land use rights contributed as capital must be
appraised and valued, and such property must be verified and
converted into shares. Such contributions may not be over-valued or
under-valued. The appraisal and valuation of land use rights shall
be conducted in accordance with the provisions of the laws,
administrative rules and regulations.
form of industrial property rights and non-patented technology
shall not exceed twenty percent of the registered capital of a
joint stock limited company.
a joint stock limited company, it shall be strictly prohibited to
convert the State-owned assets into shares at a depressed price or
to sell off them at a depressed price, or to distribute them to
individuals without charge.
by means of sponsorship, the sponsors shall pay in full for their
shares immediately after confirming in writing their subscription
of the shares to be issued according to the articles of association
of the company. If material objects, industrial property rights,
non-patented technology or land use rights are invested as payment
for shares, the sponsors shall undertake the transfer procedures
for property rights therein in accordance with the law.
they shall elect the board of directors and supervisory board. The
board of directors shall submit to the Company Registration
Authority the documents such as approval document for the company's
incorporation, articles of association and capital verification
certificate of the company, and shall apply for registration of incorporation.
by means of share offer, the sponsors shall not subscribe for less
than thirty five percent of the total shares issued by the company,
and the remaining shares shall be offered to the general public.
subscription, the sponsors must submit to the department of security administration under the State Council an application for
share offer along with the following main documents:
company;
subscribed for by the sponsors, the forms of capital contributions
and the capital verification certificate;
money on behalf of the company; and
without the approval of the securities administrative department
under the State Council.
approval of the department of security administration under the
State Council, offer its shares to the general public outside the
territory of the People's Republic of China. The specific measures
therefor shall be specially stipulated by the State Council.
State Council shall approve the applications for share offer which
conform to the stipulations of this Law, and disapprove the
applications which fail to conform to the stipulations of this Law.
stipulations of this Law after it has been granted, such approval
shall be revoked. If the share offer has not yet been made, the
offer shall be halted; if the share offer has already been made,
the subscribers may claim a refund from the sponsors according to
their paid-up subscriptions plus bank deposit interest calculated
for the same period.
of association of the company formulated by the sponsors attached,
and shall specify the following:
that subscribers may withdraw their share subscriptions if all the
shares are not taken up within the time limit.
public, the sponsors must publish the company's prospectus on share
offer and prepare subscription forms. The subscription forms shall
contain the items listed in the preceding Article, and the
subscribers shall fill in the number of shares subscribed for, the
amount of money contributed to, and their respective domiciles on
the forms, and shall sign and seal such forms. The subscribers
shall pay their subscription money in accordance with the number of shares subscribed for.
shares shall be distributed by a securities agency established
according to law, with which a distribution agreement shall be
concluded.
sponsors shall enter into an agreement with a bank on the
collection of subscription money on behalf of the company.
shall, in accordance with its agreement, collect and keep the
subscription money, issue receipts to the subscribers for their
payments, and bear an obligation to issue certification of receipt
of subscription money to the relevant departments.
all shares is made, a statutory capital verification institution
shall be commissioned to conduct a verification of the funds and
produce a verification certificate. The sponsors shall, within
thirty days thereafter, convene and preside over an inaugural
meeting composed of all the subscribers.
within the time limit specified in the prospectus on share offer
or, after payment in full of the subscription money for the total
share is made, or if sponsors fail to hold an inaugural meeting
within thirty days thereafter, the subscribers may claim a refund
from the sponsors according to the paid-up share subscription money
plus bank deposit interest calculated for the same period.
date of the inaugural meeting or make a public announcement 15 days
prior to the convening of the meeting. The inaugural meeting may be
convened only if subscribers representing fifty percent or more of the total shares issued are present.
inaugural meeting:
incorporation of the company;
incorporation of the company;
by the sponsors to pay for subscription money; and
that a force majeure or major changes in business operation
conditions may directly affect the incorporation of the company.
listed in the preceding paragraph must be approved by subscribers
attending the meeting who represent more than half of the voting
rights.
share capital after paying their subscription money or making their
capital contributions as substitutes for subscription money, except
where the total share issue is not fully subscribed for within the
time limit or the sponsors fail to convene the inaugural meeting
according to the schedule, or the inaugural meeting resolves not to
incorporate the company.
after the inaugural meeting, submit the following documents to the
Company Registration Authority and apply for registration of the
incorporation of the company:
in charge;
incorporation of the company;
certificate;
thirty days after receipt of an application for the incorporation
of a joint stock limited company, make a decision whether or not to
register the company. A company complying with the provisions of this Law shall be registered and a company business licence shall
be issued thereto. A company failing to comply with the provisions
of this Law shall not be registered.
the date of the incorporation of the company. Once a company is
incorporated, an announcement shall be made.
offer shall, after its registration for incorporation, report its
share subscription to the department of security administration
under the State Council for the record.
the incorporation of a joint stock limited company, the company
shall submit applications for registration of the establishment of the branches to, and obtain business licenses of the branches
from,
the Company Registration Authority.
joint stock limited company, the legal representative of the
company shall submit applications for registration of the branches
to, and obtain business licences of the branches from, the Company
Registration Authority.
