【名称】 Company Law of the People's Republic of
China
【题注】 (Adopted at the Fifth session of the Standing Committee of theEighth
National People's Congress on December 29, 1993)
【章名】 Whole document
Company
Law of the People's Republic of China
(Adopted
at the Fifth session of the Standing Committee of the
Eighth
National People's Congress on December 29, 1993)
【章名】 Chapter 1 General Provisions
Article
1
This Law is formulated in accordance
with the Constitution in order to
adapt
to the needs to establish a modem enterprise system, standardize the
organization
and activities of companies, protect the legitimate rights
and
interests of companies, shareholders and creditors,
safeguard social
and
economic order and promote the development of the socialist market
economy.
Article
2
In this Law, the term
"company" refers to a limited liability company
or
a company limited by shares established within Chinese territory in
accordance
with this Law.
Article
3
All limited liability companies and
companies limited by shares are
enterprise
legal persons.
In the case of a limited liability
company, a shareholder is liable to
the
company to the extent of the amount of the shareholder's capital
contribution.
A limited liability company is liable for the debts
of the
company
with all its assets.
In the case of a company limited by shares, its entire capital is
divided
into shares of equal value and shareholders shall be liable to the
company
to the extent of the shares held by them. A company limited by
shares
is liable for the debts of the company with all its assets.
Article
4
The shareholders of a company, as
capital contributors, have the right
to
enjoy the benefits of the assets of the company, make major
decisions,
choose
managers etc. in accordance with the amount of capital they have
invested
in the company.
A company enjoys all legal person
property rights constituted by the
shareholders' investment,
enjoys civil rights
and assumes civil
liabilities
in accordance with law.
Ownership of the State-owned assets in
a company belongs to the state.
Article
5
With respect to all its corporate
property, a
company conducts its
business
autonomously in accordance with law and is responsible for its
own
profits and losses.
Under the state's macro regulation and
control adjustment, a company
organizes
its production and operations autonomously according
to market
demand
with the objectives of raising economic efficiency and labour
productivity
and preserving and increasing the value of assets.
Article
6
A company implements an internal
management structure with a clear
division of rights and responsibilities, scientific management and
combined
incentives and restrictions.
Article
7
A state owned enterprise which is
being reorganized as a company shall
replace its system of operation, gradually and systematically
take
inventory
of its assets and verify its capital, determine property rights,
clear
creditors' rights and indebtedness, value assets and set up a
standardized
internal management structure in accordance with the law
and
conditions
and requirements of administrative regulations.
Article
8
The establishment of a limited
liability company or a company limited
by
shares shall comply with the conditions set out in this Law. A company
complying
with the conditions of this Law is registered as a limited
liability
company or a company limited by shares. A Company which does not
comply
with the conditions set out in this Law shall not be registered as
a
limited liability company or a company limited by shares.
Where the law or administrative regulations
require that the
establishment
of a company be submitted for examination and approval,
the
procedures
for such examination and approval are carried out before the
company
is registered.
Article
9
A limited liability company
established in accordance with this Law
shall
have the words "limited liability company" in its name.
A company limited by shares
established in accordance with this Law
shall
have the words "company limited by shares" in its name.
Article
10
The domicile of a company is the place
where its principal place of
business
is located.
Article
11
In establishing a company, the
company's articles of association shall
prepared
in accordance with this Law. The articles of association
are
binding
on the company, the shareholders,
directors, supervisors and
managers.
A company's business scope is
specified in its articles of association
and
registered in accordance with the law. For items in a company's
business
scope which are restricted by law or administrative
regulations,
approval
shall be obtained in accordance with the law.
A company shall conduct business activities within its registered
business
scope. A company may change its business scope by amendments to
its
articles of association in accordance with procedures provided by law
and after changing its registration with the company
registration
authority.
Article
12
A company may invest in other limited
liability companies or companies
limited
by shares and be liable to the companies which it has invested in
to
the extent of the amount of capital invested in such companies.
Except for investment companies and
holding companies specified by the
State Council, where a company invests in other limited liability
companies or companies limited by shares, the aggregate amount of
investment
shall not exceed fifty per cent of the net assets of the
company,
not including any increase in the capital of the other limited
liability
companies or companies limited by shares in which the company
invests
arising from any conversion of profits of these companies into
capital
following such investment.
Article
13
A company may set up branches.
Branches of a company do not have the
status
of enterprise legal persons and the company assumes the civil
liabilities
of its branches.
A company may set up subsidiaries.
Subsidiaries of a company have the
status of enterprise legal persons and assume civil
liabilities
independently
in accordance with the law.
Article
14
In conducting its business activities,
a company shall abide by the
law
and by business ethics, strengthen the construction of socialist
spiritual
civilization and accept the supervision of the government and
the
public.
The legitimate rights and interests of
a company are protected by law
and
shall not be infringed.
Article
15
A company shall protect the legitimate
rights and
interests of its
staff
and workers, strengthen labour protection and bring about production
safety.
A
company should use various means to enhance vocational education and
on-the-job
training for staff and workers to increase their work
quality.
Article
16
The staff and workers of a company organize a trade union in
accordance
with the law to carry out union activities and protect the
lawful
rights and interests of the staff and workers. A company shall
provide
the necessary conditions for activities of the trade union of the
company.
Limited liability companies
established with investment by a wholly
state-owned
company and those established with investment by two
or more
state-owned
enterprises or
two or
more other state-owned
investment
entities
practice democratic management in accordance with the
provisions
of
the Constitution and of relevant laws through the representative
conferences
of the staff and workers and otherwise.
Article
17
The activities of the base-level
organizations of the Communist Party
of
China in the company are dealt with in accordance with the
Charter of
the
Communist Party of China.
Article
18
The Law applies to limited liability companies with
foreign
investment. Where the laws on Sino-foreign
equity joint venture
enterprises, Sino-foreign
co-operative joint venture enterprises and
wholly-owned
foreign enterprises otherwise provide, the provisions of such
laws
apply.
【章名】 Chapter 2 Establishment and Organizational
Structure of A Limited Liability Company
【章名】 Section 1 Establishment
Article
19
Establishment of a limited liability company shall be subject to
fulfillment
of the following conditions;
(1) the number of shareholders meets
the requirements of the law;
(2) the investment contributed
by shareholders meets the minimum
amount
of capital required by law;
(3) the company's articles of
association are formulated jointly by
the
shareholders;
(4) there is a company name, and an
organizational structure complying
with
the requirements for establishing a limited liability company; and
(5) there is a fixed site for production and operations and the
necessary
conditions for production and operations.
Article
20
A limited liability company is
established by
capital contributions
made
jointly by at least two and no more than fifty shareholders.
A state-authorized investment
institution or a department authorized
by
the state may invest on its own to establish a wholly state-owned
limited
liability company.
Article
21
A
state-owned enterprise established before the implementation of this
Law
which fulfills the conditions for the establishment of a limited
liability company under this Law may be reorganized
as a
wholly
state-owned
limited liability company in the case of an investment
entity
with
a single investor, or as a limited liability company as
provided in
the
first paragraph of the preceding Article in the case of an
investment
entity
with many investors.
Implementing procedures and specific
means for the reorganization of
state-owned
enterprises into companies are specified by the State
Council
in
separate provisions.
Article
22
The articles of association of a
limited liability company shall set
out
the following:
(1) the company's name and domicile;
(2) the company's business scope;
(3) the company's registered capital;
(4) shareholders' names or titles;
(5) shareholders' rights and
obligations;
(6) the form and amount of
shareholders' capital contributions;
(7) conditions for shareholders'
transfer of capital contributions;
(8) the company's organs and the
method of establishing them, their
powers
and rules of procedure for discussion;
(9) the company's legal
representative;
(10) grounds for the dissolution of
the company and method for its
liquidation;
and
(11) other matters which the shareholders consider necessary to
provide
for.
The shareholders shall sign and seal the company's articles of
association.
Article
23
A limited liability company's registered capital is the capital
actually
contributed by all the shareholders
and registered with the
company
registration authorities.
The registered capital of a limited
liability company shall not be
less
than the following minimum amounts:
(1) for a company engaging principally
in production operations, RMB
500,000
yuan;
(2) for a company engaging principally
in wholesaling commodities, RMB
500,000
yuan;
(3) for a company engaging principally
in commercial
retailing, RMB
300,000
yuan;
(4) for a company engaging principally in technology development,
consultancy
and services, RMB 100,000 yuan.
Requirements for the minimum amount of registered capital for a
limited
liability company in a particular line of business to be higher
than
the amount stated in the preceding paragraphs are provided for in
separate
laws or administrative regulations.
Article
24
Shareholders may make capital
contributions in currency, or may invest
in
kind, use industrial property, non-patented technology or land use
rights
to make capital contributions based on their appraised
value. For
investment
in kind, industrial property, non-patented technology
or land
use
rights which are capital contributions, a valuation shall
be carried
out
and the
property contributed verified, without overvaluation
or
undervaluation.
The valuation of land use rights is to be dealt with in
accordance
with the provisions of laws and administrative regulations.
The amount of industrial property or non-patented technology
contributed
as capital based on its appraised value shall not exceed
twenty
percent of the registered capital of a company, except as otherwise
specified
by the state for the use of the results of new and high
technology.
Article
25
Shareholders shall pay in full their respective subscribed capital
contributions
specified in the article of association. If a shareholder
makes
its contribution in currency, the currency contribution
shall be
deposited
in full into a temporary account established with a bank by
the
proposed
limited liability company; if the contribution is to be
made in
investment
in kind, industrial property, non-patented
technology or land
use
rights, procedures for transfer of the property rights shall be dealt
with
in accordance with the law.
If a shareholder does not pay its
subscribed capital contribution in
accordance with the provisions of the preceding paragraph,
such
shareholder
shall be liable for default to the other shareholders who have
fully
paid their capital contributions.
Article
26
After the shareholders have paid in full their subscribed capital
contributions
a legally authorized investment verification authority
must
verify
the investment and issue certificate.
Article
27
Upon verification by a legally authorized investment verification
authority
of all capital
contributions of shareholders,
a designated
representative
or jointly appointed agent of all the shareholders applies
to
the company registration authority to register the establishment of the
company,
submitting the company registration application, the company's
article
of association, investment verification
certificate and other
documents.
If examination and approval from
relevant departments is required in
accordance with any law or administrative
regulation, the approval
documents
shall be submitted when applying to register the establishment
of
the company.
Where the conditions required by this Law are met, the company
registration
authority registers the company and issues a company business
licence.
Where the conditions of this Law are not met, the company is not
registered.
The date of issue of the business
licence is the date of establishment
of
a limited liability company.
Article
28
After the establishment of a limited
liability company, if the actual
values
of the
investment in kind, industrial property, non-patented
technology
or land use rights are obviously lower than the values
set in
the
articles of association, the difference shall be made up by the
shareholder(s)
who contributed such investment, and other
shareholders at
the
time of the establishment of the company shall be jointly
liable for
the
difference.
