Company Law of the People's Republic of China
(The Company Law of the People’s Republic of China has been amended and adopted by the 18th meeting of the Standing Committee of the Tenth National People's Congress on October 27, 2005. This Law, as amended, is hereby promulgated and will come into force on January 1, 2006.)
Chapter One: General Provisions.
Chapter Two: Incorporation and Organizational Structure of a Limited Liability Company.
Section One Incorporation.
Section Two Organizational Structure.
Section Three Special Provisions on One-Person Limited Liability Companies.
Section Four Special Provisions on Wholly State-owned Companies.
Chapter Three: Share Transfer of a Limited Liability Company.
Chapter Four: Establishment and Organizational Structure of a Joint Stock Limited Company.
Section One Establishment
Section Two General Meeting of Shareholders.
Section Three Board of Directors and General Manager
Section Four Board of Supervisors. 27
Chapter Five Issue and Transfer of Shares of Joint Stock Limited Companies.
Section One Issue of Shares.
Section Two Assignment Of Shares.
Chapter Six: Qualifications and Obligations of Directors, Supervisors and Senior Officers.
Chapter Seven: Company Bonds.
Chapter Eight : Financial and Accounting Affairs of Company.
Chapter Nine:Merger and Division of Company, Increase and Decrease of Registered Capital
Chapter Ten: Dissolution and Liquidation of Company.
Chapter Eleven : Branch of Foreign Company.
Chapter Twelve: Legal Liabilities.
Chapter Thirteen : Supplementary Provisions.
Chapter One: General Provisions
Article 1
This Law is enacted in order to standardize the organization and activities of companies, to protect the legitimate rights and interests of companies, shareholders and creditors, to maintain the socio-economic order and to promote the development of the socialist market economy.(www.21lawyer.cn)
Article 2
The term 'company' referred to in this Law means a limited liability company or a joint stock limited company incorporated within the territory of the People's Republic of China in accordance with this Law.(www.21lawyer.cn)
Article 3
A company is an enterprise legal person that shall enjoy the right to the entire independent property of the legal person. A company shall be liable for its debts to the extent of all its assets. In the case of a limited liability company, shareholders shall assume liability towards the company to the extent of their respective capital contributions. In the case of a joint stock limited company, shareholders shall assume liability towards the company to the extent of their respective shareholdings.(www.21lawyer.cn)
Article 4
The shareholders of a company shall enjoy such rights as benefiting from assets of the company, making major decisions and selecting managerial personnel in accordance with the law.(www.21lawyer.cn)
Article 5
In conducting its business, a company must abide by laws and administrative rules and regulations, observe social morals and business ethics, conduct businesses in good faith, subject itself to the supervision of the government and the public and fulfill social responsibilities.(www.21lawyer.cn)
The company's lawful rights and interests are protected by law and shall not be infringed upon.(www.21lawyer.cn)
Article 6
A company shall apply to the company registration authority for establishment registration. Companies meeting the conditions set by this Law shall be registered as limited liability companies or joint stock limited companies; while companies failing to meet the conditions set by this Law shall not be registered as limited liability companies or joint stock limited companies.(www.21lawyer.cn)
Where laws, administrative rules and regulations provide that incorporation of companies must be subject to examination and approval, the procedures of examination and approval shall be completed according to law prior to the registration of such companies.(www.21lawyer.cn)
The public may inquire about registration items from the company registration authority. The company registration authority shall provide such inquiry service.(www.21lawyer.cn)
Article 7
The company registration authority shall grant registration and issue a business license to a company that is established in accordance with the law. The date of the issuance of the company business license shall be the date of the incorporation of the company.(www.21lawyer.cn)
The business license shall specify the name and domicile of the company, registered capital, paid-in capital, business scope, the name of the legal representative, etc. In the event of any change to the registration item of the business license, a company shall undergo alteration registration procedures with the company registration authority in accordance with the law, after which a new business license shall be issued to the company.(www.21lawyer.cn)
Article 8
A limited liability company established according with this Law must clearly indicate the words 'limited liability company' in its name.(www.21lawyer.cn)
A joint stock limited company established according to this Law must clearly indicate the words 'joint stock limited company' or ‘joint stock company’ in its name.(www.21lawyer.cn)
Article 9
If a limited liability company is to be converted into a joint stock limited company, it shall satisfy the requirements for a joint stock limited company stipulated by this Law. If a joint stock limited company is to be converted into a limited liability company, it shall satisfy the requirements for a limited liability company stipulated by this Law. Where a limited liability company is converted into a joint stock limited company or vice versa, the claims and debts of the original company shall be succeeded to by the company into which it is converted.(www.21lawyer.cn)
Article 10
A company's domicile shall be the place where its main administrative organization is located.(www.21lawyer.cn)
Article 11
Articles of association must be formulated in accordance with the law when a company is incorporated. A company's articles of association shall have binding force on the company, its shareholders, directors, supervisors and senior officers.(www.21lawyer.cn)
Article 12
A company's scope of business shall be defined in its articles of association and registered in accordance with the law. A company may change its scope of business by amending its articles of association but shall register such amendments with the company registration authority.(www.21lawyer.cn)
Items within the company's business scope that are subject to verifications under laws, administrative rules and regulations shall be approved in accordance with the law.(www.21lawyer.cn)
Article 13
The legal representative of a company may be represented by the chairman, executive director or manager of a company in compliance with its articles of association and registered in accordance with the law. In the event of any change of the legal representative of a company, such change shall be registered in accordance with the law.(www.21lawyer.cn)
Article 14
A company may establish branches. The company, in establishing its branch(es), shall conduct establishment registration procedures with the company registration authority and obtain the business license(s). The branches shall not possess the status of enterprise legal persons and whose civil liabilities shall be borne by the company.(www.21lawyer.cn)
A company may establish subsidiaries, which shall possess the status of enterprise legal persons, and shall independently bear civil liabilities in accordance with the law.(www.21lawyer.cn)
Article 15
A company may invest in other enterprises, however, unless otherwise stipulated by the law, the company making such investment shall not bear joint and several liability for the debts of the enterprise in which the company invests.(www.21lawyer.cn)
Article 16
Investments in other enterprises or provisions of security by a company shall be determined by its board of directors, shareholders meeting or general meeting of shareholders in compliance with its articles of association. Where the limit of the aggregate amount of investment or security extended by a company or, the amount of investment or security extended in each case is set out in the articles of association, the actual amount of investment or security shall not exceed such limit. Security provided by a company to its shareholders or actual controller shall be determined by the shareholders meeting or the general meeting of shareholders of the company.(www.21lawyer.cn)
The shareholders described in the preceding paragraph or the shareholders dominated by the actual controller described in the preceding paragraph shall not participate in the voting process on the matters described in the preceding paragraph. The vote on such matters shall be adopted by more than half of all the other shareholders attending the meeting.(www.21lawyer.cn)
