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
Chapter I 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 labor 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 as apply.
Chapter 2 Establishment and Organizational Structure of
A Limited Liability Company
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,
RMB500,000 yuan;
(2) for a company engaging principally in wholesaling commodities,
RMB500,000 yuan;
(3) for a company engaging principally in commercial retailing,
RMB300,000 yuan;
(4) for a company engaging principally in technology development,
consultancy and services, RMB100,000 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).
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