Article
29
If a branch or branches of a limited
liability company is established
at
the same time a limited liability company is established, application
for
the registration of the branch(es) shall be made to the company
registration
authority to obtain the business licence(s).
If a branch or branches of a limited
liability company are established
after
the establishment of the company,
application for registration
shall
be made by the legal representative of the company to the company
registration
authority to obtain the business licence(s).
Article
30
An investment certificate shall be
issued to each of the shareholders
upon
the establishment of a limited liability company.
An investment certificate shall set
out the following:
(1) the company's name;
(2) the company's date of
registration;
(3) the company's registered capital;
(4) the shareholder's name and the amount and date of payment of
capital
contribution; and
(5) the number and date of issue of
the investment certificate.
An investment certificate is sealed
with the company's seal.
Article
31
A limited liability company shall
establish a register of shareholders
setting
out the following:
(1) the shareholders' names and
domiciles;
(2) the shareholders' amounts of
capital contributions; and
(3) the numbers of the investment
certificates.
Article
32
Shareholders have the right to examine
the minutes
of shareholders'
meetings
and the company's financial and accounting reports.
Article
33
Shareholders are entitled to receive
dividends in accordance with the
proportions
of their capital contributions. Shareholders have a preemptive
right
to subscribe capital when a company increases its capital.
Article
34
Shareholders shall not withdraw their
capital contributions after the
registration
of a company.
Article
35
Shareholders may transfer among themselves all or part of their
capital
contributions.
Where a shareholder transfers its
capital contribution to a person
other than a shareholder,
the consent of more than half of all
shareholders
shall be required. A shareholder objecting to such transfer
shall
purchase the
capital contribution to be transferred
and such
shareholder
is deemed to have agreed to the transfer if he does not
purchase
the capital contribution.
For a transfer of capital contribution
which is transferred with the
consent
of the shareholders, other shareholders have a pre-emptive right
to
purchase it on the same conditions.
Article
36
After a shareholder transfers its
capital contribution in accordance
with
the law, the company records in the register of shareholders the name
of
the transferee, its domicile and the amount of the capital contribution
transferred.
【章名】 Section 2 Organizational Structure
Article
37
The shareholder's meetings of a
limited liability company are made up
of all shareholders. The shareholders' meeting
is the company's
authoritative
organization, exercising its powers in accordance with this
Law.
Article
38
The shareholders' meeting exercises
the following powers:
(1) to decide on the company's operational policies and investment
plans;
(2) to elect and replace directors and
decide on matters relating to
the
remuneration of directors;
(3) to elect and replace the
supervisors who are representatives
of
the
shareholders, and decide on matters relating to the remuneration
of
supervisors;
(4) to examine and approve reports of
the board of directors;
(5) to examine and approve reports of
the board of supervisors or any
supervisor(s);
(6) to examine and approve the company's proposed annual financial
budget
and final accounts;
(7) to examine and approve the
company's plans for profit distribution
and
recovery of losses;
(8)
to decide on increases in or reductions of the company's
registered
capital;
(9) to decide on the issue of bonds by
the company;
(10) to decide on transfers of capital
contribution by shareholders to
a
person other than a shareholder;
(11) to decide on issue such as
merger, division, change in corporate
form
or dissolution and liquidation of the company; and
(12) to amend the company's articles
of association.
Article
39
Except as otherwise provided in this
Law, methods of discussion and
voting procedures for shareholders'
meetings are specified in the
company's
articles of association.
A resolution for an increase in or
reduction of
registered capital,
division,
merger, dissolution or change in corporate form of the company
shall
be passed by shareholders representing two-thirds or more of the
voting
rights.
Article
40
A company may amend its articles of
association. A resolution to amend
the
company's articles of association shall be passed by shareholders
representing
two-thirds or more of the voting rights.
Article
41
Shareholders shall exercise voting
rights at shareholders' meetings in
accordance
with the proportions of their capital contribution.
Article
42
The first shareholders' meeting is
convened and presided over by the
shareholder
whose capital contribution is the largest. Such shareholder
exercises
its rights in accordance with this Law.
Article
43
Shareholders' meetings are divided
into regular meetings and interim
meetings.
Regular meeting shall be convened on time in accordance with the
provisions
of the
articles of association.
Shareholders representing
one-fourth
or more of the voting rights or one-third or more of the
directors
or supervisors may request that an interim meeting be convened.
Where a limited liability company has a board of directors,
shareholders'
meetings are convened by the board of directors and presided
over
by the chairman of the board of directors. If the chairman of the
board
of directors is unable to perform his duties for a particular
reason,
the vice-chairman or another director designated by
the chairman
presides
over the meeting.
Article
44
When convening a shareholders'
meeting, notice shall be given to all
shareholders
fifteen days before the meeting is convened.
Shareholders' meetings shall keep
minutes of the
decisions made on
matters
discussed. The minutes shall be signed by the shareholders present
at
the meeting.
Article
45
A limited liability company has a
board of directors with three to
thirteen
members.
For a limited liability company
established with the investment of two
or
more state-owned enterprises or two or more state-owned
investment
entities,
members of its board of directors shall include representatives
of
the staff and workers of the company. Representatives
of staff and
workers
on the board of directors are chosen by the company's staff and
workers
by democratic election.
The board of directors has one chairman and may have one or two
vice-chairmen.
The method of election of the chairman and vice-chairmen is
specified
in the articles of association.
The chairman of the board of directors
is the legal representative of
the
company.
Article
46
The board of directors is responsible
to the shareholders' meetings
and
exercises the following powers:
(1)
to be
responsible for convening shareholders' meetings and
accountable
to the shareholders' meeting;
(2) to implement the resolutions of
the shareholders' meeting;
(3) to decide on the operational plans and investment plan of the
company;
(4) to formulate the company's
proposed annual financial budget and
final
accounts;
(5) to formulate plans for profit
distribution and recovery of losses;
(6) to formulate plans for increases
in or reductions of the company's
registered
capital;
(7) to prepare plans for merger,
division, change in corporate form
and
dissolution of the company;
(8) to decide on the set up of the company's internal management
structure;
(9) to appoint or dismiss the
company's manager (general manager) (the
"manager")
and pursuant to the manager's nominations to appoint or dismiss
the
deputy manager and the financial officers of the company and decide
upon
their remuneration; and
(10) to formulate the company's basic
management system.
Article
47
The term of office of the directors is
as provided in
the company's
articles
of association, provided that each term shall not be longer
than
three
years. At the end of a director's term, the director may serve
another
term if re-elected.
The shareholders' meeting shall not
without reason remove a director
from
office before the expire of that director's term.
Article
48
Meetings of the board of directors are
convened and presided over by
the
chairman. When the chairman is unable to perform his duties for a
particular
reason, the vice-chairman or another director designated by the
chairman
convenes and presides over the meetings. One-third or more of the
directors
may request that an interim meeting be convened.
Article
49
Except as otherwise provided in this
Law, methods of discussion and
voting
procedures for the board of directors are provided for in the
company's
articles of association.
When convening a meeting of the board
of directors,
notice of the
meeting
shall be given to all directors ten days before the meeting is
convened.
The board of directors shall keep
minutes of the
decisions made on
matters
discussed. Such minutes shall be signed by the directors present
at
the meeting.
Article
50
A limited liability company has a manager who is appointed or
dismissed
by the board of directors. The manager is responsible to the
board
of directors and exercises the following powers:
(1) to be in charge of the company's production, operations
and
management
and organize the implementation of the resolutions of the board
of
directors;
(2) to organize the implementation of
the company's
annual business
plan
and investment plan;
(3) to propose plans for the putting in place of the company's
internal
management structure;
(4) to propose the company's basic
management system;
(5) to formulate specific rules and
regulations for the company;
(6) to propose the appointment or
dismissal of the company's deputy
manager(s)
and financial officers;
(7) to
appoint or dismiss management officers other than those
required
to be appointed or dismissed by the board of directors; and
(8) other powers conferred by the
company's articles of association
and
the board of directors.
The manager is present at meetings of
the board of directors.
Article
51
A
limited liability company with a relatively small number of
shareholders
and of a relatively small scale may have one executive
director
and no board of directors. The executive director may also be the
company's
manager.
The powers of the executive director shall be specified in the
company's
articles of association with reference to the provisions of
Article
46 of this Law.
Where a limited liability company has no board of directors, the
executive
director is the legal representative of the company.
Article
52
A
limited liability company with a relatively large scale of
operations
shall have a board of supervisors with not less than three
members.
The board of
supervisors elects a convener from among its
members.
The board of supervisors is made up of
representatives of shareholders
and
a reasonable proportion of representatives from the company's staff
and
workers, the specific proportion to be provided in the company's
articles
of association. Representatives of the staff and workers
on the
board
of supervisors are chosen by the company's staff and workers by
democratic
election.
A
limited liability company with a relatively small number of
shareholders
and of a small scale may have one to two supervisors.
The directors, manager and financial
officers of the company shall not
act
concurrently as supervisors.
Article
53
The term of office of the supervisors
is three years. At the end of a
supervisor's
term, the supervisor may serve another term, if reelected.
Article
54
The board of supervisors as supervisor (s) exercises the following
powers:
(1) to inspect the company's financial
situation;
(2) to exercise supervision over the
acts of the directors and manager
carried
out while performing their corporate functions which violate laws,
regulations
or the company's articles of association;
(3)
to demand remedies from a director or manager when the acts of
such
director or manager are harmful to the company's interests;
(4) to propose the convening of an
interim shareholders' meeting; and
(5) other powers specified in the
company's articles of association.
The supervisors are present at
meetings of the board of directors.
Article
55
When considering and deciding on the wages, welfare and production
safety
of the staff and workers and labour protection, labour insurance
and
other issues involving the personal interests of the staff and
workers,
the company shall first solicit and consider the opinions of the
company's trade union and staff and workers, and
shall invite
representatives
from the trade union and the staff and workers to attend
the
relevant meetings.
Article
56
When
considering and deciding on major issues relating to the
company's
production and operations and formulating important rules and
regulations,
the company shall solicit and consider the opinions and
proposals
of the company's trade union and staff and workers.
Article
57
Any of the following persons shall not
serve as a director, supervisor
or
manager of a company:
(1) persons without civil capacity or
with restricted civil capacity;
(2) persons who have committed the
offences of
corruption, bribery,
infringement
of property, misappropriation of property or
sabotaging the
socioeconomic
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 offences, where less than five years have elapsed since the
date
of the completion of implementation of this deprivation;
(3) persons who are former directors,
factory directors or managers of
a
company or enterprise which has become bankrupt and been liquidated as a
result
of mismanagement and are personally liable for the
bankruptcy
of
such
company or enterprise, where less than three years have elapsed since
the
date of the completion of the bankruptcy and liquidation of the
company
or enterprise;
(4) persons who were legal
representatives of a company or enterprise
which
had its business licence revoked due to a violation of the
law and
who
are personally liable, where less than three years have elapsed since
the
date of the revocation of the business licence; or
(5) persons who have a relatively large amount of debts due and
outstanding.