Article 17
Companies must protect the lawful rights and interests of their staff and workers, sign labor contracts with them and cover them with social insurances in accordance with the law, and strengthen labor protection so as to achieve safety in production.(www.21lawyer.cn)
Companies shall apply various forms to strengthen professional education and on-the-job training of their staff and workers so as to improve their skills and capabilities.(www.21lawyer.cn)
Article 18
Company's staff and workers shall, in accordance with the Trade Union Law of the People’s Republic of China, organize a trade union to carry out the trade union activities and protect the lawful rights and interests of the staff and workers. The company shall provide its trade union with conditions necessary for carrying out its activities. The trade union may represent the staff and workers to enter into a collective contract with the company in respect of the remuneration, work hours, welfare, insurance, labor security, etc. in accordance with the law.(www.21lawyer.cn)
Companies shall, through the congress of the workers and staff members or other forms, practice democratic management in accordance with the provisions of the Constitution and relevant laws.(www.21lawyer.cn)
A company shall seek advices from its trade union when discussing and deciding upon important issues on the restructuring or operation of the company, or formulating important rules and regulations and shall, through the congress of the workers and staff members or other forms, seek advice and suggestions from its staff and workers.(www.21lawyer.cn)
Article 19
The organizations of the Communist Party of China may be established in companies and carry out their activities in accordance with the Constitution of the Communist Party of China. Companies shall provide the organizations of the Communist Party of China with conditions necessary for carrying out their activities.(www.21lawyer.cn)
Article 20
The shareholders of a company shall exercise their shareholders’ rights in compliance with laws, administrative rules and regulations as well as the articles of association of the company, shall not abuse their shareholders’ rights to injure the interests of the company or other shareholders, or take advantage of the company’s independent status or the limited liability of shareholders to injure the interests of the company’s creditors.(www.21lawyer.cn)
Where the abuse of shareholders’ rights causes any loss to the company or other shareholders, such abusive shareholder shall be liable for compensation in accordance with the law.(www.21lawyer.cn)
Where shareholders of a company take advantage of the company’s independent status or the limited liability of shareholders to disregard debts and seriously injures the interests of the company’s creditors, such shareholders shall bear joint and several liability for the debts of the company.(www.21lawyer.cn)
Article 21
The controlling shareholders, actual controllers, directors, supervisors or senior officers of a company shall not take advantage of their affiliations with others in an attempt to harm the company’s interests and, where any losses are incurred in violation hereof, shall be liable for compensation.(www.21lawyer.cn)
Article 22
Any resolution against laws and administrative rules and regulations that is adopted by the shareholders meeting, the general meeting of shareholders or the board of directors of a company shall be null and void.(www.21lawyer.cn)
Where the convening of shareholders meeting, general meeting of shareholders or board of directors of a company or the voting method violates laws, administrative rules and regulations or the articles of association of the company, or the resolution thereof contravenes the articles of association of the company, shareholders may, within sixty (60) days of the resolution, apply to the people’s court for revocation.(www.21lawyer.cn)
Where shareholders file suit in accordance with the provisions of the preceding paragraph, a people’s court may, at the company’s request, order the shareholders to provide relevant security.(www.21lawyer.cn)
Where the company has effected alteration registration according to the resolution of shareholders meeting, general meeting of shareholders or board of directors, the company shall, after the people’s court declares such resolution null and void or revokes the same, shall apply to the company registration authority for cancellation of its alteration registration.(www.21lawyer.cn)
Chapter Two: Incorporation and Organizational Structure of a Limited Liability Company
Section One Incorporation
Article 23
The following conditions shall be fulfilled for the incorporation of a limited liability company:
(1) The number of shareholders conforms to the statutory quorum;
(2) The capital contributions of the shareholders reach the statutory minimum amount of capital;
(3) The shareholders have jointly formulated the articles of association of the company;
(4) The company has a name and an organizational structure established in compliance with the requirements for a limited liability company; and
(5) The company has a domicile.(www.21lawyer.cn)
Article 24
A limited liability company shall be incorporated by not more than fifty (50) shareholders.(www.21lawyer.cn)
Article 25
The articles of association of a limited liability company shall specify the following particulars:
(1) the name and domicile of the company;
(2) the scope of business of the company;
(3) the registered capital of the company;
(4) the names or titles of the shareholders;
(5) the method, amount and time of capital contributions by the shareholders;
(6) the organization of the company, its method of creation, functions and powers and the
rules of procedure;
(7) the legal representative of the company;
(8) other items which the shareholders deem necessary to be specified. Shareholders shall sign and execute the article of association of the company.(www.21lawyer.cn)
Article 26
The registered capital of a limited liability company shall be the amount of the paid-up capital contributions of all its shareholders as registered with the company registration authority. The amount of the initial investment contributed by all shareholders shall not be lower than twenty percent (20%) of the registered capital or the minimum amount prescribed by the law, the remaining of which shall be fully paid up within two years of the establishment of the company. In the case of an investment company, the remaining amount of the registered capital may be paid up within five years of the establishment of the company. The minimum amount of the registered capital of a limited liability company shall be RMB 30, 000. Where laws and administrative regulations provide for more than the minimum amount, such provisions shall apply.(www.21lawyer.cn)
Article 27
Except for assets forbidden to be used as contribution by laws and administrative regulations, a shareholder may make its capital contributions to a company in currency or by contributing such non-currency property as material objects, intellectual property rights and land-use rights that can be evaluated in the form of currency and transferred in accordance with the law.(www.21lawyer.cn)
The non-currency property to be contributed as capital shall undergo an asset valuation and verification, and shall not be overvalued or undervalued. Where there are other provisions of laws and administrative regulations on the valuation and verification of non-currency property, such provisions shall apply.(www.21lawyer.cn)
The amount of the capital contributions in currency shall not be lower than thirty percent (30%) of the amount of the registered capital of the limited liability company.(www.21lawyer.cn)
Article 28
Each shareholder shall make in full the amount of the capital contribution subscribed for under the articles of association of the company. Where a shareholder makes its capital contribution in currency, it shall deposit the full amount of such capital contribution in currency in the bank account opened by the limited liability company to be established. Where a shareholder makes its capital contribution in the form of non-currency property, the property rights therein shall be transferred in accordance with legally prescribed procedures.(www.21lawyer.cn)
Shareholders failing to make full capital contributions they have subscribed for in accordance with the preceding paragraph shall, they shall, in addition to making the contributions in full, be liable for breach of contract towards the shareholders who have made full capital contributions.(www.21lawyer.cn)
Article 29
After all shareholders have made their capital contributions in full, such contributions must be verified by a statutory capital verification institution which shall issue capital verification certificates.(www.21lawyer.cn)
Article 30