bear the following responsibilities:
joint and several liabilities for all debts and expenses incurred
in the act of the incorporation;
joint and several liabilities for refunding to the subscribers the
paid-up subscription money plus bank deposit interest calculated
for the same period of time; and
during the course of its incorporation due to fault of the
sponsors, liability for compensation to the company.
into a joint stock limited company, it shall satisfy the
requirements for a joint stock limited company stipulated by this
Law and the conversion shall be handled in accordance with the
procedures stipulated in this Law for the incorporation of a joint
stock limited company.
approval, converted into a joint stock limited company in
accordance with the law, the total amount of its shares converted
shall be equal to the amount of its net assets. Where a limited
liability company that is, after approval, converted into a joint
stock limited company in accordance with the law offers shares to
the general public for the purpose of increasing its capital, it
shall be handled in accordance with the provisions of this Law in
respect of the share offers to the public.
joint stock limited company in accordance with the law, the claims and
debts of the original limited liability company shall be succeeded to by
the joint stock limited company into which it is converted.
articles of association, roster of the shareholders, minutes of the
shareholders' general meetings and financial and accounting
statements at the company.
shareholders' general meeting which shall be composed of all the
shareholders. The shareholders' general meeting is the organ of power of the company and shall exercies its functions and powers
in
accordance with this Law.
the following functions and powers:
investment plans of the company;
to decide upon matters concerning the remuneration of the
directors;
representatives of the shareholders and to decide upon matters
concerning the remuneration of the supervisors;
financial budget and final accounts;
distribution and making up losses;
registered capital of the company;
division, dissolution and liquidation of the company; and
meeting shall be convened once a year. An interim
shareholders'general meeting shall be convened within two months if
any of the following situations occurs:
stipulated by this Law, or less than two-thirds of the number
required by the articles of association of the company;
made up reaches one-third of its total share capital;
company's shares request to convene a shareholders' meeting;
convened.
by the board of directors in accordance with the provisions of this
Law and presided over by the Chairman of the board. Where the
Chairman is unable to perform his duties due to special reasons,
the vice-chairman or other director designated by the Chairman may
preside over such meetings. Shareholders shall be notified of the
matters to be considered at a shareholders general meeting thirty
days prior to the holding of such a meeting. At interim
shareholders' general meetings, no resolutions may be adopted in
respect of matters not included in the notice.
shall be made in respect of the matters mentioned in the preceding
paragraph forty-five days prior to the holding of such a meeting.
meeting shall deposit their share certificates with the company for
the period from five days prior to the holding of the meeting until
the end of the meeting.
meeting shall have the right to one vote for each share held.
passed by more than one half of the voting rights held by the
shareholders present at the meeting. Resolutions on the merger,
division or dissolution of the company adopted by the shareholders'
general meeting must require more than two-thirds of the voting
rights held by the shareholders present at the meeting.
company must be adopted by more than two-thirds of the voting
rights held by the shareholders present at the shareholders'
general meeting.
shareholders' general meeting on his behalf. The proxy shall
present the shareholders' power of attorney to the company and
exercise voting rights within the scope of authorization.
shareholders' general meeting shall be minuted down. The directors
attending the meeting shall sign the minutes. The minutes of the
meeting shall be kept together with the roster of the signatures of the shareholders attending the meeting and the powers of attorney
of attending proxies.
articles of association of the company, the minutes of the
shareholders' general meetings and the financial and accounting
statements, and to make suggestions or inquiries about the business
operation of the company.
meeting or of the board of directors violates the law or
administrative rules and regulations or infringes the lawful rights
and interests of the shareholders, the shareholders concerned shall
have the right to bring a lawsuit in a people's court demanding
that such illegal or imfringing action be stipped.
Section 3 Board of Directors, and Manager
of directors composed of five to nineteen members.
shareholders' general meeting and exercise the following functions
and powers:
on its work to the shareholders' general meeting;
general meetings;
investment plans of the company;
accounts of the company;
up losses of the company;
registered capital of the company and plans for the issue of company bonds;
dissolution of the company;
organs of the company;
of the manager, to engage or dismiss the deputy manager(s) and
responsible persons in charge of the financial affairs of the
company, and to decide on matters concerning their remuneration;
and
may have one or two vice-chairmen. The chairman and vice-chairmen
of the board of directors shall be elected by the affirmative votes
of more than half of all the directors.
following functions and powers:
convene and preside over meetings of the board of directors;
of directors; and
exercise the chairman's powers and functions on behalf of the
chairman of the board in case the chairman is unable to perform his
powers and functions.
stipulated in the articles of association of the company, but each
term shall not exceed three years. A director may serve consecutive
terms if reelected upon expiration of his term of office.
remove a director from office before the expiration of his term of office.
at least twice a year. All the members of the board shall be
notified of the meeting ten days prior to the holding of the
meeting.
be separately decided.
convened only if more than one half of all the directors are
present. Any resolution of the board must be adopted by the
affirmative votes of more than one half of all the directors.
attended by the directors in person. If a director is unable to
attend a meeting of the boad for certain reasons, he may entrust
another director in writing with attending the meeting on his
behalf. The power of attorney shall define the scope of authorization.
signed by the directors and clerks present.