Where
a company elects, nominates or appoints any director or
supervisor
or employs
a manager contrary to the provisions of the
preceding clause, such election,
appointment or employment
is
ineffective.
Article
58
State civil servants shall not act concurrently
as a
company's
director,
supervisor or manager.
Article
59
The directors, supervisors or managers
shall abide by
the company's
articles
of association, faithfully execute their official duties and
protect
the company's interests. They shall not exploit their position and
power
in the company to advance their own private interests.
The directors, supervisors or managers
of a company shall not exploit
their
position to accept bribes or other illegal income or wrongfully take
over
company property.
Article
60
The directors or managers shall not
misappropriate company funds or
loan
such funds to others.
The directors or managers shall not
open accounts in their own names
or
in the names of other individuals for the deposit of the company's
assets.
The directors or managers shall not
provide a guarantee for debts of a
shareholder
of the company or other individual(s) with the company's
assets.
Article
61
The directors or managers shall not
engage on their own behalf or on
behalf
of others in any business similar to the business of the company in
which they hold office or in activities harmful to the company's
interests.
The proceeds from such business or activities shall
belong to
the
company.
Unless otherwise provided in the
company's articles of association or
with
the consent of a shareholders' meeting, a director or
manager shall
not
enter into any contracts or transactions with the company.
Article
62
The directors, supervisors or managers
shall not disclose the secrets
of
the company except in accordance with the provisions of the law or with
the
consent of a shareholders' meeting.
Article
63
Where a director, supervisor or
manager of a company violates the law,
administrative
regulations or the company's articles of association
while
performing
his official corporate duties resulting in harm to the company,
such
director, supervisor or manager shall be liable for damages.
【章名】 Section 3 Wholly State-Owned Companies
Article
64
"A wholly state-owned company"
in this Law refers to a limited
liability
company in which a state-authorized investment institution or a
state-authorized
department is the sole investor and which is established
solely by a state-authorized investment
institution or by
a
state-authorized
department.
A company designated by the State Council for the production of
special
products or belonging to a specified trade shall be established in
the
form of a wholly state-owned company.
Article
65
The articles of association
of a
wholly state-owned company are
formulated
in accordance with this Law by the state-authorized
investment
institution
or the state-authorized department or formulated by the
board
of
directors, and reported to the state-authorized investment
institution
or
the state-authorized department for approval.
Article
66
A wholly state-owned company does not
have shareholders' meetings. The
company's board of directors is authorized by the state-authorized
investment
institution or the state-authorized department to exercise part
of
the powers of the shareholders' meetings, decide on the major issues of
the
company, provided that decisions on merger, division,
dissolution of
the
company, increase or decrease in capital and
issue of corporate bonds
shall
be decided by the state-authorized investment institution or the
state-authorized
department.
Article
67
The state-authorized investment
institution or
the state-authorized
department
shall exercise supervision and management over the state-owned
assets
of a wholly state-owned company in accordance with the provisions
of
law and administrative regulations.
Article
68
A wholly state-owned company shall
have a board
of directors which
carries
out its duties in accordance with the provisions of Article 46 and
Article
66 of this Law. The term of office of the board of directors is
three
years.
The board of directors has three to nine members,
appointed or
replaced by the state-authorized investment
institution or the
state-authorized
department in accordance with the board of directors'
terms.
Members of the board of directors shall include representatives of
the
staff and workers of the company. Representatives of the staff and
workers
on the board of directors are chosen by the company's staff and
workers
by democratic election.
The board of directors has a chairman
and may have one vice-chairman
if
necessary. The chairman and the vice-chairman are designated from among
the
directors by
the state-authorized investment institution or the
state-authorized
department.
The chairman of the board of directors
is the legal representative of
the
company.
Article
69
A wholly state-owned company shall
have a manager who is appointed or
dismissed
by the board of directors. The manager exercises his
powers in
accordance
with the provisions of Article 50 of this Law.
With the consent of the
state-authorized investment institution or the
state-authorized
department, members of the board of directors may act
concurrently
as manager.
Article
70
The chairman and vice-chairman of the
board of
directors, directors
and
the manager of a wholly state-owned company shall not act concurrently
as
officers of other limited liability companies, companies limited by
shares or other economic organizations without the consent of the
state-authorized investment
institution or the
state-authorized
department.
Article
71
To transfer assets of a wholly
state-owned company, in accordance with
the
provisions of law and administration
regulations, examination and
approval
and procedures for transfer of property rights are handled by the
state-authorized investment
institution or the
state-authorized
department.
Article
72
Large-scale wholly state-owned
companies with a sound system of
operation
and management and whose operational situation is relatively
good
may be authorized by the State Council to exercise rights as the
owner
of the assets.
【章名】 Chapter 3 Establishment and Organizational
Structure of A Company Limited by Shares
【章名】 Section 1 Establishment
Article
73
Establishment of a company limited by
shares shall be subject to the
fulfillment
of the following conditions:
(1) the number of promoters meets the
requirement of the law;
(2) the share capital subscribed by
the promoters and by public offer
meets
the minimum amount of capital required by law;
(3) the issue of shares and related
preliminary matters comply with
the
provisions of law;
(4) articles of association
are formulated by the promoters and
adopted
by the founding meeting;
(5) there is a company name and the
establishment of an organizational
structure
complying with the requirements for the establishment
of a
company
limited by shares; and
(6) there is a fixed site for production and operations and the
necessary
conditions for production and operations.
Article
74
A limited liability company may be
established by means of promotion
or
offer.
Establishment by the promoter method means the establishment
of a
company
by the subscription by the promoters for all the shares to be
issued
by the company.
Establishment by the offer method
means establishment of a company by
the
subscription by the promoters of part of the shares to be issued by a
company
and a public offer of the remaining part of the shares.
Article
75
The establishment of a company limited
by shares shall have at least
five
promoters including more than half of the promoters with domiciles
within
Chinese territory.
When a state-owned enterprise is
reorganized into a company limited by
shares,
there may be less than five promoters, but the offer method
shall
be
adopted for its establishment.
Article
76
The promoters of a company limited by shares shall subscribe for
shares
for which they are required to subscribe in accordance with this
Law
and shall be responsible for the preparation of the
establishment of
the
company.
Article
77
The establishment of a company limited
by shares shall be approved by
the
department authorized by the State Council or by the
provincial-level
people's
government.
Article
78
The registered capital of a company
limited by
share is the total
share
capital which has been registered with the company registration
authority
and which has been actually received.
The minimum amount of the registered
capital of a company limited by
shares
is RMB 10,000,000. Requirements for the minimum amount of the
registered
capital of a company limited by shares to be higher than the
above amount are provided for in separate laws or administrative
regulations.
Article
79
The articles of association of a
company limited by shares shall set
out
the following:
(1) the company's name and domicile;
(2) the company's scope of business;
(3) the company's method of
establishment;
(4) the total shares, value per share
and registered capital of the
company;
(5) the names of the promoters and the
number of shares subscribed by
them;
(6) the rights and obligations of the
shareholders;
(7) the composition, powers, term of
office and rules of procedure for
discussion
of the board of directors;
(8) the company's legal
representative;
(9) the composition, powers, term of
office and rules of procedure for
discussion
of the board of supervisors;
(10) the company's method of profit
distribution;
(11) grounds for the dissolution of
the company and method for its
liquidation;
(12) procedures for company notices
and announcements; and
(13) other matters which the
shareholders' general meeting considers
necessary
to specify.
Article
80
The promoters may make capital contributions in currency, or may
invest
in kind, use industrial property, non-patented technology
or land
use
rights to make capital contributions based on their
appraised value.
For
investment in kind, industrial property, non-patented technology or
land
use rights which are capital contributions, a valuation shall be
carried
out, the property contributed, verified and conversion into shares
made,
without over valuation or under valuation. The valuation of land use
rights
is to be dealt with in accordance with the provisions of
laws and
administration
regulations.
The amount of industrial property or non-patented technology
contributed
as capital based on its appraised value shall not exceed
twenty
percent of the registered capital of a company.
Article
81
When a state-owned enterprise is
reorganized into a company limited by
shares,
it is strictly prohibited to under value state-owned assets for
conversion
into shares,
sell them at prices below their value, or
distribute
them without compensation to individuals.
Article
82
Where a company limited by shares is
to by established by the promoter
method,
the promoters shall pay the full amount for the shares immediately
after
they have subscribed in writing for all shares which the articles of
association
provide to be
issued. If investment in kind, industrial
property,
non-patented technology or land use rights are used
as payment
for
the shares, procedures for the transfer of
the property rights shall
be
dealt with in accordance with the law.
The board of directors and the board
of supervisors shall be elected
after
the promoters have paid all capital contributions.
The board of
directors
submits to the
company registration authority the approval
document(s), the company's articles of association,
the investment
verification
certificate and other documents for the establishment of
the
company
and applies to register the establishment of the company.
Article
83
Where a company limited by shares is
to be established by the offer
method,
the shares subscribed for by the promoters shall not be less than
thirty-five
percent of the total number of shares of the company. The
remaining
portion shall be offered to the public.
Article
84
When the promoters offer shares to the
public, and application for the
offer
shall be submitted to the securities administration
authorities of
the
State Council together with the following major documents:
(1) document(s) approving the
establishment of the company;
(2) the company's articles of
association;
(3) the operating budget;
(4) the promoters' names, the number of shares subscribed by the
promoters,
the type(s) of capital contribution and investment verification
certificate;
(5) the prospectus;
(6) the names and addresses of the
receiving bankers; and
(7) the names of the underwriters and
relevant agreements.
The promoters shall not offer any
shares to the public without prior
approval of the securities administration authorities
of the
State
Council.
Article
85
Subject to the approval of the
securities administration authorities
of
the State Council, promoters may publicly offer shares to investors
outside
China. The concrete procedures for such offers are set out in
specific
regulations of the State Council.
Article
86
The securities administration
authorities of the State Council grant
approval
to applications for offers which comply with the conditions
provided
in this
Law. If
the applications do not comply with the
conditions
provided in this Law, no approval is granted.
If, after the approval has been
granted, the offer is found not to
comply
with the provisions of this Law, approval shall be revoked. If
shares
have not been offered, the offer will not be carried out. If shares
have
already been offered, the subscribers may demand that
the promoters
refund
their payments for shares with interest at the bank's
rate for a
deposit
of the same term.
Article
87
The articles of association formulated by the promoters shall be
attached
to the prospectus which shall set out the following:
(1) the number of shares subscribed by
the promoters;
(2) the par value per share and issue
price for each share;
(3) the total number of non-registered
shares issued;
(4) the rights and obligations of the
subscribers; and
(5) the duration of the offer and explanation that subscribers
may
revoke
their subscription to shares if the offer is under-subscribed
at
the
close of the offer.
Article
88
In making a public offer of shares, promoters
shall publish a
prospectus
and prepare share subscription applications. Share subscription
applications
shall set out the items stated in the preceding article.
Subscribers
fill in the number of shares subscribed, the amount of payment
and
their domiciles, and sign and seal the share subscription application.