After the initial capital contributions of the shareholders have been verified by a statutory capital verification institution, application shall be made to the company registration authority for registration of the incorporation of the company by a representative designated by all the shareholders or by an agent jointly entrusted by them, who shall submit such documents as an application for registration, the articles of association and the capital verification certificate.(www.21lawyer.cn)
Article 31
Where, after the incorporation of a limited liability company, it is discovered that the actual value of the non-currency property contributed as capital is notably less than the value stated in the articles of association, the shareholders that made such contributions shall make up the difference. Those who are shareholders at the time of the incorporation of the company shall bear joint and several liability therefor.(www.21lawyer.cn)
Article 32
After a limited liability company has been incorporated, it shall issue capital contribution certificates to its shareholders.(www.21lawyer.cn)
A capital contribution certificates shall specify the following items:
(1) the name of the company;
(2) the registration date of the company;
(3) the registered capital of the company;
(4) the name or title of the shareholder, the amount and date of its capital contribution;
(5) the serial number of the capital contribution certificate and the date of its verification and issuance. A capital contribution certificate shall bear the seal of the company on it.(www.21lawyer.cn)
Article 33
A limited liability company shall prepare a roster of its shareholders with the following items therein:
(1) the names or titles and domiciles of the shareholders;
(2) the amounts of capital contributions of the shareholders; and
(3) the serial numbers of the capital contribution certificates.(www.21lawyer.cn)
The shareholders recorded in the roster of shareholders may claim and exercise the right of shareholders on the strength of the roster of shareholders.(www.21lawyer.cn)
The company shall register the names of shareholders and the amount of capital contributions of the shareholders with the company registration authority and, in the event of any change thereof, apply for alteration registration. Unless duly registered, the above-mentioned items and any changes thereof shall not be a defense against a third party.(www.21lawyer.cn)
Article 34
A shareholder shall have the right to view the articles of association, the minutes of shareholders meetings, resolutions of board of directors and board of supervisors and the financial and accounting reports of the company.(www.21lawyer.cn)
Shareholders may view the accounting books and reports of the company. For this purpose, they shall submit a written request and state reasons. Where the company reasonably believes that shareholders have unjust purposes in viewing the accounting books and reports which may harm the legal rights and interests of the company, the company may refuse such request and shall, within fifteen (15) days of such request, reply in written form and state reasons. Given such, shareholders may apply to the people’s court for an order under which the company shall provide the shareholders with such references.(www.21lawyer.cn)
Article 35
Unless otherwise agreed upon by all shareholders, shareholders shall draw dividends in proportion to their actual capital contributions and, where a company increases capital, shall have priority in subscription for new shares in proportion to their actual contributions.(www.21lawyer.cn)
Article 36
Once a company is registered, its shareholders shall not withdraw their capital contributions.(www.21lawyer.cn)
Section Two Organizational Structure
Article 37
The shareholders meeting of a limited liability company shall be composed of all the shareholders. The shareholders meeting shall be the organ of power of the company and shall exercise its functions and powers in accordance with this Law.(www.21lawyer.cn)
Article 38
The shareholders meeting shall exercise the following functions and powers:
(1) to decide on the business policy and investment plan of the company;
(2) to elect and recall directors and supervisors whose posts are not taken by the representatives of the staff and workers, and to decide on matters concerning the remuneration of directors and supervisors;
(3) to examine and approve reports of the board of directors;
(4) to examine and approve reports of the supervisory board or supervisors;
(5) to examine and approve the annual financial budget plan and final accounts plan of the company;
(6) to examine and approve plans for profit distribution of the company and plans for making up losses;
(7) to adopt resolutions on the increase or reduction of the registered capital of the company;
(8) to adopt resolutions on the issuance of company bonds;
(9) to adopt resolutions on matters such as the merger, division, transformation, dissolution and liquidation of the company;
(10) to amend the articles of association of the company;
(11) to exercise other functions and powers provided for in the articles of association.(www.21lawyer.cn)
Where a unanimous consent on the matters described above is achieved in writing by shareholders, the company may directly make decisions that shall be signed and executed by all shareholders instead of convening a shareholders meeting.(www.21lawyer.cn)
Article 39
The first meeting of the shareholders of a company shall be convened and presided over by the shareholder who has made the biggest capital contribution to the company and shall exercise its functions and powers in accordance with this Law.(www.21lawyer.cn)
Article 40
Shareholders meetings shall be divided into regular meetings and interim meetings. Regular shareholders meetings shall be convened on time as stipulated by the articles of association of the company. Interim shareholders meetings may be convened upon proposal made by shareholders representing more than one-tenth of voting rights or by more than one-third of directors, or at the request of board of supervisors or the supervisors of a company absent a board of supervisors.(www.21lawyer.cn)
Article 41
Where a limited liability company has a board of directors, its shareholders meeting shall be convened by the board of directors and presided over by the chairman of the board. Where the chairman of the board is unable to or does not perform his function, the meeting shall be presided over by a vice-chairman. Where the vice-chairman is unable to or does not perform his function, the meeting shall be presided over by a director jointly nominated by more than half of the directors.(www.21lawyer.cn)
Where a limited liability company does not form a board of directors, the shareholders meetings shall be convened and presided over by the executive director.(www.21lawyer.cn)
Where the board of directors or executive director cannot or does not perform its function, the shareholders meeting shall be convened and presided over by the board of supervisors or the supervisor in the absence of a board of supervisors. Where the board of supervisors or supervisor cannot or does not perform its function, the meeting shall be convened and presided over by shareholders representing more than one-tenth of the voting rights.(www.21lawyer.cn)
Article 42
All shareholders shall be notified fifteen (15) days prior to the convening of a shareholders meeting, unless otherwise stipulated by the articles of association or agreed upon by all shareholders.(www.21lawyer.cn)
The shareholders meeting shall prepare minutes regarding the decisions on matters considered at the meeting, which shall be signed by the shareholders present at the meeting.(www.21lawyer.cn)
Article 43
Shareholders shall exercise their voting rights at the shareholders meeting in proportion to their capital contributions, unless otherwise stipulated by the articles of association.(www.21lawyer.cn)
Article 44
Except as provided for in this Law, the rules of deliberation and voting procedures of the shareholders meeting shall be stipulated by the articles of association of the company.(www.21lawyer.cn)
Resolutions of the shareholders meeting on the increase or reduction of the registered capital, the division, merger, dissolution, or transformation of the company must be adopted by shareholders of the company representing two-thirds or more of the voting rights.(www.21lawyer.cn)
Article 45