board of directors. If a resolution of the board violates the law,
administrative rules and regulations or the articles of association
of the company and thus causes serious losses to the company, the
directors who participated in the adoption of such a resolution
shall be liable for compensation to the company. However, if a
director is proved to have expressed his objection to such a
resolution when it was put to the vote and his objection was
recorded in the minutes of the meeting, he may be exempted from
such liability.
manager, who shall be engaged or dismissed by the board of directors. The manager shall be responsible to the board of directors
and shall exercise the following functions and powers:
management of the company and to organize the implementation of resolutions of the board of directors;
plans and investment plans of the company;
management organs of the company;
company;
manager(s) and responsible persons in charge of the financial
affairs of the company;
who shall be appointed or dismissed by the board of directors; and
articles of association of the company and by the board of directors.
as a non-voting participant.
its chairman to perform part of its functions and powers when the
meeting of the board is not in session.
shall concurrently serve as the manager of the company.
on issues involving the personal interests of its staff and workers
such as the salary, welfare, safety in production, labour
protection and labour insurance, and shall invite representatives
from the trade union or from its staff and workers to attend
relevant meetings as non-voting participants.
suggestions of the trade union and its staff and workers when
studying and deciding major issues in respect of the company's
production and operations or the formulation of important rules and
regulations of the company.
of association of the company, faithfully perform their duties and
protect the interests of the company, and shall not use their
positions, functions and powers in the company to seek personal
gains.
disqualified to serve as directors and managers, and the
obligations and responsibilities of the directors and managers
shall apply to directors and managers of joint stock limited
companies.
supervisory board composed of no less than three members. The
supervisory board shall elect a convener from among its members.
representatives and an appropriate proportion of representatives of the staff and workers of the company, and the specific proportion
of such representatives shall be provided for by the articles of association of the company. The representatives of the staff and
workers serving on the supervisory board shall be democratically
elected by the staff and workers of the company.
financial affairs of the company may not serve concurrently as
supervisors.
three years. A supervisor may serve consecutive terms if re-elected
upon expiration of his term of office.
functions and powers:
the laws, the administrative rules and regulations or the articles
of association of the company during the performance of their
functions;
any of their acts is found to have damaged the interests of the
company;
meetings; and
non-voting participants.
stipulate the method of deliberation and voting procedures of the
supervisory board.
of supervision in accordance with the law, the administrative rules
and regulations and the articles of association of the company.
Law regarding persons disqualified to serve as supervisors and the
obligations and responsibilities of supervisors shall apply to the
supervisors of joint stock limited companies.
Chapter IV Issue and Transfer of Shares of Joint Stock Limited Companies
be divided into shares of equal value.
certificates, which are vouchers issued by the company to certify
the shares held by their shareholders.
the principles of publicity, fairness and justice. The same shares
must carry the same rights and the same benefits.
conditions and at the same price. A unit or an individual
subscribing to shares shall pay the same price for each share.
par.
approval of the department of security administration under the
State Council.
entered under the capital common reserve fund of the company.
above par shall be separately stipulated by the State Council.
other forms as stipulated by the department of security
administration under the State Council.
share certificate:
board of directors and sealed with the seal of the company.
"sponsor's share certificate" shall be clearly stated on the share
certificates.
State-authorized investment institution or legal persons shall be
registered shares which shall state the names of the sponsors,
State-authorized investment institution or legal persons. Such
shares may not be registered in other names, or names of their
representatives.
shares or bearer shares.
shall prepare a roster of the shareholders, in which the following
items shall be recorded:
shareholder; and
record of the number, the serial numbers and the issue date of the
share certificates.
regulations on the issue of other classes of shares which are not
provided for in this Law.
deliver share certificates to its shareholders immediately after
the registration of its incorporation. No company may deliver share
certificates to its shareholders prior to the registration of its
incorporation.
following conditions:
subscribed for and at least one year has elapsed since the previous
issue of shares;
three years and is able to pay dividends to its shareholders;
financial accounting documents in the last three years; and
interest rate of bank deposit for the same period of time.
profits shall not be restricted by item (2) of the preceding
paragraph.
the following matters shall be adopted by a shareholders' general
meeting:
shareholders.
resolution to issue new shares, the board of directors must apply
to the department authorized by the State Council or to the local
provincial people's government for approval. If the new shares are
to be issued to the general public, the approval of the department
of security administration under the State Council must be
obtained.
shares to the general public, it must publicly announce its
prospectus on new share offer and its financial accounting
statements with annexed detailed schedules, and shall prepare
subscription application forms.
shares shall be distributed by a securities agency established in
accordance with the law, with which a distribution agreement shall
be concluded.
determine the pricing proposal for new shares based upon the
circumstances of its consecutive profit gains and property value
appreciations.
subscribed for, the company shall apply to the Company Registration
Authority for registration of the modification in its capital and
make a public announcement thereafter.
accordance with the law.
conducted through stock exchanges established in accordance with
the law.
for by the law and administrative rules and regulations.
register the transferee's name or title and domicile in its roster
of shareholders.
as stipulated in the preceding paragraph shall be made within
thirty days prior to the convening of a shareholders' general
meeting or within five days prior to the date decided by the
company for the distribution of dividends.
immediately after the shareholder delivers the share certificates
to the transferee at a stock exchange established in accordance
with the law.
be transferred within three years after the date of incorporation
of the company.
numbers of shares held by them to the company, and shall not
transfer such shares during their term of office.