Subscribers
make payment for shares according to the number of shares they
have
subscribed.
Article
89
A public offer of shares by promoters shall be underwritten
by
securities
institutions. established in accordance with the law, and an
underwriting
agreement shall be entered into.
Article
90
In making a public offer of shares,
the promoters shall enter into a
agreement
with the receiving bankers.
The receiving bankers shall receive
and hold as agents the payments
for
shares, issue receipts to subscribers making payments,
and shall be
obliged to issue evidence of receipt of payments to the relevant
departments.
Article
91
After payment in full has been made for the shares issued, an
authorized
investment verification authority shall verify the investments
and
issue an investment verification certificate.
The promoters shall
convene
a founding meeting within thirty days. The founding meeting is
made
up of the subscribers.
If the shares issued are not fully
subscribed after the closing date
specified
in the prospectus; or if the promoters do not convince the
founding
meeting within thirty days of payment in full having been made
for
the shares offered, the subscribers may demand that the promoters
refund
their payments for shares plus interest at the bank's
rate for a
deposit
of the same term.
Article
92
The promoters shall give notice to all subscribers or make an
announcement
of the date of the founding meeting fifteen days before the
meeting. The founding meeting shall be held only if subscribers
representing
half or more of the total shares are present.
The founding meeting exercises the
following powers:
(1) to examine the report of the
promoters on
preparations for the
establishment
of the company;
(2) to adopt the company's articles of
association;
(3) to elect the members of the board
of directors;
(4) to elect the members of the board
of supervisors;
(5) to examine and verify the expenses
incurred for the establishment
of
the company;
(6) to examine and verify the valuation of the property used by
promoters
as payments for shares; and;
(7) in the case of the occurrence of force major or substantial
changes
to operating
conditions which have a direct effect on the
establishment
of the company, a resolution not to establish the company
may
be made.
A resolution at the founding meeting
on any of the
matters set out
above
requires the approval of subscribers with more than half of the
voting
rights present at the meeting.
Article
93
The promoters and subscribers shall
not withdraw their share capital
after
making payments for shares or making their contribution
of capital
as
payment for shares, except where the shares have not been fully
subscribed
within the offer period, the promoters have not convened the
founding
meeting within the period specified, or a resolution not to
establish
the company is adopted at the founding meeting.
Article
94
Within 30 days of the conclusion of
the founding meeting, the board of
directors
shall submit to the company registration authority the following
documents
and shall apply to register the establishment of the company:
(1) approval document from the
relevant supervising departments;
(2) minutes of the founding meeting;
(3) the company's articles of
association;
(4)
the auditors' report on financial matters relating to the
preparation
of the establishment of the company;
(5) investment verification
certificate;
(6) the names and domiciles of members
of the board of directors and
board
of supervisors; and
(7) the name and domicile of the legal
representative.
Article
95
The company registration authority
shall, within thirty days from the
date
of receipt of an application to register the establishment
of a
company
limited by shares decide whether or not to grant registration.
Registration is granted and a business licence issued if all the
conditions
set out in this Law are met. Registration is not granted if the
conditions
set out in this Law are not met.
The date of issue of the business
licence is the date of establishment
of
a company limited by shares. After the company is established, a public
announcement
shall be made.
After the registration and establishment
of a
company limited by
shares,
in the case of establishment by the offer method, a report on the
offer of shares shall be filed with the securities administration
authorities
of the State Council for the record.
Article
96
Where a branch or branches are to be
set up at the same time as the
establishment
of a company limited by shares, application shall be made to
the
company registration authority to register it or them and obtain
business
licence(s).
Where a branch or branches are to be
set up after the establishment of
a
company limited by shares, the legal representative of the company shall
apply
to the company registration authority to register it or them and
obtain
business licence(s).
Article
97
Promoters of a company limited by
shares shall assume the following
responsibilities:
(1) to be jointly liable for the debts and expenses arising from
actions
to establish the company, if the company can not be established;
(2) to be jointly liable to refund
subscribers' payments for shares
plus
interest at the bank's rate for a deposit of the same
term, if the
company
cannot be established; and
(3) to be responsible for compensating
the company for damages to the
interests
of the company arising from negligence of the promoters during
the
process of establishing the company.
Article
98
A limited liability company being
converted into a company limited by
shares
shall meet the conditions for a company limited by shares
set out
in
this Law, and procedures for the establishment of a company limited by
shares
shall be carried out in accordance with this Law.
Article
99
When a limited liability company is
converted into a company limited
by
shares in accordance with the law and with approval, the
total amount
of
shares into which conversion is made shall be equivalent to the amount
of
the company's net assets. When a limited liability company is converted
into
a company limited by shares and increases its capital by public offer
of
shares, the provisions of this Law concerning
public offer of shares
shall
be followed.
Article
100
Where a limited liability company is
being converted into a company
limited
by shares, the creditors' rights and indebtedness of the
original
limited
liability company are assumed by the company limited by shares
after
the conversion.
Article
101
A company limited by shares shall
deposit its articles of association,
register
of shareholders, minutes of shareholders'
general meetings and
financial
and accounting reports at the company.
【章名】 Section 2 Shareholders' General Meeting
Article
102
A company limited by shares shall have
a shareholders' general meeting
made
up of all shareholders. The shareholders' general meeting is the
company's authoritative
organization which exercises its powers
in
accordance
with this Law.
Article
103
The shareholders' general meeting
exercises the following powers:
(1) to decide on the company's operational policies and investment
plans;
(2) to elect and replace directors and
decide on matters relating to
the
remuneration of directors;
(3) to elect and replace the
supervisors who are representatives
of
the
shareholders and decide on matters relating to the remuneration of
supervisors;
(4) to examine and approve reports of
the board of directors;
(5) to examine and approve reports of
the board of supervisors;
(6) to examine and approve the company's proposed annual financial
budget
and final accounts;
(7) to examine and approve the
company's profit distribution plan and
plan
for recovery of losses;
(8)
to decide on increases in or reductions of the company's
registered
capital;
(9) to decide on the issue of bonds by
the company;
(10) to decide on issue such as merger, division, dissolution
and
liquidation
of the company and other matters; and
(11) to amend the company's articles
of association.
Article
104
Shareholders' general meetings shall be held once every year. An
interim
shareholders' general meeting shall be held within two months
under
any of the following circumstances:
(1) the number of directors is less
than tow-thirds of the number of
directors
required by this Law or of the number of directors specified in
the
company's articles of association;
(2) the unrecovered losses of the
company's capital reach one-third of
the
company's total share capital;
(3) upon request by shareholders
holding ten per cent or more of the
shares
of the company;
(4) when deemed necessary by the board
of directors; and
(5) when the board of supervisors
proposes convening it.
Article
105
Convening shareholders' general
meetings is the responsibility of the
chairman
of the board of directors in accordance with the provisions of
this
Law and such meetings are presided over by the chairman. If the
chairman
is unable to perform his duties for a particular reason, the
vice-chairman
or another director designated by the chairman presides over
the
meeting. When convening a shareholders' general meeting, notice shall
be
given to all shareholders thirty days before the meeting,
stating the
matters
to be considered at the meeting. An interim shareholders'
general
meeting
shall not adopt resolutions on matters not stated in the notice.
Where bearer shares are issued, a
public announcement shall be made
about
the matters in the preceding paragraph forty-five days before the
meeting.
Where shareholders of bearer shares
are present
at a
shareholders'
general
meeting, their shares shall be deposited with the company from
five
days prior to the opening of the meeting until the adjournment of the
meeting.
Article
106
Shareholders present at a
shareholders' general meeting have one vote
for
each share they hold.
Resolutions of the shareholders'
general meeting shall be adopted with
half
or more of the voting rights held by shareholders
present at the
meeting.
Resolutions of
the shareholders' general meeting on merge,
division
or dissolution of a company shall be adopted by shareholders with
two-thirds
or more of the voting rights present at the meeting.
Article
107
Amendments to the articles of association of the company must be
adopted
by shareholders with two-thirds or more of
the voting rights
present
at the meeting.
Article
108
Shareholders may appoint proxies to attend shareholders'
general
meetings.
A proxy shall present to the company a power of attorney from
the
shareholder and shall exercise his voting rights within the
scope of
his
authorization.
Article
109
Minutes of decision made on matters discussed by the shareholders'
general
meeting shall be kept and signed by the shareholders present at
the
meetings. The minutes shall be kept together with the signed register
of
shareholders in attendance and the powers of attomey of shareholders
who
attended by proxy.
Article
110
shareholders have the right to examine the company's articles of
association,
minutes of shareholders' general meetings and financial and
accounting
reports, and to make proposals or inquiries in respect
of the
company's
operations.
Article
111
If any resolution adopted by a
shareholders' general meeting or the
board
of directors violates any law or administrative regulation or
infringes
the lawful rights and interests of shareholders, shareholders
have
the right to initiate proceedings in the people's court to require
that
such acts of violation or infringement be stopped.
Section
3 Board of Directors, Manager
Article
112
A company limited by shares has a
board of
directors with five to
nineteen
members.
The board of directors is responsible to the shareholders'
general
meeting
and exercises the following powers:
(1) to be responsible for convening
the shareholders' general meeting
and
reporting on its work to the shareholders' general meeting;
(2) to implement the resolutions of the shareholders'
general
meetings;
(3) to decide on the company's
business plans and investment plans;
(4) to formulate the company's
proposed annual financial budget and
final
accounts;
(5) to formulate the company's profit
distribution plan and plan for
recovery
of losses;
(6)to formulate proposals for increases in or reductions of the
company's
registered capital and the issue of corporate bonds;
(7) to prepare plans for the merger,
division or dissolution of the
company;
(8) to decide on the putting in place of the company's internal
management
structure;
(9) to appoint or dismiss the
company's manager, and pursuant to the
manager's
nominations to appoint or dismiss the deputy general manager and
financial
officers of the company and decide on their remuneration; and
(10) to formulate the company's basic
management system.
Article
113
The board of directors has one chairman and may have one or two
vice-chairmen. The chairman and vice-chairmen are elected from the
directors
with the approval of more than half of all the directors.
The chairman of the board of directors
is the legal representative of
the
company.
Article
114
The chairman of the board of directors
exercises the following powers:
(1) to preside over shareholders'
general meetings and convene and
preside
over meetings of the board of directors;
(2) to check on the implementation of resolutions of the board of
directors;
and
(3) to sign the company's share
certificates and bonds.
The vice-chairmen assist the chairman
in his work. When the chairman
is
unable to perform his duties, the vice-chairman designated by the
chairman
performs his duties on his behalf.
Article
115
The term of office of the directors is specified in the company's
articles
of association, provided, however, that each term may not be
longer
than three years. At the end of a director's term, the director may
serve
another term if re-elected.
The shareholders' general meeting
shall not without reason remove a
director
from office before the expire of that director's term.
Article
116
Meetings of the board of directors are
convened at least twice a year.
Notice
of each meeting shall be given to all directors ten days before the
meeting.
For convening an interim meeting of
the board of directors, the board
of
directors may provide for a different method of giving notice and
notice
period.