Except as otherwise provided for in Article 51 of this Law, a limited liability company shall have a board of directors, which shall be composed of three to thirteen members. The members of the board of directors of a limited liability company invested in and established by two or more State-owned enterprises, or by two or more other State-owned investment entities shall include representatives of the staff and workers of the company. The members of the board of directors of other limited liability companies may also include representatives of the staff and workers. Such representatives of the staff and workers shall be democratically elected by the workers and staff members of the company through the congresses or assemblies of the staff and workers or other forms. A board of directors shall have a chairman and may have a vice-chairman. The method for the creation of the chairman and vice-chairmen shall be stipulated in the articles of association of the company.(www.21lawyer.cn)
Article 46
The term of the directors shall be prescribed by the articles of association, provided that each term may not exceed three (3) years. A director may continue to serve his post if he is re-elected upon the expiration of his term. Where a new elect is not yet available upon expiration of a director’s term, or the number of the directors on the board is less than the quorum due to the resignation of a director within his term, such director, before the new elect takes his office, shall continue the performance of his duties in accordance with laws, administrative regulations and the articles or association.(www.21lawyer.cn)
Article 47
The board of directors is accountable to the shareholders meeting and shall exercise the following powers:
(1) being responsible for convening shareholders meetings and presenting reports thereto;
(2) implementing resolutions adopted by the shareholders meeting;
(3) determining the company's operational plans and investment programs;
(4) preparing annual financial budget plans and final accounting plans of the company;
(5) preparing profit distribution plans and plans to cover company losses;
(6) preparing plans for increasing or reducing registered capital of the company or issuing company bonds;
(7) drafting plans for merger, division, change of corporate form or dissolution of the company;
(8) determining the structure of the company's internal management;
(9) appointing or removing the general manager of the company, appointing or removing, upon the general manager's recommendation, deputy managers of the company and the officer in charge of finance, and determining the remuneration for those officers;
(10) formulating the basic management scheme of the company;
(11) exercising other powers stipulated by the articles of association.(www.21lawyer.cn)
Article 48
A meeting of the board of directors shall be convened and presided over by the chairman. Where the chairman is unable to or does not perform his duties, the meeting shall be convened and presided over by the vice-chairman. Where the vice-chairman is unable to or does not perform his duties, the meeting shall be convened and presided over by a director jointly nominated by more than half of the directors.(www.21lawyer.cn)
Article 49
Except as otherwise provided for in this Law, the rules of deliberation and voting procedures at the meeting of board of directors shall be stipulated by the articles of association of the company.(www.21lawyer.cn)
The board shall prepare minutes relating to the decisions on matters considered at the meeting, which shall be signed by the directors present at the meeting.(www.21lawyer.cn)
In the voting process, one director shall represent one vote.(www.21lawyer.cn)
Article 50
A limited liability company shall have a general manager, to be appointed or removed by the board of directors. The general manager is accountable to the board and shall exercise the following powers:
(1) management of the company's production and operation, and organizing the implementation of board resolutions;
(2) organizing the implementation of annual operating plans and investment programs of the company;
(3) preparing the plan for the structure of the company's internal management;
(4) preparing the basic management scheme of the company;
(5) formulating detailed company rules;
(6) recommending the appointment or removal of a deputy manager and the officer in charge of finance;
(7) appointing and removing officers of the company other than those to be appointed or removed by the board of directors;
(8) exercising other powers delegated by the board of directors.(www.21lawyer.cn)
Where the articles of association stipulate otherwise in respect of the manager’s powers, such stipulations shall prevail. The general manager shall be present at board meetings.(www.21lawyer.cn)
Article 51
A small-scaled limited liability company or a limited liability company with only a few shareholders may have an executive director without establishing a board of directors. The executive director may serve concurrently as the general manager of the company.(www.21lawyer.cn)
The powers of the executive director shall be prescribed in the articles of association.(www.21lawyer.cn)
Article 52
A limited liability company shall have a board of supervisors composed of no less than three (3) members. A small-scaled limited liability company or a limited liability company with only a few shareholders may have one or two supervisors without establishing a board of supervisors. The board of supervisors shall be composed of shareholders' representatives and representatives of the staff and workers of the company. The number of the staff and workers’ representatives shall not be lower than one third of all the supervisors, the specific percentage of which shall be determined in the articles of association. The representatives of the staff and workers on the board of supervisors shall be democratically elected by the staff and workers through the congresses or assemblies of the workers and staff members or other forms. The board of supervisors shall have one chairman elected by more than half of all the supervisors. The meetings of the board of supervisors shall be convened and presided over by the chairman of the board. In the event that the chairman is unable to or does not perform his duties, the meeting shall be convened and presided over by a supervisor jointly nominated by more than half of all the supervisors.(www.21lawyer.cn)
A director and a senior officer of the company shall not serve concurrently as a supervisor.(www.21lawyer.cn)
Article 53
Each term of a supervisor shall be three (3) years, and a supervisor may continue to serve his post upon expiration of his term if he is re-elected.(www.21lawyer.cn)
Where a new elect is not yet available upon expiration of a supervisor’s term, or the number of the supervisors on the board is less than the quorum due to the resignation of a supervisor within his term, such supervisor, before the new elect takes his office, shall continue the performance of his duties in accordance with laws, administrative regulations and the articles or association.(www.21lawyer.cn)
Article 54
The board of supervisors or the supervisor, as the case may be, shall exercise the following authorities:
(1) reviewing the financial affairs of the company;
(2) monitoring the acts of the directors or the senior officers in the course of performance of their duties, and propose recall of the director or senior officer in violation of laws, administrative regulations or the articles of association;
(3) requiring the directors or the senior officers to make rectification when any act thereof causes harm to company interests;
(4) proposing for interim meetings of shareholders meetings, convene and preside over the meeting when the board of directors does not perform its function to convene and preside over a shareholders meeting as set forth in this Law;
(5) submitting proposals at the shareholders meeting;
(6) filing suit against the directors or senior officers of the company in accordance with the provisions of Article 152 in this Law;
(7) exercising other authorities prescribed by the articles of association.(www.21lawyer.cn)
Article 55
The supervisors may attend board meetings, present inquiry or proposal with regards to the issues to be determined by the board of directors.(www.21lawyer.cn)
The board of supervisors or the supervisors of a company that does not have the board may conduct investigations upon discovery of any unusual operations of the company and, where necessary, engage an accounting firm to assist in such investigations at the expense of the company.(www.21lawyer.cn)
Article 56
The board of supervisors shall have a meeting at least once a year. An interim meeting may be convened at the request of supervisors.(www.21lawyer.cn)
Except as provided for in this Law, the rules of deliberation and voting procedures at the meeting of board of directors shall be stipulated by the articles of association of the company.(www.21lawyer.cn)
The resolution of the board of supervisors shall be adopted by more than half of all the supervisors. The board shall prepare minutes relating to the decisions on matters considered at the meeting, which shall be signed by the supervisors present at the meeting.(www.21lawyer.cn)
