Company Law of the People's Republic of China
(Adopted at the Fifth Meeting of the Standing Committee of the ighth National People's Congress of China on December ，．Revised for the first time by the th Meeting of the Standing Committee of the th People's Congress on December ，．Revised for the second time by the th Meeting of the Standing Committee of the)th People's Congress on Au．gust ，)
第一章 总 则 Chapter I General Provisions
第二章 有限责任公司的设立和 Chapter II stablishment and
组织机构 Organizational Setupof a Limited
第一节 设 立 Section I stablishment
第二节 组织机构 Section II Organizational Setup
第三节 国有独资公司 Section III Solely State-Owned Companies
第三章 股份有限公司的设立和 Chapter III stablishment and
组织机构 Organizational Setupof Joint Stock
第一节 设 立 Section I stablishment
第二节 股东大会 Section II Shareholder's Meeting
第三节 董事会、经理 Section III Board of Directors．Manager
第四节 监事会 Section IV Supervisory Committee
第四章 股份有限公司的股份发 Chapter IV Issue and Transfer of Shares
行和转让 of a Joint Stock Limited Company
第一节股份发行 Section I Issue of Shares
第二节股份转让 Section II Transfer of Shares
第三节上市公司 Section III Listed Companies
第五章 公司债券 Chapter V Corporate Bonds
第六章 公司财务、会计 Chapter VI Financial Affairs and
Accounting of a Company
第七章 公司合并、分立 Chapter VII Merger and Division of
第八章 公司破产、解散和清算 Chapter VIII Bankruptcy，Dissolution
第九章 外国公司的分支机构 Chapter IX Branches of Foreign Companies
第十章 法律责任 Chapter X Legal Responsibilities
第十一章 附 则 Chapter Xl Supplementary Provisions
第一章 总 则
Chapter I General Provisions
Article The law is formulated in conformity with the Constitution in view to establishing a modern enterprise system，standardizing the organization and operation of companies，protecting the legitimate rights and interests of companies，shareholders and creditors，maintaining the socialist economic order and promoting the development of the socialist market economy．
Article The term “company” used in this law refers to a limited liability company or a joint stock company limited set up within the territory of the People's Republic of China according to the provisions of this law．
Article A limited liability company and a joint stock company limited are enterprise legal persons．
For a limited liability company, a shareholder bears the responsibility to the company within the limit of the amount of investment made by the shareholder per se and the company shall bear the responsibility for its debts with all its assets．
For a joint stock company limited the entire capital is divided into shares of equal amount and the shareholders bear responsibilities to their company within the scope of the number of shares they hold and the company shall bear responsibilities for its debts with all its assets．
Article Shareholders of a company。as capital contributor，shall have the right to enjoy capital gains，take major policy decisions and choose managers in proportion to share of the investment they make in the company．
A company shall enjoy all legal person property rights formed by the investment by shareholders，enjoy civil rights，and bear the civil responsibilities according to law．
Ownership of the State—owned property rights in a company belongs to the State．
Article A company shall operate independently with all its assets，and be responsible for its own profits and losses．
Under the macro—economic control and regulation by the State，a company shall have the autonomy in organizing its own production and operations according to market demand so as to raise its economic efficiency，step up its productivity and preserve and accrete the value of its assets．
Article A company shall institute an internal management system that is of a clear division of power and responsibility，a scientific management，and a combine mechanism of incentives and restrictions．
Article I n changing over to a company，a State—owned enterprise shall first of all change its original operational mechanism，gradually and systematically make an inventory of its own assets，define its own property right，clear its own credits and debts，appraise its own assets and establish a standard internal organizational setup according to taw and administrative decrees concerned．
Article A limited liability company or a joint stock company limited shall be set up according to this law．Only those that can meet the requirements as set in this law can be registered as limited liability companies or joint stock companies limited those that cannot meet such requirements cannot be registered as a limited liability company or joint stock company limited．
Article A limited liability company established according to this law shall include the words “limited liability” in its name．
A joint stock company limited established according to this law shall be clearly indicated as a joint stock company limited in its name．
Article A company shall make the location of its math office as its address．
Article A company established according to this law shall formulate its articles of association that have a binding force on the company，its shareholders，directors，supervisors and managers alike．