Article
117
Meetings of the board of directors
shall be held only if half or more
of
the directors are present. Resolutions
of the
board of directors
require
the approval of more than half of all directors.
Article
118
The directors shall attend the
meetings of the board of directors in
person.
If a director is unable to attend a meeting for any reason, he may
appoint
another director by a written power of attomey to attend the
meeting
on his behalf. The power of attorney shall set out the scope of
the
authorization.
The board of directors shall keep
minutes of resolutions on matters
discussed
at the meetings. The minutes are signed by the directors present
at
the meeting and the person who recorded the minutes.
The directors shall be responsible for
the resolutions of the board of
directors.
If a resolution of the board of directors violates the law,
administrative
regulations or the company's articles of association and
this
results in the company sustaining serious losses, the directors
participating
in the resolution are liable to compensate the company.
However,
if it can be proven that a director expressly objected to the
resolution
when the resolution was voted on, and that such objections were
recorded
in the minutes of the meeting, such director may be free of
liability.
Article
119
A company limited by shares has a
manager appointed and dismissed by
the
board of directors. The manager is responsible to the board of
directors
and exercises the following powers:
(1) to be in charge of the company's production,
operation and
management
and organize the implementation of the resolutions of the board
of
directors;
(2) to organize the implementation of
the company's
annual business
plan
and investment plan;
(3) to propose plans for the putting in place of the company's
internal
management structure;
(4) to propose the company's basic
management system;
(5) to formulate specific rules and
regulations for the company;
(6) to propose the appointment or
dismissal of the company's deputy
manager
and financial officers;
(7) to appoint or dismiss management personnel other than those
required
to be appointed or dismissed by the board of directors; and
(8) other powers conferred by the
company's articles of association
and
the board of directors.
The manager is present at meetings of
the board of directors.
Article
120
The board of directors may, as
required, authorize the chairman of the
board
of directors to exercise part of the powers of the board of
directors
during the period when the board of directors is not in session.
Article
121
When considering and deciding on the wages, welfare and production
safety
of staff and workers and labour protection, labour insurance and
other
issues involving the personal interests of staff and workers, the
company
shall first solicit and consider the opinions and proposals of the
company's
trade union
and the staff and workers, and shall invite
representatives
from the company's trade union and the staff and workers
to
attend the relevant meetings.
Article
122
When
considering and deciding on major issues relating to the
company's
production and operation and formulating important rules and
regulations,
the company shall solicit and consider the opinions and
proposals
of the company's trade union and the staff and workers.
Article
123
The directors and manager shall abide
by the company's articles of
association,
faithfully execute their official duties, and protect the
company's
interests. They shall not exploit their position and power in
the
company to advance their own private interests.
The provisions of Article 57 to
Article 63 of this Law on persons not
eligible
for the positions of director and manager and on the
obligations
and
duties of the directors and manager are applicable to the directors
and
manager of a company limited by shares.
Section
4 Board of Supervisors
Article
124
A company limited by shares has a
board of supervisors made up of not
less
than three members. The board of supervisors shall choose a
convener
from
among its members.
The board of supervisors is made up of representatives
of the
shareholders and a reasonable proportion of representatives of the
company's
staff and workers, the specific proportion to be provided for in
the
company's articles of association. Representatives of
the staff and
workers
on the board of supervisors are chosen by the company's staff and
workers
by democratic election.
The directors, manager and financial officers shall not
act
concurrently
as supervisors.
Article
125
The term of office of the supervisors
is three years. At the end of a
supervisor's
term, the supervisor may serve another term if re-elected.
Article
126
The board of supervisors exercises the
following powers:
(1)to inspect the company's financial
situation;
(2)to exercise supervision over the
acts of the directors and manager
carried
out while performing their corporate functions which violate laws,
regulations
or the company's articles of association;
(3) to demand remedies from a director
or manager when the acts of
such
director or manager are harmful to the company's interests;
(4)to propose the convening of an interim shareholders' general
meeting;
and
(5) other powers specified in the
company's articles of association.
Supervisors are present at meetings of
the board of directors.
Article
127
The discussion methods and voting procedures of the board of
supervisors
are specified
in the
company's articles of association.
Article
128
The supervisors shall faithfully
execute their supervisory duties in
accordance with laws, administrative regulations and the company's
articles
of association.
The provisions of Articles 57 to
Article 59 and Articles 62 to Article
63
of this Law on persons not eligible for the position of supervisor and
on
the obligations and duties of supervisors are applicable to supervisors
of
a company limited by shares.
【章名】 Chapter 4 Issue and Transfer of Shares by A Company Limited by
Shares
Section
1 Issue of Shares
Article
129
The capital of a company limited by
shares is
divided into shares.
Each
share is of equal value.
Shares in a company take the form of share certificates. A share
certificate
signed and issued by the company is an evidence that the share
is
held by the shareholder.
Article
130
The issue of shares is public, fair
and impartial. Shares of the same
class
must have the same rights and benefits.
For shares certificates issued at the
same time, each share shall have
the
same issue terms and price. The share price for each
share purchased
by
any organization or individual must be the same.
Article
131
The share certificate issue price may
be equal to or greater than the
par
value, but may not be less than the par value.
Share certificates with an issue price above par value shall be
approved by the securities administration departments
of the
State
Council.
The premium obtained from the issue of
share certificates above par
value
is allocated to the company's capital common reserve fund.
Specific regulations governing the
issue of share certificates at a
premium
are separately issued by the State Council.
Article
132
Share certificates take the form of
paper certificates or such other
form
as specified by the securities administration
departments of the
State
Council.
The following items shall be set out
on a share certificate:
(1) the company's name;
(2) the company's registration and
establishment date;
(3) the class of the share
certificate, the par value and the number
of
shares represented by the share certificate; and
(4) the number of the share
certificate;
The share certificate is signed by the chairman of the board of
directors
and sealed by the company.
Share certificates of promoters shall
bear the
notation "promoter's
share
certificate".
Article
133
Shares issued to promoters,
state-authorized investment organizations
and
legal persons shall be in the form of registered share certificates,
shall bear the name of such promoter, state-authorized
investment
organizations
or legal person, and may not carry a different account
name
or
be registered in the name of an agent.
Shares issued to the general public
may be in the form of registered
share certificates
and also may be in the form of bearer
share
certificates.
Article
134
A company issuing registered share certificates shall prepare a
register
of shareholders setting out the following:
(1) the name and address of the
shareholders;
(2) the number of shares held by each
shareholder;
(3) the number(s) of the share certificate(s) held by each
shareholder,
and
(4) the date on which each shareholder
acquired its shares.
A company issuing bearer share
certificates shall record the number of
such
share certificates issued, their numbers and dates of issue.
Article
135
The State Council may separately issue
regulations governing the issue
of
classes of share certificates not covered by this Law.
Article
136
A company limited by shares formally
delivers share
certificates to
its
shareholders immediately upon its registration and establishment. No
share
certificates shall be delivered prior to the registration
and
establishment
of the company.
Article
137
A company issuing new shares shall
meet the following conditions:
(1) the previous issue of shares has been fully subscribed and at
least
one year have elapsed since that issue;
(2)the company has been continuously
profitable for
the last three
years
and is able to make dividend payments to its shareholders;
(3) there has been no false reporting
in the company's financial and
accounting
documents during the last three years; and
(4) the projected profit rate of the
company equals
or exceeds the
rate
of interest on bank deposits for the same term.
A company which uses a given year's
profits to issue new shares is not
subject
to clause (2) above.
Article
138
In order for a company to issue new shares, resolutions shall be
passed
on the following matters at a meeting of the shareholders:
(1) the class and quantity of the new
shares;
(2) the issue price of the new shares;
and
(3) the commencement and closing dates
of the new share issue;
(4) the class and quantity of shares to be issued to existing
shareholders.
Article
139
Once
the shareholders at a shareholders'
meeting have passed a
resolution
to issue new shares, the board of directors shall apply to
the
apply
to the authorized department of the State Council or to the
provincial
level people's government for approval. Public offers shall
require
the approval of the securities administration departments
of the
State
Council.
Article
140
Upon receiving approval to issue new
shares in a
public offer, the
company
shall publish a prospectus for the new shares and its financial
statements
with their detailed schedules, and prepare a share subscription
application.
A public offer of new shares shall be underwritten by a legally
established
securities institution and an underwriting agreement shall
be
executed.
Article
141
A company issuing new shares may
determine its pricing plans in the
light
of the company's continuous profitability and the increase in the
value
of its property.
Article
142
After a company issuing new shares has
fully collected the payments
for
shares, the company shall change its registration with the company
registration
authority and issue a public notice.
Section
2 Transfer of Shares
Article
143
A shareholder may transfer his shares in accordance with the law.
Article
144
A shareholder's transfer of its shares
must be carried out through a
legally
established stock exchange.
Article
145
Registered share certificates are
transferred by means of endorsement
or
by other means as stipulated by law or by administrative regulations.
Upon the transfer of registered share certificates,
the company
records
the name and
address of the transferee in the register of
shareholders.
Pursuant to the previous paragraph, no changes in the register of
shareholders
shall be made within 30 days before the convening of the
shareholders'
general meeting or within 5 days before the record date
for
the
issue of dividends.
Article
146
A transfer of bearer share
certificates is effective upon delivery of
the
share certificates to the transferee through a legally established
stock
exchange.
Article
147
Shares of a company held by a promoter
of that company shall not be
transferred
for three years after the company's establishment.
Directors, supervisors and the manager
of a company shall report to
that
company all the shares that they hold in the company, and
shall not
transfer
them during their term of office.
Article
148
A state-authorized investment
institution may transfer the shares it
holds
in accordance with the law and may also purchase the shares held by
other
shareholders. The approval limits and the regulatory regime for such
share
transfers and purchases are separately determined by law or by
administrative
regulations.
Article
149
A company shall not purchase the company's own share certificates,
except
in order to decrease its capital by canceling its shares or when it
merges
with another company that holds its shares.
Within ten days following the purchase of the company's own share
certificates
pursuant to the terms of the preceding paragraph, a company
shall,
in accordance with applicable law and administrative regulations,
cancel
that portion of its shares, change its registration and issue a
public
notice.
A company shall not accept the
company's own
share certificates as
collateral.
Article
150
In the
event registered share certificates are stolen, lost or
destroyed,
the shareholder may, pursuant to the procedures for public
invitation
to assert claims contained in the Code of Civil Procedure,
request
the people's court to declare the share certificates invalid.
After the share certificates are declared invalid by the people's
court, the shareholder may, pursuant to the procedures for public
invitation to assert claims, apply to the company to have share
certificates
re-issued.
Section
3 Listed Companies
Article
151
A listed company referred to in this
Law means a company limited by
shares
whose issued shares are approved for trading on a stock exchange by
the
State Council or its authorized securities administration departments.