transfer its shares held by it in accordance with the law and may
purchase shares held by other shareholders. The authority to
examine and approve, and measures for administration of such
transfers or purchases shall be separately provided for by the law
and administrative rules and regulations.
where, for the purpose of reducing its capital, shares need to be
cancelled, or where the company merges with another company which
holds its shares.
itself in accordance with the preceding paragraph within ten days,
and register the change of its capital in accordance with laws and
administrative rules and regulations and make a public announcement
thereafter.
of a mortgage.
lost or destroyed, the shareholder may, in accordance with the
procedure for publicizing public notice for assertion of claims
provided for in the Civil Procedure Law, request a people's court
to declare such share certificates as void.
accordance with the aforesaid procedure, the shareholder may apply
to the company for a replacement of the share certificates.
a joint stock limited company which has its issued shares listed
and traded at stock exchanges with the approval of the State
Council or the department of security administration authorized by
the State Council.
have its shares listed and traded, the following conditions shall
be satisfied:
with approval of the securities administrative department under the
State Council;
not less than RMB 50,000,000 yuan;
or more and have made profits for the past three consecutive years;
the business operation of a company which is converted from a
State-owned enterprise according to law or which is newly
incorporated after the implementation of this Law with medium
and large-size State-owned enterprises as the main sponsors may be
traced back without interruption to the original enterprise or the
main sponsors;
value of RMB 1,000 yuan or more is not less than one thousand and
the shares issued to the general public amount to twenty five
percent or more of the total share issue; where the company has a
registered capital of more than RMB 400,000,000 yuan, the ratio of shares issued to the general public must amount to fifteen percent
or more of the total share issue;
illegal activities in the recent three years, and its financial
accounting statements must contain no false information in the same
period; and
have its shares listed and traded in a stock exchange, it shall
apply to the State Council or the department of security
administration authorized by the State Council for approval and
submit the relevant documents as required by the law and
administrative rules and regulations.
authorized by the State Council shall approve applications for
approval of the listing and trading of shares that comply with the
conditions specified in this Law and shall not approve those that
fail to comply with the provisions of this Law.
been approved, the approved listed company must publicly announce
its report on the listing of its shares and put its application
documents at a designated place for public review.
listed and traded in accordance with the relevant laws and
administrative rules and regulations.
administration under the State Council, shares of a joint stock
limited company may be listed and traded in stock exchanges outside
the territory of the People's Republic of China and the measures
therefore shall be specially formulated by the State Council.
provisions of the laws and administrative rules and regulations,
regularly disclose its financial and business situations. A
financial accounting report shall be publicized every half year of each fiscal year.
the State Council may decide to suspend the listing of the shares
of a listed company if any of the following circumstances occurs:
ownership have been altered to make the company no longer satisfy
the requirements necessary for listing;
situation in compliance with the legal provisions or has falsified
its financial accounting statements;
consecutive years.
(2) or (3) of the preceding Article applies to a listed company and
the consequences are verified to be serious, or where any of the
circumstances stipulated in item (1) or (4) of the preceding
Article is unable to be eliminated within the time limit and the
company has become disqualified as a listed company, the department
of security administration under the Satate Council shall decide to
terminate the listing of the shares of the company.
competent administrative department in accordance with the law to
close down or is declared bankrupt, the department of security
administration under the State Council shall decide to terminate
the listing of the company's shares.
Chapter V Company Bonds
State-owned company, and a limited liability company incorporated
by two or more State-owned enterprises or by two or more other
State-owned investment entities may, for the purpose of raising
funds for its production and operation, issue company bonds in
accordance with this Law.
negotiable instrument issued by a company in accordnace with the
legal procedures with repayment of the principal and payment of the
interest within a definite time limit.
must be met:
asset may not be lower than RMB 30,000,000 yuan; for a limited
liability company, the value of its net asset may not be lower than
RMB 60,000,000 yuan;
forty percent of the value of the net assets of the company;
shall be sufficient to pay the interest on the company bonds for
one year;
the industrial policies of the State;
ceiling fixed by the State Council; and
for the purpose approved by the examination and approval
authorities and shall not be used to make up the losses of the
company or for non-production expenditure.
may not make another issue of bonds:
fully subscribed for; or
deferred repayment of the principal and the payment of interest of its previously issued company bonds or its debts, and such default
or deferment still persists.
liability company to issue company bonds, its board of directors
shall formulate a plan therefor, and a pertinent resolution shall
be adopted by the shareholders' meeting.
decision on the approval shall be made by the State-authorized
investment institution or the department authorized by the State.
preceding two paragraphs of this Article, the company shall submit
the matter to the department of security administration under the
State Council for approval.
determined by the State Council. Issues of company bonds examined
and approved by the department of security administration under the
State Council shall not exceed the scale determined by the State
Council.