The scope of business shall be defined in the articles of association and registered according to law．If the scope of business covers items restricted by law or administrative decrees．it shall be subject to approval according to law．
A company shall conduct its business activities within the scope registered．If a company has revised its articles of association according to legal procedures and registered for alteration with the registration authorities． it may change the scope of business．
Article A company may invest in other limited liability companies or joint stock companies limited and bear responsibility to the companies in which it has invested in proportion to the amount of investment it has made．
xcept for investment companies and holding companies as specified by the State Council where a company invests in other limited liability companies or joint stock companies limited．the aggregate amount of the investment shall not exceed ％ of the net assets of the company，not including the capital gains of the latter put in by the company from its profits gained from the latter．
Article A company may set up branches，which shall not enjoy the status of enterprise legal persons．and the parent company shall be responsible for civil liabilities of its branches．
A company may set up subsidiaries which shall enjoy the status of enterprise legal persons and be independently responsible for their own civil liabilities．
Article I n conducting business operations，a company shall abide by taw，observe business ethics，promote socialist culture and ethics，and accept the supervision by the government and the public．
The legitimate rights and interests of a company shall be protected by law against any infringement．
Article A company shall protect the legitimate rights and interests of its staff and workers，strengthen labor protection，and ensure safe production．
A company shall provide its workers with vocational education and in job training in various forms to improve their working quality．
Article Workers of a company shall organize a trade union in accordance with the law to carry out trade union activities and protect their legitimate rights and interests．A company shall provide the necessary conditions for activities of its trade union．
A solely State—owned company or a limited liability company established by more than two State—owned enterprises or by more than two State—owned investment entities shall exercise democratic management in accordance with the provisions of the Constitution and relevant laws through the general meetings of the staff and workers or otherwise．
Article The grassroots organizations of the Communist Party of China in a company shall carry out their activities according to the Constitution of the Communist Party of China．
Article This taw applies to limited liability companies established with foreign investment except otherwise provided foreign the laws concerning Sino—foreign joint equity ventures，Sino—foreign joint cooperative ventures and foreign enterprises．
Chapter ll stablishment and Organizational Setup Of a Limited Liability Company
第一节 设 立
Section I stablishment
Article The establishment of a limited liability company shall be subject to the fulfillment of the following conditions：
.The number of shareholders tallies with that provided for by law；
.The investment contributed by shareholders reaches the minimum amount of capital required by law；
.Shareholders participate in the formulation of articles of association：
.The company has a suitable name and its organizational setup complies with that of a limited liability company；
.The company has fixed production or operational site(s)and necessary conditions for production Or operations．
Article A limited liability company shall be set up by capital contributions made up by at beast two and no more than shareholders．
Investment entities or departments authorized by the State may set up limited liability companies with sole State investment．
Article A State—owned enterprise set up before the implementation of this law if can fulfill the condition of a limited liability company under this law may be reorganized into a solely State—owned limited liability company in the case of an investment entity with a single investor，or into a limited liability company as provided for in the first paragraph of the preceding Article in the case of an investment entity with many investors．
The steps and specific methods for State—owned enterprises to convert into companies shall be formulated separately by the State Council．
.Name and address of the company;
.Scope of business of the company;
.Registered capital of the company;
.Names of shareholders;
.Rights and obligations of shareholders;
.Forms and amount of investment made by shareholders;
.Conditions for shareholders to transfer their investment;
.The organizations of the company and the methods of establishment, their powers and functions and rules of procedures for meetings;
. Legal representative of the company;
. Grounds for dissolution of the company;
. Other matters deemed necessary by shareholders;
Shareholders should sign and seal the articles of association of the company.