Article
152
A company limited by shares shall meet the following requirements
before
applying for its shares to be listed on a stock exchange:
(1) the securities administration
departments of
the State Council
have
approved the company's stock being issued to the public;
(2) the company's total share capital
is not less than RMB 50,000,000;
(3) the company has been in operation
for over three
years and has
been profitable in each of the last three years; if an original
state-owned
enterprise has been converted and the company established
according
to the law, or the company has been reorganized and
established
after
the effective
date of this Law with a large-or medium-sized
state-owned
enterprise as its main promoter, the three year periods may be
calculated
continuously;
(4) the number of shareholders each
holding shares
of a
par value
totaling
at least RMB 1,000 is not less than one thousand; the company's
shares
already issued to the public account for over 25% of the
company's
total
shares;
if the
company's total share capital exceeds
RMB
400,000,000,
company shares already issued to the public account for
over
15%
of the company's total shares;
(5) during the last three years, the
company has
not committed any
significant
acts in violation of the law and the company's financial
statements
have not contained any false statements; and
(6) such other conditions as may be
specified by the State Council.
Article
153
A company limited by shares applying
to have its
shares listed for
trading
shall file an application for approval with the State
Council or
its
authorized securities administration departments and
submit relevant
documents in accordance with applicable laws
and administrative
regulations.
The State Council or its authorized securities administration
departments
grant approval to those listing applications which meet the
requirements
specified in this Law and deny approval to those listing
applications
which do not meet the requirements specified in this Law.
A company which has been granted
approval for listing must publish a
share
listing report and keep its application documents on file in a
designated
place for public inspection.
Article
154
Shares of a company which has been
approved for listing shall trade on
a
stock exchange in accordance with applicable laws and administrative
regulations.
Article
155
If granted approval by the securities administration
departments of
the
State Council, shares of a company may be listed abroad, The specific
means
are stipulated by special regulations issued by the
State Council.
Article
156
Pursuant to laws and administrative
regulations, a listed company
shall
periodically make public its financial and operational conditions. A
listed
company shall publish its financial statements once every six
months
in each fiscal year.
Article
157
A listed company in one of the
following situations shall have its
listing temporarily
suspended upon determination
by the
securities
administration
departments of the State Council:
(1) the company's total share capital,
share distribution, or other
circumstances
have changed such that the company no longer meets the
listing
requirements;
(2) the company does not make public its financial condition as
required
by the regulations, or its financial statements contain false
statements;
(3) the company commits a significant
violation of law; and
(4)
the company has had a loss in each of the three previous years.
Article
158
A listed company in the situation
described in clause (2) or clause
(3)
of the preceding article which upon investigation is found to have
caused
serious consequences, or a listed company which is in the situation
described
in clause (1) or clause (4) of the same article and is unable to
eliminate it within a limited time,
does not meet the listing
requirements,
its listing
shall be terminated upon decision by the
securities
administration departments of the State Council.
If a company resolves to dissolve
itself, or if a company is legally
ordered
to close down by the responsible administrative department, or if
a
company is declared to be bankrupt, the company shall have
its listing
terminated
upon decision by the securities administration departments of
the
State Council.
【章名】 Chapter 5 Corporate Bonds
Article
159
A company limited by shares, a wholly state-owned company and a
limited
liability company established with the investment by two
or more
state-owned
enterprises or two or more state-owned investment entities, in
order
to raise funds for production and operations, may issue corporate
bonds
in accordance with this Law.
Article
160
"Corporate bonds" as used in
this Law mean valuable securities issued
by
a company in accordance with legally specified procedures and pursuant
to
which the company covenants to repay principal and interest within a
certain
period of time.
Article
161
The issue of corporate bonds shall be subject to the following
conditions:
(1) the net assets of a company
limited by shares are not less than
RMB
30,000,000, and the net assets of a limited liability company are not
less
than RMB 60,000, 000;
(2) the aggregate amount of bonds of
the company does not exceed forty
per
cent of the net assets of the company;
(3) the average distributable profits
over the previous three years is
sufficient
to defray one year's interest payments on the company's bonds;
(4) the funds raised are used in a manner consistent with state
industrial
policy;
(5) the interest rate payable on the
corporate bonds does not exceed
the
levels set by the State Council; and
(6) such other conditions as may be
provided for by the State Council.
The funds raised by corporate bonds
shall be used
for the purposes
approved
by the approval authority and shall not be used to cover losses
or
for non-productive expenditures.
Article
162
A company shall not re-issue corporate bonds under any of the
following
circumstances:
(1) the corporate bonds issued the
previous time have not yet been
fully
subscribed;
(2) the company has defaulted on
previously issued corporate bonds or
other
indebtedness, or is late in the payment of principal or interest,
and
such situation is still continuing.
Article
163
When a company limited by shares or a limited liability company
proposes
to issue corporate bonds, its board of directors shall draft a
proposal
for approval by resolution at a meeting of the shareholders.
The issue of corporate bonds by a
wholly state-owned company shall be
decided by the state-authorized investment
organization or the
state-authorized
department.
Once a resolution or decision has been
made pursuant to the preceding
two
paragraphs, the company shall submit an application
for approval to
the
securities administration departments of the State Council.
Article
164
The scale of an issue of corporate
bonds shall be determined by the
State
Council. Approvals by the securities administration
departments of
the
State Council of an issue of corporate bonds shall not exceed the
scale
determined by the State Council.
The securities administration
departments of the State Council shall
grant
approval if an application to issue corporate bonds satisfies the
requirements
of this Law and deny approval if an application to issue
corporate
bonds does not satisfy the requirements of this Law.
If an approval that has previously
been granted for an application is
found
not to satisfy the requirements of this Law, the approval
shall be
revoked.
With respect to corporate bonds not yet issued, the issue will
not
be carried out. With respect to corporate bonds already issued, the
issuing
company shall return the funds paid to the subscribers, together
with
interest calculated at the rate on bank deposits for the
same term.
Article
165
The company shall submit the following
documents when applying to the
securities
administration departments of the State Council for approval to
issue
corporate bonds:
(1) the company's registration
certificate;
(2) the company's articles of
association;
(3) corporate bond offer procedure;
and
(4) an asset appraisal report and investment verification report.
Article
166
Upon approval of the company's
application to issue corporate bonds,
the
company shall make public its corporate bond offer procedure.
The corporate bond offer procedure
shall set out the following:
(1) the company's name;
(2) the total amount and face value of
the bonds;
(3) the bonds' interest rate;
(4) the periods and method for paying
principal and interest;
(5) the commencement and closing dates
of the issue;
(6) the net assets of the company;
(7) the total amount of corporate
bonds already issued but not yet
due;
and
(8) the underwriter for the corporate
bonds.
Article
167
When a company issues corporate bonds, the bonds shall show
information
including the company's name, the face value of the bond,
the
interest
rate, and the date of maturity, and be signed by the chairman of
the
board of directors and sealed by the company.
Article
168
Corporate bonds may be either bearer
or registered bonds.
Article
169
A company which issues corporate bonds
shall keep a
corporate bonds
register.
When registered bonds are issued, the
following items shall be set out
in
the register:
(1) the names and addresses of the
bondholders;
(2) the date on which the bond was
acquired by the bondholder and its
number;
(3)the total amount of the bond, its face value, interest
rate,
principal
and interest payment dates and method of payments; and
(4) the issue date.
When bearer bonds are issued, the
register shall set out the total
amount
of the bonds, the interest rate, the maturity date and payment
method,
the date of issue and the number of the bonds.
Article
170
Corporate bonds may be transferred.
Transfers of corporate bonds shall
be
carried out through a legally established stock exchange.
The transfer price is negotiated and
agreed upon by the transferor and
transferee.
Article
171
Registered corporate bonds are
transferred by the bondholder through
endorsement
or by other means as stipulated by law or administrative
regulations.
Upon the transfer of a registered
corporate bond, the company records
in
its corporate bond register the name and address of the transferee.
A transfer of a bearer corporate bond becomes effective upon the
delivery
of the corporate bond to the transferee at a legally
established
stock
exchange.
Article
172
Subject to a resolution at a general
meeting of the
shareholders, a
listed
company may issue corporate bonds convertible into shares
of the
company.
The procedures for conversion are specified in the corporate bond
offer
procedures.
The
issue of corporate bonds convertible
into shares shall be
submitted
to the
securities administration departments of the State
Council
for approval. Corporate bonds convertible into shares
shall meet
not
only the requirements for the issue of bonds but also the requirements
for
the issue of shares.
Corporate bonds convertible into
shares shall be marked "convertible
corporate
bonds", and the quantity of convertible corporate bonds shall be
recorded
in the corporate bond register.
Article
173
A company which issues corporate bonds
convertible into shares shall
issue
share certificates to bondholders in accordance with its
conversion
procedures,
provided that the bondholder has the option whether or not
to
convert.
【章名】 Chapter 6 Financial Affairs and Accounting of A
Company
Article
174
A
company shall establish its financial and accounting systems
according
to laws, administrative regulations and the regulations
of the
responsible
finance department of the State Council.
Article
175
At the end of each fiscal year, the
company shall prepare a financial
statement
which shall be examined and verified as provided by law.
The company's financial statements shall include the following
accounting
statements and schedules:
(1) balance sheet;
(2) profit and loss statement;
(3) statement of financial changes;
(4) explanation of financial
condition; and
(5) profit distribution statement.
Article
176
A limited liability company shall
present its financial statements to
the
shareholders in accordance with the time periods specified in the
company's
articles of association.
A company limited by shares shall
deposit its financial statements at
the
company for inspection by the shareholders at least twenty days before
the
convening of the annual general meeting of shareholders.
A company limited by shares
established by the offer method shall make
public
its financial statements.
Article
177
When distributing each year's
after-tax profits, the company shall set
aside
ten per cent of its after-tax profits for the company's statutory
common
reserve fund and five per cent to ten per cent of its
profits for
the
company's statutory common welfare fund. When the aggregate balance in
the
statutory common reserve fund is fifty per cent or more of the
registered
capital of the company, the company need not make any further
allocations
to that fund.
When the company's statutory common
reserve fund is not sufficient to
make
up for the company's losses of the previous year, current year
profits
shall be used to make up for the losses before allocations are set
aside
for the statutory common reserve fund or the statutory common
welfare
fund in accordance with the previous clause.
Subject to a resolution of the shareholders'
meeting, after the
company
has set aside funds from after-tax profits for the statutory
common
reserve fund, the company may set aside funds for a discretionary
common
reserve fund.
After the company has made up its
losses and made allocations to its
common
reserve fund and statutory common welfare
fund, the remaining
profits are distributed in proportion to the shareholders'
capital
contributions
if the company
is a
limited liability company and in
proportion
to the number of shares held by the shareholders if the company
is
a company limited by shares.
If a shareholders meeting or the board
of directors violates the above
provisions
and profits are distributed to the shareholders before the
company
makes up for losses or makes allocations to the statutory common
fund and the statutory common reserve welfare fund, the profits
distributed
in violation of the provisions must be returned to the
company.
Article
178
In accordance with this Law, the
premium a company limited by shares
obtains
when it issues shares at a price which exceeds par value, and any
other
income designated for the capital common reserve fund by the
regulations
of the responsible finance department of the State Council
shall
be allocated to the company's capital common reserve fund.