Council shall approve the application for issuing company bonds if
it conforms with the provisions of this Law and shall disapprove
the application if it does not conform with the provisions of this
Law.
compliance with the stipulations of this Law, such an approval
shall be withdrawn. In the event that company bonds have not yet
been issued, the company shall stop issuing the bonds; if the
company bond issue has already commenced, the issuing company shall
refund the subscribers the money already paid for their
subscriptions plus bank deposit interest calculated for the same
period of time.
bonds, the following documents shall be submitted:
report.
bonds is approved, the company shall make a public announcement of the method of offer of the company bonds.
following main particulars:
of the principal and the payment of interest;
and
carry thereon items such as the name of the company, the par value,
the interest rate and the time limit for repayment, and the bonds
shall be signed by the chairman of the board of directors and
sealed by the company.
and bearer bonds.
counterfoils of bonds issued.
serial numbers;
rate of the bonds and the method of and time limit for repayment of the principal and payment of interest; and
company bonds shall specify the total amount of the bonds, the
interest rate, the time limit for and method of repayment of the
principal and payment of interest, the issuing date of the bonds
and the serial numbers.
shall be carried out at the securities exchanges established in
accordance with the law.
agreed upon by the transferor and transferee.
law or administrative rules and regulations.
of the transferee shall be recorded in the counterfoils of the
company bonds.
effective immediately after the bondholder delivers his bonds to
the transferee at a securities exchange established in accordance
with the law.
general meeting, a listed company may issue company bonds which can
be converted into shares. The specific measures for the conversion
shall be stipulated in the method of offer of the company bonds.
subjected to the approval of the department security administration
under the State Council. Company bonds convertible into shares
shall, in addition to satisfying the conditions for the issue of company bonds, satisfy the conditions for the issue of shares.
"convertible company bonds" shall be clearly indicated on the bonds
and the amount of convertible company bonds shall be recorded in
the counterfoils of company bonds.
into shares shall let the bondholders convert their bonds into
shares in accordance with the convertion measures. However,
bondholders shall have an option whether or not to convert their
bonds into shares.
Chapter VI Financial Affairs and Accounting of Companies
accounting system in accordance with the law, administrative rules
and regulations, and the stipulations of the department in charge
of financial affairs under the State Council.
prepare its financial and accounting report, which shall be
examined and verified in accordance with the law.
following financial and accounting statements and annexed detailed
schedules:
company;
company; and
fiancial and accounting report to each of its shareholders within
the time limit stipulated in its articles of association.
accounting report available at the company for examination by its
shareholders twenty days prior to the convening of the
shareholders' annual general meeting.
offer must announce its financial and accounting report.
profits, it shall allocate ten percent of its profits to its
statutory common reserve fund and another five to ten percent to
its statutory common welfare fund. Where the accumulated amount of the statutory common reserve fund has exceeded fifty percent of
the
registered capital of the company, no further allocation may be
made.
make up the company's losses of the previous fiscal year, the
company shall apply its annual after-tax profits to making up its
losses before allocating such profits, in accordance with
provisions of the preceding paragraph, to the statutory common
reserve fund and statutory common welfare fund.
from the company's after-tax profits, the company may, upon resolution
made by the shareholders' meeting, make allocations to the discretionary
common reserve fund.
the statutory common reserve fund and the statutory common welfare
fund, a limited liability company shall distribute the remaining
profits to its shareholders according to the proportion of capital
subscribed for by each shareholder, and a joint stock limited
company shall distribute the remaining profits to its shareholders
according to the proportion of the shareholdings held by each
shareholder.
violates the provisions of the preceding paragraphs by distributing
profits to the shareholders before making up the company's losses
and making allocations to the statutory common reserve fund and the
statutory common welfare fund, the profits distributed in violation
of the legal provisions must be returned to the company.
above par by a joint stock limited company in accordance with the
provisions of this Law, and other income which according to the
rules set by the departments in charge of financial affairs under
the State Council should be entered into the capital common reserve
fund, shall be entered into the capital common reserve fund of the
company.
make up the company's losses, to expand the production and
operation of the company or to increase the capital of the company
by means of conversion.
fund into capital upon a resolution made by the shareholders'
general meeting, it shall issue new shares in proportion to the
original shares held by the shareholders or increase the original
par value of each share. However, when the statutory common reserve
fund is converted into its capital, the remaining amount of the
statutory common reserve fund shall not be less than twenty five
percent of the registered capital.
company shall be used for the collective welfare of the company's
staff and workers.
in addition to its statutory account books.
deposit of a company's assets.
Chapter VII Merger and Division of Companies
the adoption of a resolution by its shareholders' meeting of the
company.
company must be approved by the department authorized by the State
Council or by the people's government at the provincial level.
and the company being absorbed shall be dissolved. When two or more
companies merge to establish a new company, it is merger for new
establishment, and all parties being merged shall be dissolved.
merger agreement and formulate a balance sheet and a detailed
inventory of assets. The company shall inform its creditors of the
intended merger within ten days following the date on which the
merger resolution is adopted, and make at least three announcements
in newspaper within thirty days. The creditors shall have the right
to claim full repayment of their debts or provision of a
orresponding guarantee from the company within thirty days from the
date of receipt of the notice or, within ninety days from the date
of the first public announcement for those who have not received
the notice. The company that fails to repay its debts in full or
to provide a corresponding guarantee shall not be merged.
succeeded to by the absorbing company or the newly established
company when companies are merged.
assets shall be divided correspondingly.
a balance sheet and a detailed inventory of assets and shall inform
its creditors of the intended division within ten days following
the date on which the division resolution is adopted, and make at
least three announcements in newspaper within thirty days. The
creditors shall have the right to claim full repayment of their
debts or provision of a corresponding guarantee from the company
within thirty days from the date of receipt of the notice or,
within ninety days from the date of the first public announcement
for those who have not received the notice. The company that fails
to pay its debts in full or to provide a corresponding guarantee
shall not be divided.