Article 57
Reasonable expenses necessary for the board of supervisors or supervisors of a company that does not have the board to perform their duties shall be borne by the company.(www.21lawyer.cn)
Section Three Special Provisions on One-Person Limited Liability Companies
Article 58
The provisions under this section shall govern the formation and the organizational structure of one-person limited liability companies. Where there are matters that are not covered by this section, the provisions of the first two sections under Chapter One shall apply.(www.21lawyer.cn)
A one-person limited liability company referred to herein means a limited liability company with a sole shareholder of either a natural person or a legal person.(www.21lawyer.cn)
Article 59
The minimum amount of the registered capital of a one-person limited liability company shall be RMB100, 000 which must be fully paid at the time of incorporation.(www.21lawyer.cn)
Natural persons are permitted to set up only one such company and that company is not allowed to invest in other one-person companies.(www.21lawyer.cn)
Article 60
In applying for registration of a one-person limited liability company, the proposed company shall indicate whether the investor is a natural person or a legal person, and specify it in its business license.(www.21lawyer.cn)
Article 61
The articles of association of a one-person limited liability company shall be formulated by its shareholder.(www.21lawyer.cn)
Article 62
A one-person limited liability company does not have shareholders meetings. The shareholder shall make the decision set forth in Article 38 (1) in written form, sign and maintain it at the company’s premises.(www.21lawyer.cn)
Article 63
A one-person limited liability company shall prepare its financial and accounting reports at the end of each fiscal year, which shall be reviewed by an accounting firm.(www.21lawyer.cn)
Article 64
Where the shareholder of a one-person limited liability company cannot prove that the company’s assets is independent from his own property, such shareholder shall bear joint and several liability for the debts of the company.(www.21lawyer.cn)
Section Four Special Provisions on Wholly State-owned Companies
Article 65
The provisions under this section shall govern the formation and the organizational structure of wholly state-owned companies. Where there are matters that are not covered by this section, the provisions of the first two sections under Chapter One shall apply.(www.21lawyer.cn)
A wholly state-owned company referred to herein means a limited liability company established through the State’s sole investment by the state-owned assets supervision and administration authority entrusted by the State Council or local people’s government to perform the capital contribution functions.(www.21lawyer.cn)
Article 66
The articles of association of a wholly state-owned company may be formulated by the state-owned assets supervision and administration authority or may be prepared by its board of directors and submitted to the state-owned assets supervision and administration authority for approval.(www.21lawyer.cn)
Article 67
A wholly state-owned company does not have shareholders meetings, and the state-owned assets supervision and administration authority shall exercise the authorities of the shareholders meeting. The state-owned assets supervision and administration authority may authorize the board of directors to exercise part of the authorities of the shareholders meeting to decide on major issues of the company, provided that matters such as merger, division or dissolution of the company, capital increase or reduction by the company, and issue of company bonds must be decided by the state-owned assets supervision and administration authority. The merger, division, dissolution or application for bankruptcy of key wholly state-owned companies shall, after examination and verification by the state-owned assets supervision and administration authority, be submitted to the people’s government at the same level for approval. The key wholly state-owned companies referred to herein shall be defined in accordance with the provisions of the State Council.(www.21lawyer.cn)
Article 68
A wholly state-owned company shall have a board of directors, which shall exercise its powers and perform its duties in accordance with the provisions of Article 47 and Article 67 hereof. The term of the directors shall not exceed three (3) years. There shall be representatives of the staff and workers on the board. The members of the board shall be designated by the state-owned assets supervision and administration authority. However, representatives of the staff and workers on the board shall be democratically elected through the congresses of the workers and staff members. The board of directors shall have a chairman and may have a vice-chairman. The chairman and vice-chairman shall be appointed by the state-owned assets supervision and administration authority from among the board members.(www.21lawyer.cn)
Article 69
A wholly state-owned company shall have a general manager, to be appointed or removed by the board of directors. The general manager shall exercise his powers and perform his duties in accordance with the provisions of Article 50 hereof. With the approval of the state-owned assets supervision and administration authority, a board member may serve concurrently as the general manager.(www.21lawyer.cn)
Article 70
Absent approval by the state-owned assets supervision and administration authority, the chairman, vice-chairman, a director, or a senior officer may not serve concurrently for any other limited liability company, joint stock limited company or any other business organization.(www.21lawyer.cn)
Article 71
The board of supervisors of a wholly state-owned company shall have no less than five (5) members, and the number of the staff and worker’s representatives on the board shall be no less than one third of the board members, the specific percentage of which shall be determined in the articles of association.(www.21lawyer.cn)
The supervisors shall be designated by the state-owned assets supervision and administration authority, however, the staff and worker’s representatives on the board shall be democratically elected through the congresses of workers and staff members. The chairman of the board of supervisors shall be appointed by the state-owned assets supervision and administration authority from among the board members. The board of supervisors shall exercise the powers prescribed in Article 54 (1), (2) and (3) hereof and other powers stipulated by the State Council.(www.21lawyer.cn)
Chapter Three: Share Transfer of a Limited Liability Company
Article 72
Shareholders of a limited liability company may transfer in whole or part their respective shares amongst themselves.(www.21lawyer.cn)
Where a shareholder transfers his shares to a person other than a shareholder, the consent of more than half of all shareholders shall be required. The shareholder who intends to transfer his shares shall notify the other shareholders in writing and seek their approval. Failure by those shareholders to make any response within thirty (30) days of the receipt of the written notice shall be deemed to be their consent to such transfer. Where more than half of the other shareholders do not consent to the transfer, such shareholders shall purchase the shares to be transferred. Failure by those shareholders to make such purchase shall be deemed to be their consent to such transfer. Where the shareholders consent to the share transfer, other shareholders shall have the preemptive right to purchase the shares to be transferred on equal terms and conditions. Two or more of the shareholders exercising the preemptive right of purchase shall negotiate and determine the proportion of the shares to be purchased respectively. Failing such, the shares shall be purchased in proportion to their capital contributions at the time of such transfer.(www.21lawyer.cn)
Where the articles of association stipulate otherwise, such stipulations shall apply.(www.21lawyer.cn)
Article 73
The people’s court, where the shares held by a shareholder is transferred through enforcement procedures prescribed by law, shall inform the company and all of its shareholders. Other shareholders shall have the preemptive right to purchase such shares on equal terms and conditions. Failure by those shareholders to exercise the right of first refusal within twenty (20) days of the date of court notice shall be deemed to be a waiver of the preemptive right of purchase.(www.21lawyer.cn)
Article 74
The company, after the share transfer is completed pursuant to Article 72 and Article 73 hereof, shall cancel the capital contribution certificate of the original shareholder, issue new certificate to the new shareholder and, amend the record of the shareholder and his capital contribution in the articles of association and the roster of shareholders. Such amendments to the articles of association need not be voted for by shareholders meetings.(www.21lawyer.cn)