Article
179
The common reserve fund of a company
is used to make up its losses,
expand
its production and operations or for conversion into additional
capital
of the company.
When the common reserve fund of a company limited by shares is
converted
to capital in accordance with a resolution passed at
a general
meeting
of the shareholders, the company either
distributes new shares in
proportion
to the shareholders, number of shares, or increases the par
value
of each share, provided, however, that when the statutory common
reserve
fund is converted to capital, the balance of the statutory
common
reserve
fund may not fall below twenty-five percent of the registered
capital.
Article
180
The company's statutory common welfare
fund is used for the collective
welfare
of the company's staff and workers.
Article
181
A company shall not keep accounting
books and records other than those
provided
by law.
The company's assets shall not be held
in an account
opened in the
name
of any individual.
【章名】 Chapter 7 Merger and Division of A Company
Article
182
A resolution to effect the merger and
division of a company shall be
passed
at a meeting of the shareholders.
Article
183
The merger and division of a company limited by shares shall be
approved
by the authorized department of the State Council or by the
provincial
government.
Article
184
The merger of a company may take the form of either merger by
absorption
or merger by the establishment of a new company.
Where one company is absorbed by
another in a merger by absorption,
the
absorbed company is dissolved. Where two or more companies establish a
new
company in a merger by re-establishment, all merged parties are
dissolved.
In the event of a merger, the merging
parties shall execute a merger
agreement
and prepare a balance sheet and an inventory of property. The
company
shall notify its creditors within ten days of the date of the
company's
resolution to merge and shall publish public notices in a
newspaper
at least three times within thirty days of the date of the
company's
resolution to merge. A creditor has the right within thirty days
of
receiving such notice from the company (or, for creditors
who do
not
receive
the notice, within ninety days of the date of the first public
notice)
to demand that the company repay its debts to that creditor or
provide
a corresponding guarantee for such debt. A company which does not
repay
its debts or provide corresponding guarantees for such
debts shall
not
be merged.
At the time of merger, the creditors'
rights and indebtedness of each
of
the merged parties shall be assumed by the company which
survives the
merger
or the newly established company.
Article
185
When a company is divided, its
property shall be split up accordingly.
At the time a company is divided, the
company shall prepare a balance
sheet
and an inventory of property. The company shall notify its creditors
within
ten days of the date of the company's resolution to divide and
shall
publish public notices in a newspaper at least three times within
thirty
days of the date of the company's resolution to divide. A
creditor
has
the right within thirty days of receiving such notice from the company
(or,
for creditors who do not receive the notice, within
ninety days of
the
date of the first public notice) to demand that the company repay its
debts
to that creditor or provide a corresponding guarantee for such debt.
A
company which does not repay its debts or provide corresponding
guarantees
for such debts shall not be divided.
Debts of the company prior to division are assumed by
the
post-division
companies in accordance with the agreements entered into.
Article
186
When a company needs to reduce its
registered capital, it prepares a
balance
sheet and an inventory of property.
The company shall notify its creditors
within ten days of the date of
the
company's resolution to reduce its registered capital and shall
publish
public notices in a newspaper at least three times within thirty
days
of the date of the company's resolution to reduce its registered
capital.
A creditor has the right within thirty days of receiving such
notice
from the company (or, for creditors who do not receive notice,
within
ninety days of the date of the first public notice) to demand that
the
company repay its debts to that creditor or provide a corresponding
guarantee
for such debt.
The registered capital of a company
following such capital reduction
shall
not be less than the minimum levels set by law.
Article
187
When a limited liability company
increases its registered capital, the
shareholders'
subscription and payment of contributions
for the
newly
increased capital are carried out in accordance with the relevant
provisions
of this Law governing payment of capital contributions for
the
establishment
of a limited liability company.
When a company limited by shares issues new shares in order to
increase its registered capital, the process by which shareholders
subscribe
for new shares shall be carried out in accordance with the
relevant
provisions of this Law governing payment for shares for the
establishment
of a company limited by shares.
Article
188
When a company merges or divides and
there is a change in any item in
its
registration, the company shall change its registration
with the
company
registration authority in accordance with the law. When a
company
dissolves,
the company shall cancel its registration in accordance with
the
law. When a new company in established, its establishment
shall be
registered
in accordance with the law.
When a company increases or decreases its registered capital, the
company
shall carry
out a
change of registration
with the company
registration
authority.
【章名】 Chapter 8 Insolvency, Dissolution and Liquidation
of A Company
Article
189
In the case of a company legally declared bankrupt because it is
unable
to repay debts due, the people's court shall,
in accordance
with
the
provisions of relevant laws, organize the shareholders, relevant
organizations and relevant professional
personnel to establish
a
liquidation
group to carry out bankruptcy liquidation procedures with
respect
to the company.
Article
190
A company may dissolve in any of the
following situations:
(1) pursuant to the provisions of the company's articles of
association,
the term of the company has expired or one of the other
events
which are grounds for dissolution has occurred;
(2) a resolution for dissolution is
passed by a shareholders' meeting;
and
(3) dissolution is necessary due to a merger or division of the
company.
Article
191
A liquidation group shall be set up
within fifteen days of a company
being
dissolved pursuant to provisions (1) or (2) of the preceding
article.
The liquidation group of a limited liability company is
made up
of
its shareholders. The composition of the liquidation group of a company
limited
by shares is determined by a general meeting of the
shareholders.
If
a liquidation group to carry out liquidation procedures is not set up
within
the specified time limit, the creditors may apply to
the people's
court
to have it designate relevant persons to form a liquidation group in
order
to carry out liquidation procedures. The people's court shall accept
and
hear such applications and timely designate the members of the
liquidation
group in order to carry out liquidation procedures.
Article
192
A company which is ordered according to law to close down for
violating
laws and administrative regulations shall be dissolved, and
the
relevant
responsible authority shall organize the shareholders, relevant
institutions
and professional personnel to establish a liquidation group
to
carry out liquidation procedures.
Article
193
During the liquidation period, the
liquidation group shall exercise
the
following powers:
(1) to check the company's property
and separately prepare a balance
sheet
and an inventory of property;
(2) to send notices to creditors or
notify them by public notice;
(3) to deal with and liquidate
relevant uncompleted business matters
of
the company;
(4) to pay off outstanding taxes;
(5) to clear creditors' rights and
indebtedness;
(6) to deal with the property
remaining after the company's debts have
been
repaid; and
(7) to represent the company in any civil litigation proceedings.
Article
194
The liquidation group shall, within
ten days
of its
establishment,
send
notices to creditors, and within sixty days of its establishment
publish
public notices in a newspaper at least three times. A creditor
shall,
within thirty days of receiving notice, report its creditors'
rights
to the liquidation group, or for creditors who do not receive
notice,
within ninety days of the date of the first public notice.
When reporting creditors' rights, the creditor shall provide and
explanation
of matters relevant to the creditor's rights and shall provide
evidentiary
materials. The liquidation group shall carry out registration
of
creditors' rights.
Article
195
After checking the company's property
and preparing a balance sheet
and
an inventory of property, the liquidation group shall formulate a
liquidation
plan and present it to a meeting of the shareholders or to the
relevant
responsible authority for confirmation.
To the extent that the company is able
to repay its debts, it shall
respectively
pay all liquidation expenses, wages of staff and workers,
labour
insurance fees and taxes owing, and shall repay the company's
debts.
The assets of the company remaining
after its debts have been repaid
in
accordance with the provisions of the previous clause
are distributed
in
proportion to the shareholders capital contributions if the company is
a
limited liability company and in proportion to the number of shares held
by
the shareholders if the company is a company limited by shares.
During the liquidation period, a
company shall not commence any new
operational activities.
The property of the company shall not be
distributed
to the shareholders until the settlement provided for
in the
second
paragraph of this article is complete.
Article
196
After putting the company's property
in order and preparing a balance
sheet
and an inventory of property in connection with liquidation
of the
company
resulting from dissolution, the liquidation group discovers that
the
company's assets are insufficient to repay the company's debts, the
liquidation
group shall immediately apply to the people's court for a
bankruptcy
declaration.
After a company is declared bankrupt by a ruling of the people's
court,
the liquidation group shall transfer liquidation matters to the
people's
court.
Article
197
After liquidation of the company is
completed, the liquidation group
shall
prepare a liquidation report and present it for confirmation to a
meeting
of the shareholders or to the relevant responsible authority,
apply
to the company
registration authority for cancellation of the
company's
registration and publish by public notice of the termination of
the
company. Where
no application is made for cancellation of the
company's
registration, the company's business license is revoked
by the
company
registration authority and a public notice is published.
Article
198
The members of a liquidation group
shall faithfully attend to their
duties
and carry out their liquidation tasks in accordance with the law.
The members of a liquidation group
shall not exploit their position to
accept
bribes or other illegal income, nor shall they wrongfully take over
the
property of the company.
The members of a liquidation group who
intentionally or through gross
negligence cause losses to the company or its creditors
shall be
responsible
for providing compensation.
【章名】 Chapter 9 Branches of Foreign Companies
Article
199
Pursuant to this Law, a foreign
company may set up branches within
Chinese territory,
and may
engage in production
and operational
activities.
Under this Law, "foreign company"
means a company registered and
established
outside Chinese territory in accordance with the law of a
foreign
country.
Article
200
To set up a branch or branches within Chinese territory, a foreign
company shall file an application with
the responsible Chinese
authorities,
and present
its company's articles of association,
the
company's
registration certificate issued by its home country and other
relevant
documents. After receiving approval, the company shall register
with
the company registration authority as provided by law and
obtains a
business
license.
The approval procedures for branches of foreign companies are
separately
provided for in regulations
issued by the State Council.
Article
201
A foreign company which establishes a
branch within Chinese territory
shall
appoint a representative or agent in charge of the branch and
allocate
to the branch appropriate funds for the operational activities it
is
engaged in.
Where it is necessary to provide for a
minimum amount of operational
funds
for branches of foreign companies, separate regulations
are issued
by
the State Council.
Article
202
The branch of a foreign company shall indicate in its name the
nationality
of the foreign company and whether it has limited or unlimited
liability.
The articles of association of the
foreign company shall be available
at
its branches.
Article
203
A
foreign company is a foreign legal person and its branches
established
within Chinese territory do not have the status of Chinese
legal
persons.
A
foreign company assumes civil liability for the operational
activities
of its branches within Chinese territory.
Article
204
A branch of a foreign company
established with approval and engaging
in
business activities within Chinese territory shall abide by the laws of
China
and shall not harm the social and public interests of China. Its
legitimate
rights and interests shall be protected by the laws
of China.
Article
205
When a foreign company withdraws its
branches from Chinese territory,
it
shall repay its debts according to law and carry out liquidation in
accordance with the provisions of the relevant company liquidation
procedures
set out in this Law. Until such debts are repaid, the
property
of
the branch shall not be transferred
outside of Chinese territory.