by the companies following the division in accordance with the
agreement reached between them.
capital, it must formulate a balance sheet and a detailed inventory
of assets.
reduction of its registered capital within ten days following the
date on which the resolution to reduce its capital is adopted, and
make at least three announcements in newspaper within thirty days
following the aforesaid date. The creditors shall have the right to
claim full repayment of their debts or provision of a corresponding
guarantee from the company within thirty days from the date of the
receipt of the notice or, within ninety days from the date of the
first public announcement for those who have not received the
notice.
registered capital shall not be lower than the statutory minimum.
registered capital, the capital contributions to the newly
increased shares subscribed for by the shareholders shall be
governed by the relevant provisions of this Law regarding the
subscription for capital contributions in connection with the
incorporation of a limited liability company.
increase its registered capital, shareholders shall subscribe for
the new shares in accordance with the relevant provisions of this
Law regarding the payment of subscription money in connection with
the incorporation of a joint stock limited company.
changes in registered items, such changes shall be registered
according to law with the Company Registration Authority. Where a
company is dissolved, it shall apply for cancellation of its
registration in accordance with the law. Where a new company is
incorporated, the registration of the incorporation of the company
shall be carried out according to law.
it shall apply to the Company Registration Authority for
registration of the changes in accordance with the law.
Chapter VIII Bankruptcy, Dissolution and Liquidation of Companies
law because it is unable to pay off its due debts, a people's court
shall, in accordance with relevant laws, organize the shareholders,
the relevant departments and relevant professionals to form a
liquidation committee which shall conduct bankruptcy liquidation of the company.
a compay may be dissolved:
as stipulated by the articles of association occur;
or
division of the company.
the provisions of item (1) or (2) of the preceding Article, a
liquidation committee shall be formed within fifteen days
thereafter. A liquidation committee of a limited liability company
shall be composed of its shareholders. Membership of a liquidation
committee of a joint stock limited company shall be decided upon by
its shareholders' general meeting. Where a company fails to form a
liquidation committee to conduct liquidation within the time limit,
its creditors may request a people's court to designate relevant
personnel to form a liquidation committee and conduct liquidation.
The people's court shall accept such request and without delay
designate the members of the liquidation committee to conduct
liquidation.
accordance with the law due to its violation of the law or
administrative rules and regulations, it shall be dissolved. In
such a case, the department in charge shall organize the
shareholders, relevant departments and relevant professionals to
form a liquidation committee to conduct liquidation.
exercise the following functions and powers:
formulate a balance sheet and a detailed inventory of assets;
business;
its remaining property; and
of the company of its establishment within ten days following the
date of its establishment, and make at least three announcements in
newspaper within sixty days following the aforesaid date. The
creditors shall declare their claims to the liquidation committee
within thirty days from the date of receipt of the notice or,
within ninety days from the date of the first public announcement
for those who have not received the notice.
relevant items of the claim and provide supporting material. The
liquidation committee shall register the claims.
the company's assets, formulated the balance sheet and a detailed
inventory of assets, it shall formulate a liquidation plan and
shall submit such plan to the shareholders' meeting or the
department in charge for confirmation.
company's debts, such assets shall be applied to payment of the
liquidation fee, the wages and labour insurance premiums of the
staff and workers of the company, due taxes and the company's
debts.
debts and expenses as prescribed by the preceding paragraph shall
be distributed, in the case of a limited liability company, in
proportion to the shareholders' capital contributions and, in the
case of a joint stock limited company, in proportion to the
shareholders' shareholdings.
activities. No assets of the company shall be distributed to the
shareholders prior to full payments prescribed by the second
paragraph of this Article.
and the liquidation committee, having checked up on the company's
assets and formulated the balance sheet and a detailed inventory of assets, discovers that there are insufficient assets in the company
to pay off its debts, the committee shall apply to the people's
court for a declaration of bankruptcy of the company.
bankrupt, the liquidation committee shall turn the liquidation
matters over to the court.
liquidation committee shall formulate a liquidation report and
submit the report to the shareholders' meeting or to the department
in charge for confirmation and submit it to the Company
Registration Authority in order to cancel the registration of the
company and publicly announce the company's termination. If no
application is made for cancellation of the company's registration,
the Company Registration Authority shall revoke the business
licence of the company and publicly announce the revocation.
devoted to their duties and perform their liquidation obligations
in accordance with the law.
other illegal income, or misappropriate the property of the company
by taking advantage of their position and power.
company or to its creditors, either willfully or through gross
negligence, shall be liable for compensation.
Chapter IX Branches of Foreign Companies
Law, establish a branch within the territory of the People's
Republic of China to engage in production and business activities.
registered and incorporated outside the territory of the People's
Republic of China in accordance with foreign laws.
branch within the territory of the People's Republic of China must
submit an application to the authorities in charge in China
together with relevant documents such as its articles of association and the company registration certificate issued by its
country. Upon approval, it shall apply to the Company Registration
Authority for registration and for a business licence for the
branch according to law.