Article 75
The shareholder voting against the decision of the shareholders meeting in respect of any one of the following circumstances may request the company to purchase his shares at reasonable prices:
(1) the company will not distribute dividends for five consecutive years though the company has made profit over these years and has met the distribution requirements prescribed in this Law;
(2) in the event of merger, division or assignment of the company’s major assets;
(3) in the event of expiry of the company or any other causes for dissolution prescribed in the articles of association, the shareholders meeting has adopted a resolution to amend the articles of association to renew the company.(www.21lawyer.cn)
Where the shareholder cannot reach a share purchase agreement with the company within sixty (60) days of the date of the resolution, the shareholder may file suit to the people’s court within ninety (90) days of the date of the resolution.(www.21lawyer.cn)
Article 76
Where a natural person shareholder deceases, his shareholder’s status may be inherited by his legal heir unless otherwise stipulated in the articles of association.(www.21lawyer.cn)
Chapter Four: Establishment and Organizational Structure of a Joint Stock Limited Company
Section One Establishment
Article 77
The establishment of a joint stock limited company is subject to the following conditions:
(1) The number of sponsors meets legal requirement;
(2) The amount of capital stocks subscribed for by the sponsors and publicly placed reaches the legally-prescribed minimum capital level;
(3) The issue of its shares and the preparation for its establishment comply with the law;
(4) The sponsors prepare the articles of association, and such articles of association of a company established by public share offer shall be adopted by the establishment meeting;
(5) There is a company name, and the organs complying with the requirements for a joint stock limited company are established;
(6) The company has a domicile.(www.21lawyer.cn)
Article 78
A joint stock limited company may be established either by sponsorship or public share offer.(www.21lawyer.cn)
Establishment by sponsorship means establishment of the company through subscription by the sponsors for all the shares to be issued by the company.(www.21lawyer.cn)
Establishment by public share offer means establishment of the company through subscription by sponsors for part of the shares to be issued by the company, and public or targeted placement of the remaining shares.(www.21lawyer.cn)
Article 79
In order to establish a joint stock limited company, there shall be not fewer than two but no more than two hundred sponsors, half of whom shall be domiciled in China.(www.21lawyer.cn)
Article 80
Sponsors of a joint stock limited company shall be responsible for the preparation of the establishment of the company and enter into a sponsor’s agreement to clarify the rights and obligations during the incorporation of the company.(www.21lawyer.cn)
Article 81
The registered capital of a joint stock limited company established by public share offer shall be the total amount of share capital subscribed for by all the sponsors and registered with the company registration authority. The initial capital contribution of all the sponsors shall not be less than twenty percent (20%) of the registered capital, the remaining of which shall be paid in full within two (2) years of the establishment of the company. In the event of an investment company, the remaining part of the registered capital may be fully paid within five (5) years of the establishment of the company. Prior to a full contribution to the registered capital, sponsors shall not offer the shares to others.(www.21lawyer.cn)
The registered capital of a joint stock limited company established by sponsorship shall be the actual total amount of share capital that is paid up and registered with the company registration authority. The minimum amount of the registered capital of a joint stock limited company shall be RMB 5,000,000. Where there is a higher level of the minimum amount stipulated by laws and administrative regulations, such stipulations shall apply.(www.21lawyer.cn)
Article 82
The articles of association of a joint stock limited company shall set forth the following:
(1) its name and domicile;
(2) its business scope;
(3) the method for its establishment;
(4) the total number of shares of the company, the value of each share, and the registered capital of the company;
(5) the names of the sponsors, the number of shares they have subscribed for, the form and time of capital contribution;
(6) the composition of the board of directors, its authorities, term, and rules of conducting business;
(7) its legal representative;
(8) the composition of the board of supervisors, its authorities, term, and rules of conducting business;
(9) the method for company profit distribution;
(10) the causes for its dissolution and the method for its liquidation;
(11) the method for giving notice and making public announcement;
(12) other matters which the general meeting of shareholders deems necessary to provide for.(www.21lawyer.cn)
Article 83
The provisions of Article 27 herein shall apply to the form of sponsor’s capital contribution.(www.21lawyer.cn)
Article 84
In the event of establishing a joint stock limited company by sponsorship, the sponsors shall fully subscribe in writing for the shares to be issued as prescribed in the articles of association. In the event of a lump sum payment, the investment shall be fully paid up in due time. In the event of payment in installments, the initial contribution shall be paid up in due time. In the event of contributions in form of non-currency property, the property rights therein shall be transferred in accordance with legally prescribed procedures.(www.21lawyer.cn)
Sponsors failing to make the capital contribution pursuant to the preceding paragraph shall bear the breach liability in accordance with the sponsor’s agreement.(www.21lawyer.cn)
Upon the initial contribution of the share capital which the sponsors have subscribed for, they shall elect members to the board of directors and the board of supervisors, and the board of directors shall apply for establishment registration by submitting the articles of association, the capital verification certificate issued by a legally established capital inspection organization and other documents required by laws and administrative regulations to the company registration authority.(www.21lawyer.cn)
Article 85
In the case of establishing a joint stock limited company by public share offer, the shares subscribed for by the sponsors shall be not less than thirty five percent (35%) of the total shares of the company. Where laws and administrative regulations stipulate otherwise, such stipulations shall apply.(www.21lawyer.cn)
Article 86
In a public share offer, the sponsors shall make the prospectus available to the public and prepare the share subscription form. The share subscription form shall contain the items listed in Article 87, and a subscriber shall fill in the following: the number of shares subscribed for, the amount of share proceeds, and his or her domicile, and shall sign or impress his chop on the form. A subscriber shall pay the share proceeds according to the number of shares he has subscribed for.(www.21lawyer.cn)
Article 87
The prospectus shall be accompanied with the articles of association prepared by the sponsors, and shall set forth the following:
(1) the number of shares subscribed for by the sponsors;
(2) the par value and issuing price of each share;
(3) the total number of bearer share certificates issued;
(4) the purpose of the fund raised;
(5) the rights and obligations of the subscribers;
(6) the commencing time and expiration time of the share offer, and a statement that in the event the shares have not be placed in full upon the expiration time, the subscribers may revoke their share subscriptions.(www.21lawyer.cn)
Article 88
The sponsors' share offer to the public shall be underwritten by a securities underwriter established in accordance with the law, and an underwriting agreement shall be executed.(www.21lawyer.cn)
Article 89
When conducting public share offer, the sponsors shall execute an agreement with a bank for deposit of share proceeds.(www.21lawyer.cn)
The depository bank shall collect and hold the share proceeds in accordance with the agreement, and issue receipts to subscribers who have paid their share proceeds, and is obligated to provide to the relevant authority a certificate for receipt of share proceeds.(www.21lawyer.cn)
Article 90