Article The registered capital is the total amount of investment paid in by All the shareholders registered with the registration department.
The amount of registered capital should not be less than the amount specified below;
.for a company mainly engaging in production operations, RMB,;
.for a company mainly engaging in wholesales, RMB,;
.for a company mainly engaging in retail sales, RMB,;
.for a company engaging in technology development, consulting and services, RMB,.
If the minimum amount of registered capital of a limited liability company of a given trade should be higher than those provided for in the preceding paragraph, it shall be determined separately by law or administrative decrees.
Article Shareholders may make their investment in cash，in kind，in industrial property rights, in non—patented technology or land use rights must be correctly assessed and verified in value terms without any over or under—valuation．The assessment of land use rights in value shall be made according to law or administrative decrees．
The amount of industrial property rights or non—patented technology in value shall not exceed percent of the total value of the registered capital of a limited liability company，except otherwise provided for by the State for the use of high and new technology．
Article Shareholders shall pay in full their subscribed capital contributions as specified in the articles of association．In cases of making investment in cash, the contribution in cash should be deposited in full into a temporal account opened by the proposed limited liability company in a bank．In cases of using investment in kind，industrial property rights，non—patented technology or land use rights, the procedures for transfer of the property rights shall be completed according to law．
Shareholders who fail to pay in the subscribed amount of investment as provided for in the preceding paragraph should be liable to breach of contract．
Article After all the shareholders have paid in their investment．the investment shall be verified by a legal investment verification institution and a certificate shall be produced by the institution．
Article After all the investment paid in by shareholders is verified，a representative designated or an agent commonly commissioned by all the shareholders shall apply for registration of establishment of the company with the registration department with an application form for registration，the articles of association，investment verification documents and other documents of the company．
If an examination and approval procedure is required by law or administrative decrees，the document of approval should be submitted when the applications for establishment and registration are filed．
The company registration department should grant registration if all the requirements provided for by this law are met and issue business licenses but if the requirements provided for by this law are not met，the registration shall be refused．
The date of issue of the company business license shall be the date of establishment of the limited liability company．
Article After the establishment of a limited liability company， if the actual value of the investment in kind，industrial property rights，non—patented technology or land use rights are found to be apparently lower than the values set for in the articles of association of the company，the shortage shall be made good by the shareholder(s)concerned with the other shareholder bearing joint responsibility．
Article If a limited liability company sets up branches at the time of its establishment, it should apply for registration to obtain business licenses for the branches.
If a limited liability company sets up a branch or branches after its establishment, the legal representative of the company shall apply for registration of the branch of branches to obtain business license(s)．
Article After the establishment，a limited liability company shall issue certificates of investment to shareholders．
A certificate of investment should specify clearly：
．Name of the company；
．Date of registration of the company；
．Registered capital of the company：
．Names of shareholder，amount of investment paid in and the date of payment；and
．Serial number and date of issue of the certificates of investment．
Certificates of investment shall be affixed with the seal of the company．
Article l A limited liability company should keep a list of its shareholders with the following specified items：
．Names or both names and address of shareholders；
．Amount of investments paid in by the shareholders；
．Serial number of the certificates of investment．
Article Shareholders of a company have the right to review the minutes of meetings of shareholders and the financial and accounting statements of their company.
Article Shareholder shall get dividends in proportion to the amount of investment they have made．If a company wants to increase its capital，its shareholders have the priority of subscription．
Article Shareholders are not allowed to withdraw their investment after the registration of the company．
Article Shareholders may transfer to each other all or part of their investment.