【章名】 Chapter 10 Legal Liabilities
Article
206
A company which violates this Law by
falsely reporting its registered
capital
when registering, presenting false documentation or employing
other deceptions to conceal important facts in order to
obtain
registration
of the company shall be ordered to remedy the situation. A
company
that falsely reports its registered capital shall be fined at
least
five per cent and no more than ten per cent of the amount of the
registered capital falsely reported. A company that presents false
documentation
or employs other deceptions to conceal important facts shall
be
fined at least RMB 10,000 and no more than RMB 100,000. In serious
cases,
the company's registration shall be canceled. If the violation
constitutes
a criminal offence, criminal liability shall be investigated
in
accordance with the law.
Article
207
A company which prepares a false prospectus,
share subscription
application
or corporate bond offer procedure in connection with the issue
of
shares or corporate bonds shall be ordered to halt such issue and
return
all funds raised together with interest, and is fined an amount of
at
least one per cent and no more than five per cent of the amount of the
funds
illegally raised. If the violation constitutes a criminal offence,
criminal
liability shall be investigated in accordance with the law.
Article
208
A promoter or shareholder who does not
pay cash or property in kind or
does
not transfer property rights, so making a false capital
contribution
and
committing fraud against creditors and the general public,
shall be
ordered
to remedy his wrongs and is fined at least five per
cent and no
more
than ten per cent of the capital which he falsely contributed. If the
violation
constitutes a criminal offence, criminal liability shall be
investigated
in accordance with the law.
Article
209
A
promoter or shareholder who illicitly withdraws his capital
contribution
after the establishment of the company shall be ordered to
correct
his wrongs and is fined at least five per cent and no more than
ten
per cent of the capital contribution
illicitly withdrawn. If the
violation
constitutes a criminal offence, criminal liability shall be
investigated
in accordance with the law.
Article
210
A company which, without having
obtained approval as provided by this
Law
from the relevant responsible authority, arbitrarily issues shares or
corporate
bonds is ordered to halt such issue and return all funds
raised
together
with interest, and shall be fined at least one per cent and no
more
than five per cent of the amount of the funds illegally raised. If
the
violation constitutes a criminal offence, criminal liability shall be
investigated
in accordance with the law.
Article
211
A company which violates this Law by keeping accounting books and
records
other than those provided for by law shall be ordered to remedy
the
situation and shall be fined at least RMB 10,000 and no more than RMB
100,000. If the violation constitutes a criminal offence, criminal
liability
shall be investigated in accordance with the law.
Where assets of the company are held
in an account opened in the name
of
an individual, illegal income shall be confiscated and there shall be
fine
of at least the same amount and less than five times
the amount of
the
illegal income. If the violation constitutes a criminal offence,
criminal
liability shall be investigated in accordance with the law.
Article
212
If a company furnishes to shareholders
or the general public financial
statements
which are false or which conceal important facts, the personnel
in
charge of the matter who have direct responsibility and other personnel
with
direct responsibility shall be fined at least RMB 10,000 and no more
than
RMB 100,000.
If the
violation constitutes a criminal offence,
criminal
liability shall be investigated in accordance with the law.
Article
213
If in violation of this Law, state
assets are converted into shares or
sold
at a low price or given to individuals
without compensation, the
personnel
in charge of the matter who have direct responsibility and other
personnel with direct responsibility
are subject to administrative
sanctions
in accordance with the law. If the violation constitutes a
criminal
offence, criminal liability shall be investigated in accordance
with
the law.
Article
214
If a director, supervisor or manager
exploits his position to accept
bribes
or other illegal income or to take property of the company
wrongfully,
the illegal income is confiscated, he shall be ordered to
return
the company's property and he is subject to sanctions by the
company.
If the
violation constitutes a criminal offence,
criminal
liability
shall be investigated in accordance with the law.
If a director or manager misappropriates
company funds or takes
company
funds and lends them to another, he shall be ordered to return
the
funds to the company, is subject to sanctions by the company, and
turns over to the company all income obtained. If the violation
constitutes
a criminal offence, criminal liability shall be investigated
in
accordance with the law.
When a director or manager in
violation of this Law uses the company's
assets
to provide a guarantee for the debts of its shareholders
or other
individuals,
he is ordered to cancel the guarantee, is responsible
according
to law for providing compensation, and turns over to the company
all
income derived from the illegal provision of the guarantee. If the
circumstances
are serious, he shall be subject to sanctions by the
company.
Article
215
If a director or manager in violation
of this Law operates for himself
or
on behalf of another a business in the same line of business as the
company
in which he holds a position, in addition to turning over all
income
obtained, he shall be subject to sanctions by the company.
Article
216
If a company does not make allocations
to its statutory common reserve
fund
or its statutory common welfare fund in accordance with this Law, the
company
shall be ordered to make up the exact amount which should have
been
allocated and shall be subject to a fine of at least RMB
10,000 and
no
more than RMB 100,000.
Article
217
In the event of a merger, division, reduction of
registered capital
or
liquidation, if the company does not send notice to or
publish public
notices
for its creditors in accordance with the provisions of
this Law,
the
company shall be ordered to remedy the situation and shall be subject
to
a fine of at least RMB 10, 000 and no more
than RMB 100,000.
If at the time of liquidation, a
company conceals its property, makes
false
entries on its balance sheet or its inventory of property, or
distributes
the company's property before repaying its debts, the
company
shall
be ordered to remedy the situation and shall be subject to a fine of
at
least one per cent and no more than five per cent of the assets
concealed
or the debts not repaid before distribution. The personnel in
charge
of the
matter who have direct responsibility
and the other
personnel
with direct responsibility shall be subject to a fine of at
least RMB 10,000 and no more than RMB 100,000. If the violation
constitutes
a criminal offence, criminal liability shall be investigated
in
accordance with the law.
Article
218
If a liquidation group does not file a liquidation report with the
company
registration authority in accordance with the provisions
of this
Law,
or the liquidation report conceals important facts or contains
significant
omissions, the wrongs shall be ordered to be remedied.
If a member of the liquidation group
exploits his position for corrupt
or
improper ends, obtains illegal income or wrongfully takes
over assets
belonging
to the company, he shall be ordered to return the company's
property,
the illegally obtained income shall be confiscated, and he shall
be
fined at least the amount of and no more than five times the amount of
the
income illegally obtained. If the violation constitutes a criminal
offence,
criminal liability shall be investigated in accordance with the
law.
Article
219
If an institution responsible for
assessing, verifying, or examining
and
certifying assets provides false documentation, its unlawful income is
confiscated
and it is subject to a fine of at least the amount of
and no
more
than five times the amount of the unlawful income. The institution
shall
also be ordered to cease doing business, and the certification
of
the
qualifications of the personnel directly responsible shall be revoked
by
the relevant responsible authority. If the violation constitutes
a
criminal
offence, criminal liability shall be investigated in accordance
with
the law.
If an institution responsible for
assessing, verifying, or examining
and
certifying assets, as a result of negligence, prepares a report which
contains
important omissions, the institution shall be ordered
to remedy
the
situation. If the circumstances are relatively serious,
it shall be
subject
to a fine of at least the amount of and no more than
three times
the
amount of the income received. The institution shall also
be ordered
to
cease doing business, and the certification of the qualifications
of
the
personnel directly responsible shall be revoked by the relevant
responsible
authority.
Article
220
If the relevant department authorized
by the State Council approves an
application
for the establishment of a company which does not meet the
requirements
of this Law or approves an application for an issue of shares
which
does not meet the requirements of this Law, and the circumstances
are
serious, the personnel in charge of the matter who have direct
responsibility
and other personnel with direct responsibility
shall be
subject
to administrative sanctions in accordance with the law. If the
violation
constitutes a criminal offence, criminal liability shall be
investigated
in accordance with the law.
Article
221
If the securities administration departments of the State Council
grant
approval for share offers, listings of shares and issues of bonds
which
do not meet the requirements of this Law, and the circumstances are
serious, the personnel in charge of the matter who have
direct
responsibility
and other personnel with direct responsibility are subject
to
administrative sanctions in accordance with the law. If
the violation
constitutes
a criminal offence, criminal liability shall be investigated
in
accordance with the law.
Article
222
If the company registration authority
registers a company which does
not
meet the registration requirements of this Law, and the
circumstances
are
serious, the personnel in charge of the matter who have direct
responsibility
and other personnel with direct responsibility
shall be
subject
to administrative sanctions in accordance with the law. If the
violation
constitutes a criminal offence, criminal liability shall be
investigated
in accordance with the law.
Article
223
If a higher level department orders
the company registration authority
to
register a company which does not meet the registration requirements of
this
Law, or covers up an unlawful registration, the personnel
in charge
of
the matter who have direct responsibility and such other
persons with
direct
responsibility shall be subject to administrative sanctions in
accordance
with the law. If the violation constitutes a criminal offence,
criminal liability shall be investigated in accordance with the law.
Article
224
A company not lawfully registered as a
limited liability company or a
company
limited by shares which falsely makes use of the title "limited
liability
company" or "company limited by shares" is ordered to remedy the
situation
or is canceled. It may also shall be subject to a fine of at
least RMB 10,000 and no more than RMB 100,000. If the violation
constitutes
a criminal offence, criminal liability shall be investigated
in
accordance with the law.
Article
225
A company which without justification
fails to commence business more
than
six months after establishment or ceases to do business for more than
six
consecutive months after commencing business, has its business license
revoked
by the company registration authority.
When items in a company's registration
have changed, and the company
fails
to carry out a change of registration as required by this
Law, the
company
shall be ordered to register such changes within a certain time
period,
and if the company fails to do so, it shall be subject to
a fine
of
at least RMB 10,000 and no more than RMB 100,000.
Article
226
If a foreign company in violation of the provisions of this Law,
arbitrarily
establishes a branch or branches within Chinese territory,
it
shall
be ordered to remedy the situation or to close down, and
may shall
be
subject to a fine of at least RMB 10,000 and no more than RMB 100,000.
Article
227
If the responsible authority whose
duty it is
to process approvals
pursuant
to this Law fails to grant approval to an application which meets
the
requirements of this Law or the company registration
authority fails
to
register a company whose application meets the requirements
of this
Law,
the interested party may apply for reconsideration according to law
or
may bring an administrative suit.
Article
228
If a company which violates the provisions of this Law shall be
subject
to civil claims for compensation and to payment of fines and
penalties,
but has insufficient assets, it first assumes responsibility
for
payment of the civil claims.
【章名】 Chapter 11 Supplementary Articles
Article
229
Companies registered and established
prior to the effective date of
this
Law pursuant to laws, administrative
regulations, local regulations
and
pursuant to the "Standard Opinion on Limited Liability
Companies" or
the
"Standard Opinion on Companies Limited by Shares"
issued by the
relevant
responsible department of the State Council continue to exist.
Those
companies not completely satisfying the requirements of this Law
shall
meet the requirements of this Law within the specified
time limit.
Specific
methods for implementation of this Law are to be set out in
separate
regulations issued by the State Council.
Article
230
This Law comes into effect on July 1, 1994.