After the proceeds from issue of the shares are paid in full, the share capital shall be verified by a legally-prescribed capital verification institution and a certificate shall be issued thereby. Within thirty (30) days, the sponsors shall convene and preside over the establishment meeting, which is composed of the subscribers.(www.21lawyer.cn)
If the issued shares are not fully placed upon expiration of the time limit prescribed in the prospectus, or the sponsors fail to hold the establishment meeting within thirty (30) days of full payment of the proceeds from issue of the shares, the subscribers may demand that the sponsors return the share proceeds.(www.21lawyer.cn)
Article 91
The sponsors shall notify each subscriber of the date of the establishment meeting or make a public announcement for such meeting fifteen (15) days in advance. The establishment meeting may not be held unless attended by subscribers representing at least half of the shares.(www.21lawyer.cn)
The establishment meeting shall exercise the following authorities:
(1) considering the report on pre-establishment activities prepared by the sponsors;
(2) adopting the articles of association;
(3) electing members of the board of directors;
(4) electing members of the board of supervisors;
(5) verifying expenses incurred for the establishment of the company;
(6) verifying the value of the assets contributed by the sponsors in lieu of share proceeds;
(7) where an event of force majeure or any material change in operating condition affecting the company's establishment has occurred, a resolution not to establish the company may be adopted.(www.21lawyer.cn)
A resolution adopted at the establishment meeting on any of the matters mentioned in the preceding paragraph requires affirmative votes by subscribers present at the meeting representing more than half of the voting rights.(www.21lawyer.cn)
Article 92
Upon payment of the share proceeds or delivery of the items as contribution of share capital in lieu of share proceeds, the sponsors and subscribers may not withdraw their share capital, except where the shares issued are not fully placed in time, the sponsors fail to hold the establishment meeting in time, or the establishment meeting adopts a resolution not to establish the company.(www.21lawyer.cn)
Article 93
Within thirty (30) days of the completion of the establishment meeting, the board of directors shall apply for establishment registration by submitting to the company registration authority the following:
(1) the company registration application;
(2) the minutes of the establishment meeting;
(3) the articles of association;
(4) the capital verification certificate;
(5) the engagement letters and identity certificates of the legal representative, directors and supervisors;
(6) the legal person’s qualification certificate of sponsors or identity certificate of natural persons;
(7) the company’s certificate of domicile.(www.21lawyer.cn)
The verification documents issued by the securities regulatory department under the State Council shall be submitted to the company registration authority in the event of public share offer by a joint stock limited company established by public share offer.(www.21lawyer.cn)
Article 94
Sponsors failing to contribute in full after the establishment of a joint stock limited company shall make up the rest of the contribution. Other sponsors shall bear joint and several liability for such contribution.(www.21lawyer.cn)
Where the actual value of the non-currency property contribution, after the establishment of a joint stock limited company, is found to be obviously lower than the amount prescribed in the articles of association of the company, the sponsor making such contribution shall make up the balance and other sponsors shall bear joint and several liability therefor.(www.21lawyer.cn)
Article 95
The sponsors of a joint stock limited company shall bear liabilities as follows:
(1) in the event of failure to establish the company, being jointly and severally liable for the debts and expenses incurred as a result of the pre-establishment activities;
(2) in the event of failure to establish the company, being jointly and severally liable for the return of share proceeds paid by the subscribers, together with the interest thereon as if they have been deposited in a bank for a like period.(www.21lawyer.cn)
(3) if the company's interest is harmed in the course of its establishment due to the negligence of the sponsors, being liable to the company for damages.(www.21lawyer.cn)
Article 96
Where a limited liability company is converted to a joint stock limited company, the total value of the converted shares shall not be higher than the company's net assets value. Public share offering by a joint stock limited company converted from a limited liability company for the purpose of increasing capital shall be carried out in accordance with the law.(www.21lawyer.cn)
Article 97
A joint stock limited company shall maintain its articles of association, the record of shareholders, the counterfoils of bonds, the minutes of the general meeting of shareholders, the board of directors and the board of supervisors as well as its financial and accounting reports at the company's premises.(www.21lawyer.cn)
Article 98
A shareholder is entitled to inspect the articles of association, the record of shareholders, the counterfoils of bonds, the minutes of the general meeting of shareholders, the board of directors and the board of supervisors as well as its financial and accounting reports and is entitled to make a proposal or inquiry concerning the company's operation.(www.21lawyer.cn)
Section Two General Meeting of Shareholders
Article 99
The general meeting of shareholders of a joint stock limited company is composed of all shareholders. The general meeting of shareholders is the company's organ of authority, and shall exercise its authorities in accordance herewith.(www.21lawyer.cn)
Article 100
The provisions set forth in Article 38(2) with regards to the functions of the shareholders meeting of a limited liability company shall apply to the general meeting of shareholders of a joint stock limited company.(www.21lawyer.cn)
Article 101
The general meeting of shareholders shall hold an annual meeting each year. An interim general meeting of the shareholders shall be held within two (2) months upon the occurrence of any of the following circumstances:
(1) The number of directors falls below the number prescribed herein or below two-thirds of the number prescribed in the articles of association;
(2) The company's losses which are not covered have reached one-third of the total amount of the share capital;
(3) Shareholders holding at least ten percent (10%) of the company's stocks make a request;
(4) The board of directors deems necessary;
(5) The board of supervisors proposes for such a meeting;
(6) Other circumstances provided for in the articles of association.(www.21lawyer.cn)
Article 102
A general meeting of shareholders shall be convened by the board of directors and shall be presided over by the chairman of the board. Where the chairman is unable to or does not perform his duties, the meeting shall be presided over by the vice-chairman. Where the vice chairman is unable to or does not perform his duties, the meeting shall be presided over by a director jointly appointed by a majority of all the directors.(www.21lawyer.cn)
Where the board of directors is unable to or does not perform the duties to convene a general meeting of shareholders, the meeting shall be called and presided over by the board of supervisors in a timely manner. Where the board of supervisors is unable to or does not perform the duties to call and preside over a general meeting of shareholders, the shareholders individually or jointly holding ten percent (10%) of the shares of the company for consecutive ninety (90) days or more may, at its own discretion, convene and preside over a general meeting of shareholders.(www.21lawyer.cn)
Article 103
In order to hold a general meeting of shareholders, notice concerning the time, venue and matters to be considered at the meeting shall be given to each shareholder twenty days in advance. In the event of an interim meeting of shareholders, the notice may be given fifteen days in advance. Where the company has issued bearer share certificates, a public notice concerning the time, venue and matters to be considered at the meeting shall be made thirty days prior to the meeting.(www.21lawyer.cn)