For transferring the investment to other people other than other shareholders of the company, a shareholder must get the consent of the simple majority of the shareholders．Shareholders who disapprove of the transfer should buy the shares of investment to be transferred. If they fail to buy the shares，it shall be regarded as approval of the transfer．
For the investment shares having been approved to be transferred, other shareholders shall have the priority for the purchase under the same conditions．
Article After a shareholder has transferred its investment according to law，the company shall record the name(s)and address(es)of the transferee(s)and the amount of investment transferred in the list of shareholders．
Section II Organizational Setup
Article The meeting of shareholders of a limited liability company shall be made up of all shareholders．The meeting of shareholders shall be the authoritative organization of the company and exercises its powers according to this law．
Article The meeting of shareholders shall exercise the following powers：
.To decide upon the operation policies and investment plans of the company．
.To elect and replace directors and decide on matters relating to remuneration to directors.
.To elect and replace the supervisors who are the representatives of shareholders and decide on the payment to supervisors．
.To examine and approve the reports by the boa rd of directors．
.To examine and approve the reports by the supervisory committee or individual supervisors．
.To examine and approve the annual financial and budget plan and financial accounting plan of the company．
.To examine and approve the plans for company's profit distribution and losses recovery．
.To pass resolutions on the increase or decrease of registered capital．
.To pass resolutions on the issue of bonds．
.To pass resolutions on the transfer of investment by shareholders to people other than shareholders．
.To pass resolutions on issues as merger，division，change in corporate form，dissolution and liquidation and other affairs of the company．
.To revise the articles of association of the company．
Article Methods of discussion and voting procedures of the meeting of shareholders shall be provided for in the articles of association except otherwise provided for by this law．
The resolution on the increase or decrease of registered capital，division，merger，dissolution or change of corporate form of the company must be agreed by shareholders representing two-thirds of the voting rights.
Article A company may revise its articles of association．The resolution on the revision of the articles of association must be agreed by shareholders representing over two—thirds of the voting rights．
Article l In a meeting of shareholders，the voting rights shall be exercised in proportion to the amount of investment made by shareholders．
Article The first meeting of the shareholders shall be convened and presided over by the shareholder whose capital contribution is the largest．Such shareholder shall exercise its rights according to the provisions of this law．
Article Meetings of shareholders shall be divided into regular meetings and irregular meetings．
Regular meetings shall be called according to the provisions of the articles of association of the company．Irregular meetings may be called upon the motion by shareholders who represent over one—fourth of the voting rights or by over one—third of the directors or supervisors．
If a limited liability company has a board of directors，the meeting of shareholders shall be called by the board of directors and presided over by the chairman of the board of directors the chairman of the board of directors is unable to perform the duty due to special reasons，the meetings shall be presided over by a vice—chairman of the board of directors or a director designated by the chairman of the board of directors.
Article If a meeting of shareholders is to be held，notice shall be given to all the shareholders l days before the meeting is held．
The meeting of shareholders shall keep minutes on matters discussed and to be signed by shareholders present．
Article The board of directors of a limited liability company shall be made up of to persons.
For a board of directors established by at least two State owned enterprises or by at least two State owned investment entities, members of its board of directors should include representatives of workers, who are to be elected by the workers through democratic processes.
A board of directors shall have a chairman and may have one to two vice-chairmen. The vided for in the articles of association of the company.
The chairman of the board of directors is the legal representative of the company.
Article The board of directors shall be responsible to the meeting of shareholders and exercises the following powers:
.To call meetings of shareholders and report work to the meetings of shareholders.
.To execute the resolutions passed by the meetings of shareholders.
.To decide on the operation and investment plans.
.To formulate the company's annual financial budget and final accounts.
.To formulate the profit distribution and losses recovery plans.
.To formulate plans for increasing or decreasing registered capital of the company.
.To draft plans for merger, division, change of corporate form and dissolution of the company.
.To decide on the organizational setup of the company.
.To appoint or dismiss manager(general manager) of the company(hereinafter referred to as“manager”), appoint or dismiss deputy managers and decide on their remuneration.
.To formulate the basic management systems of the company.