State Council.
the territory of the People's Republic of China must appoint its
representative or agent within the territory of the People's
Republic of China to take charge of the branch and shall allocate
to the branch funds commensurate with the business which it is to
engage in.
branch of a foreign company, the State Council shall separately
prescribe to that effect.
indicate in its name the nationality and the form of liability of such foreign company.
of association of such foreign company.
its branch established within the territory of the People's
Republic of China shall not have the status of a Chinese legal
person in China.
operational activities engaged by its branch within the territory
of the People's Republic of China.
territory of the People's Republic of China by branches of foreign
companies established upon due approval must comply with the laws
of China and shall not harm the social and public interest of China. The lawful rights and interests of such branches shall be
protected by the laws of China.
established within the territory of the People's Republic of China,
it must pay off the branch's debts according to law and carry out
liquidation in accordance with the relevant procedures concerning
company liquidation provided for in this Law. The assets of the
branch shall not be transferred out of the territory of the
People's Republic of China prior to the full payment of its debts.
Chpater X Legal Liability
a false report on its registered capital, submitting falsified
certificates, or resorting to other fraudulent means to conceal
important facts in violation of this Law when carrying out company
registration, it shall be ordered to make a rectification; where a
company makes a false report on its registered capital, it shall be
fined an amount of not less than five percent but not more than ten
percent of the registered capital falsely reported; where a company
submits falsified certificates or resorts to other fraudulent means
to conceal important facts, it shall be punished with a fine of not
less than RMB 10,000 yuan but not more than RMB 100,000 yuan. If
circumstances are serious, the registration of the company shall be
revoked. If a crime is constituted, criminal liabilities shall be
investigated in accordance with the law.
making false prospectus on share offer, false subscription forms or
false methods of offer of company bonds, it shall be ordered to
stop the issuance and to refund the funds it has raised and the
interest therefrom to the subscribers, and shall be punished with
a fine of not less than one percent but not more than five percent
of the funds illegally raised. If a crime is constituted, criminal
liabilities shall be investigated in accordance with the law.
capital contribution by failing to pay the promised cash or
tangible assets, or to transfer property rights, thereby deceiving
the creditors and the general public, he shall be ordered to make
a rectification and imposed a fine of not less than five percent
but not more than ten percent of the false capital contributions.
If a crime is constituted, criminal liabilities shall be
investigated in accordance with the law.
surreptitiously withdraws his capital contribution after the
incorporation of the company, rectification shall be ordered and a
fine of not less than five percent but not more than ten percent of the amount of capital contribution withdrawn surreptitiously
shall
be imposed. If a crime is constituted, criminal liabilities shall
be investigated in accordance with the law.
without the approval of the relevant department in charge as
stipulated by this Law, it shall be ordered to stop the issuance
and to refund the funds it has raised with interest, and a fine of not less than one percent but not more than five percent of the
funds illegally raised shall be imposed. If a crime is constituted,
criminal liabilities shall be investigated in accordance with the
law.
Law by setting up account books in addition to its statutory
account books, it shall be ordered to make a rectification and
imposeda fine of not less than RMB 10,000 yuan but not more than
RMB 100,000 yuan. If a crime is constituted, criminal liabilities
shall be investigated in accordance with the law.
shall be confiscated of the illegal gains and imposed upon a fine
from one to five times the amount of the illegal gains. If a crime
is constituted, criminal liabilities shall be investigated in
accordance with the law.
the general public false financial and accounting reports or
reports concealing important facts, the persons in charge who are
directly responsible and other persons directly held responsible
shall be imposed upon a fine of not less than RMB 10,000 yuan but
not more than RMB 100,000 yuan. If a crime is constituted, criminal
liabilities shall be investigated in accordance with the law.
State-owned assets into shares at a depressed value, or selling
them at low prices, or distributing them gratuitously to
individuals, the persons in charge who are directly responsible and
other persons directly held responsible shall be given
administrative sanctions in accordance with the law. If a crime is
constituted, criminal liabilities shall be investigated in
accordance with the law.
bribes, to take other illegal gains or to misappropriate company
property, he shall be confiscated of the illegal gains, ordered to
return such property to the company, and imposed upon a sanction.
If a crime is constituted, criminal liabilities shall be
investigated in accordance with the law.
or lends company funds to another person, he shall be ordered to
return such funds to the company; the gains derived therefrom shall
belong to the company; the company shall impose a sanction upon
him. If a crime is constituted, criminal liabilities shall be
investigated in accordance with the law.
debts of a shareholder of its company or of another person, he
shall be ordered to cancel the guarantee and shall be liable for
compensation in accordance with the law; the gains derived from the
illegal provision of guarantee shall belong to the company. If the
circumstances are serious, the company shall impose a sanction upon
him.
provisions of this Law by engaging for his own account or for
another person in the same kind of business as his company is
engaged in, the income derived therefrom shall belong to the
company. In addition, the company may impose a sanction upon him.
statutory common reserve fund or statutory common welfare fund in
accordance with this Law, the company shall be ordered to make up
the amount that it is required to allocate and shall be imposed
upon a fine of not less than RMB 10,000 yuan but not more than RMB
100,000 yuan.
announcement to its creditors according to this Law in case of merger, division, reduction of its registered capital or
liquidation, it shall be ordered to make a rectification and be
imposed upon a fine of not less than RMB 10,000 yuan but not more
than RMB 100,000 yuan.
property, records false information in its balance sheet or
inventory of assets or, distributes the company assets prior to the
full payment of its debts, it shall be ordered to make a
rectification and be imposed upon a fine of not less than one
percent but not more than five percent of the amount concealed or
of the amount distributed prior to the full payment of the debts of the company. The persons in charge who are directly responsible
and
others directly held responsible shall be imposed upon a fine of not less than RMB 10,000 yuan but not mroe than RMB 100,000 yuan.