Shareholders individually or jointly holding three percent (3%) of the shares of the company may, ten days prior to the general meeting of shareholders, submit a temporary written proposal to the board of directors. The board of directors shall, within two days after receipt of the proposal, inform other shareholders and submit the proposal to the general meeting of shareholders for deliberation. The items contained in the proposal shall fall within the scope of powers exercised by the general meeting of shareholders and clear topic and specific matters to be considered shall be included. The general meeting of shareholders shall not decide on any matters that are not specified in aforesaid notices. Where the holders of bearer shares attend the general meeting of shareholders, they shall deposit the shares with the company five (5) days earlier before the date of the meeting up till the closing date of the meeting.(www.21lawyer.cn)
Article 104
When a shareholder attends the general meeting of shareholders, each share he holds is entitled to one vote. However, the share held by the company itself shall not have the voting right. A resolution adopted by the general meeting of shareholders requires affirmative votes by a majority of the votes held by shareholders attending the meeting. The resolution with regards to amendment to the articles of association, increase or decrease of registered capital, merger, division or dissolution of the company or change of the form of the company requires affirmative votes by at least two-thirds of the votes held by shareholders attending the meeting.(www.21lawyer.cn)
Article 105
Where it is stipulated in this Law or the articles of association that the assignment or receipt of the company’s major assets or provision of security shall be determined at the general meeting of shareholders, the board of directors shall, in a timely manner, convene the general meeting of shareholders that will vote on aforesaid matters.(www.21lawyer.cn)
Article 106
The general meeting of shareholders shall adopt accumulative voting system when voting on the election of directors or supervisors in accordance with the articles of association or the resolution adopted by the shareholders’ general meeting. The accumulative voting system referred to herein means that in the election of the directors or supervisors at the general meeting, the number of votes attached to each share held by a
shareholder shall be equal to the number of candidates. A shareholder can multiply his voting shares by the number of candidates and vote them all for one person for director or supervisor.(www.21lawyer.cn)
Article 107
A shareholder may attend a general meeting of shareholders by proxy, the proxy holder shall present the proxy statement issued by the shareholder to the company, and shall exercise his voting rights to the extent authorized by the proxy.(www.21lawyer.cn)
Article 108
The general meeting of shareholders shall prepare minutes regarding the decisions on matters considered at the meeting, which shall be signed by the chairman of the meeting and directors attending the meeting. The minutes shall be maintained together with the record containing signatures of the shareholders attending the meeting and the proxy statements.(www.21lawyer.cn)
Section Three Board of Directors and General Manager
Article 109
A joint stock limited company shall have a board of directors, which shall be composed of not fewer than five but not more than nineteen members.(www.21lawyer.cn)
The members of the board of directors shall include representatives of the staff and workers of the company. Such representatives of the staff and workers shall be democratically elected by the staff and workers of the company through the congresses or assemblies of the workers and staff members or other forms.(www.21lawyer.cn)
The provisions of Article 46 on the term of directors of a limited liability company shall apply to that of the directors of a joint stock limited company.(www.21lawyer.cn)
The provisions of Article 47 on the functions and powers of the board of directors of a limited liability company shall apply to that of the board of directors of a joint stock limited company.(www.21lawyer.cn)
Article 110
The board of directors shall have a chairman, and may have one or two vice-chairmen. The chairman and vice-chairman shall be elected by the board of directors through affirmative votes by more than half of all the directors.(www.21lawyer.cn)
The chairman shall convene and preside over meetings of the board of directors and supervise the implementation of resolutions adopted by the board of directors. The vice-chairman shall assist the chairman in his work. Where the chairman is unable to or does not exercise his authorities, the vice-chairman appointed by the chairman shall exercise such authorities in his capacity. Where the vice chairman is unable to or does not exercise his authorities, a director jointly nominated by more than half of all the directors shall exercise such authorities.(www.21lawyer.cn)
Article 111
The board of directors shall hold meetings at least twice a year, and notice shall be given to all directors and supervisors ten days in advance. Shareholders representing one tenth of voting rights, or one third or more of all the directors or supervisors may propose to have an interim meeting of the board. The Chairman, within ten days after receipt of such proposal, may convene and preside over a meeting of the board. Where an interim meeting of the board of directors is to be held, the method and time limit for notification for convening the interim meeting may be prescribed separately.(www.21lawyer.cn)
Article 112
A meeting of the board of directors may not be held unless attended by more than half of the directors. A resolution adopted by the board of directors requires affirmative votes by more than half of all the directors.(www.21lawyer.cn)
In the voting procedures, one director shall represent one vote.(www.21lawyer.cn)
Article 113
A meeting of the board of directors shall be attended by each director in person. Where a director is unable to attend the meeting for cause, he may issue a written proxy entrusting another director to attend on his behalf, and the proxy shall set forth the scope of authorization.(www.21lawyer.cn)
The board of directors shall prepare minutes regarding the decisions on matters considered at the meeting, which shall be signed by the directors attending the meeting and the person preparing the minutes.(www.21lawyer.cn)
The directors shall be responsible for resolutions adopted by the board of directors. Where a resolution of the board violates any national statutes, administrative regulations or the articles of association, and causes the company to incur serious loss, those directors participating in the adoption of the resolution are liable to the company for damages. Provided, however, if a director is proven to have dissented at the vote adopting such resolution and such dissension was noted in the minutes, then the director may be exempt from liability.(www.21lawyer.cn)
Article 114
A joint stock limited company shall have a general manager, to be appointed or removed by the board.(www.21lawyer.cn)
The provisions of Article 50 on the functions and powers of the manager of a limited liability company shall apply to the manager of a joint stock limited company.(www.21lawyer.cn)
Article 115
The board of directors of the company may decide that a board member is to serve concurrently as the general manager.(www.21lawyer.cn)
Article 116
A joint stock limited company must not directly, or through its affiliate companies, borrow money from its directors, supervisors or senior officers.(www.21lawyer.cn)
Article 117
A joint stock limited company shall disclose on regular basis the remuneration of its directors, supervisors and senior officers.(www.21lawyer.cn)
Section Four Board of Supervisors
Article 118
A joint stock limited company shall have a board of supervisors, which shall be composed of not fewer than three (3) members.(www.21lawyer.cn)
The board of supervisors shall be composed of the shareholders' representatives and representatives of the workers of the company. The number of the workers’ representatives shall not be lower than one third of all the supervisors, the specific percentage of which shall be determined in the articles of association. The workers' representatives on the board of supervisors shall be democratically elected by the workers of the company through the congresses or assemblies of the workers and staff members or other forms. The board of supervisors shall have one chairman that shall be elected by more than half of all the supervisors. The meetings of the board of supervisors shall be convened and presided over by the chairman of the board. In the event that the chairman is unable to or does not perform his duties, the meeting shall be convened and presided over by a supervisor jointly nominated by more than half of all the supervisors.(www.21lawyer.cn)
A director and a senior officer may not serve concurrently as a supervisor.(www.21lawyer.cn)
The provisions of Article 52 on the term of the supervisor of a limited liability company shall apply to the supervisor of a joint stock limited company.(www.21lawyer.cn)
Article 119
The provisions of Article 54 a