Article The term of office for the chairman of the board of directors shall be provided for in the articles of association，in case that each term of the office shall not be longer than three years．The chairman of the board of directors may be re—elected upon the expiration of the term to serve another term．
Before the term of office of a director expires，the meeting of shareholders shall not dismiss him(her)from his(her)posts without justifiable reasons．
Article The meetings of the board of directors shall be called and presided over by the chairman of the board of directors．If the chairman of the board of directors is unable to perform his(her)duty due to special reasons，a vice—chairman of the board of directors or a director designated by the chairman of the board of directors shall call and preside over the meetings．A meeting of the board of directors may be called upon the motion by at least one-third of the directors．
Article The method Of discussion and the procedures of voting at the meeting of the board of directors shall be provided for in the articles of association except otherwise provided for in this law．
In concerning a meeting of the board of directors，a notice shall be given to the directors concerned days before the meeting is held．
The board of directors shall keep minutes of meetings made on the matters discussed and being
signed by the directors present．
Article A limited liability company shall have a manager，subject to appointment or dismissal by the board of directors．The manager shall be responsible to the board of directors and exercise the following powers：
.To be in charge of the company's production operations and management of the company and organize the implementation of the decisions of the board of directors．
.Implementation of the annual operation and investment plans of the company.
.Formulate the internal organizational setup plan．
.Formulate the basic management system of the company．
.Formulate specific rules and regulations of the company．
.Propose the appointment or dismissal of deputy managers and financial officers of the company．
.Appoint or dismiss management officers other than those required to be appointed or dismissed by the board of directors．
.Other powers conferred by the articles of association and the board of directors．
The manager shall attend the meeting of the board of directors as a non—voting member．
Article If a limited liability company with a small number of shareholders and a small scale of operation，it may have one sole executive director instead of the board of directors．The executive director may concurrently serve as the manager of the company．
The powers and functions of the managing director shall be defined in the articles of association pursuant to the provisions of Article of this law．
If a limited liability company has no board of directors，the managing director shall be the legal representative．
Article A limited liability company with a relatively large scale of operation shall have a supervisory committee made up of not less than three members and a convenor elected among the members．
The supervisory committee shall include representatives of shareholders and a certain proportion of workers representatives．The specific proportion shall be specified in the articles of association．
The workers representatives to the supervisory committee shall be elected by workers through democratic process．
A limited liability company with a relatively small number of shareholders and of a small operation scale may have one to two supervisors．
Director, manager and financial officer of a company shall not concurrently serve as supervisors．
Article The term of office of a supervisor is three years, upon the expiration of the term, a
supervisor may be reappointed and serve another term.
Article The supervisory committee or individual supervisors of a company exercise the following powers:
.To check up on the financial affairs of the company;
.To supervise the law and regulation violating acts or the articles of association of directors and manager in performing their duties;
.To request directors or manager to remedy their acts whenever such acts harm the interests of the company;
.To propose the convening of an interim shareholders' meeting; and
.To exercise other powers as provided for in the articles of association.
Supervisors shall attend the meeting of the board of directors as non-voting members.
Article Whenever considering and deciding on wages, welfares, production safety of the staff and workers and labor protection and labor insurance and other issues concerning the personal interests of the staff and works, opinions of the trade union and the workers of the company should first of all be solicited and representatives of the trade union or workers should be invited as observers to meetings concerned.
Article Opinions and suggestions of the trade union and workers of the company should also be solicited when considering and deciding on major issues concerning the operation of the company and when major rules and regulation are formulated for the company.
Article The following persons may not serve as the director, supervisor or manager of a company:
.persons without or with restricted civil capacity;
.persons who have committed the offences of corruption, bribery, infringement of property, misappropriation of property or sabotaging the social economic order, and have been sentenced to criminal penalties, where less than five years have elapsed since the date of completion of the sentence; or persons who have been deprived of their political rights due to criminal offense, where less than five years have elapsed since the date of the completion of this deprivation;
.persons who are former directors, factory directors of managers of a company or enterprise which has become bankrupt and been liquidated as a result of mismanagement and are personally liable of bankruptcy of such company or enterprise, where less than three years have elapsed since the date of completion of the bankruptcy and liquidate.