If a crime is constituted, criminal liabilities shall be
investigated in accordance with the law.
liquidation report to the Company Registration Authority in
accordance with the provisions of this Law, or where a report
submitted conceals major facts or contains major omissions, it
shall be ordered to make a rectification.
seek illegal income or misappropriate the property of the company,
he shall be ordered to return the property to the company,
confiscated of his illegal gains and imposed upon a fine from one
to five times the amount of his illegal gains. If a crime is
constituted, criminal liabilities shall be investigated in
accordance with the law.
capital verification or certificate verification provides false
documents of certification, the illegal income derived therefrom
shall be confiscated and a fine from one to five times the amount
of the illegal income shall be imposed; the relevant department in
charge may order the institution to suspend its business and revoke
the qualification certificates of those directly held responsible
according to law. If a crime is constituted, criminal liabilities
shall be investigated in accordance with the law.
verification or certificate verification provides by negligence
reports with major omissions, it shall be ordered to make a
rectification; where the circumstances are serious, a fine from one
to three times the amount of the income derived therefrom shall be
imposed, and the relevant department in charge may order the
institution to suspend its business and revoke the qualification
certificates of those directly held responsible according to law.
by the State Council approves an application for the incorporation
of a company or an application for the issue of shares that does
not satisfy the conditions as stipulated in this Law, if the
circumstances are serious, the persons in charge who are directly
responsible and others directly held responsible shall be given
administrative sanctions according to law. If a crime is
constituted, criminal liabilities shall be investigated in
accordance with the law.
the State Council approves an application for the offer of shares,
the listing of shares or the issue of bonds that does not satisfy
the conditions as stipulated in this Law, if circumstances are
serious, the persons in charge who are directly responsible and
others directly held responsible shall be given administrative
sanctions according to law. If a crime is constituted, criminal
liabilities shall be investigated in accordance with the law.
an application for registration which does not meet the
requirements as stipulated in this Law, if the circumstances are
serious, the persons in charge directly held responsible and others
directly held responsible shall be given administrative sanctions
according to law. If a crime is constituted, criminal liabilities
shall be investigated in accordance with the law.
Company Registration Authority force the Company Registration
Authority to approve an application for registration which does not
meet the requirements as stipulated in this Law or, covers up an
illegal registration, the persons in charge who are directly
responsible and others directly held responsible shall be given
administrative sanctions according to law. If a crime is constituted,
criminal liabilities shall be investigated in accordance with the law.
to law as a limited liability company or a joint stock limited
company assumes the name of "limited liability company" or "joint
stock limited company", it shall be ordered to make a
rectification or be banned, and a fine of not less than RMB 10,000
yuan but not more than RMB 100,000 yuan may be imposed. If a crime
is constituted, criminal liabilities shall be investigated in
accordance with the law.
without justification within the period of more than six months of its incorporation or, after commencing its business, suspends
business at its own will for a period of six consecutive months or
more, the Company Registration Authority shall revoke the company's
business licence.
in accordance with the provisions of this Law whenever modification
occurs in items of company registration, it shall be ordered to
conduct modification registration within a specified time limit;
and if the company still fails to register within the specified
time limit, a fine of not less than RMB 10,000 yuan but not more
than RMB 100,000 yuan shall be imposed.
provisions of this Law, establishes a branch within the territory
of the People's Republic of China without authorization, it shall
be ordered to make a rectification or to be closed down, and a fine
of not less than RMB 10,000 yuan but not more than RMB 100,000 yuan
may be imposed.
examination and approval duties according to this Law refuses to
approve an application which meets the statutory requirements or
the Company Registration Authority refuses an application for
registration which meets the statutory requirements, the party
concerned may apply for reconsideration or institute an
administrative lawsuit in accordance with the law.
Law should assume civil liability for compensation and pay fines
and penalties, and the company's property is insufficient to pay
such compensation, fines and peralties, the company shall assume
the civil liability for compensation first.
Chapter XI Supplementary Provisions
accordance with the law, administrative rules and regulations,
local regulations or the Opinions on Standardization of Limited
Liability Companies and the Opinions on Standardization of Joint
Stock Limited Companies formulated by the relevant competent
departments under the State Council prior to the implementation of this Law shall continue to be retained; companies which do not
fully meet the requirements as stipulated in this Law shall meet
all such requirements within a prescribed time limit. Specific
measures for the implementation thereof shall be formulated
separately by the State Council.
its proportion of registered capital covered by the fund of the appraised
value of the investment of a sponsor in the form of industrial property
and non-patented technology, and the conditions of issuing new shares
by the company and applying to have its shares listed and traded shall be
provided by the State Council otherwise.
1994.
URL: http://www.asianlii.org/cn/legis/cen/laws/dotscotnpcrtrocl932