Company Law of the People（新公司法英文版）

Company Law of the People's Republic of China Company Law of the People's Republic of China 【Document No.】Order of the President of the People's Republic of China No.42 【Promulgation Date】2005-10-27 【Effective Date】2006-01-01 【Repealed Date】 【Promulgation Body】Standing Committee of the NPC 【Status】Effective 【Status Description】 The revised Company Law of the People's Republic of China was adopted at the 1 8th Meeting of the Standing Committee of the Tenth National People's Congress of the People's Republic of China on October 27, 2005, is hereby promulgated a nd shall come into effect as of January 1, 2006. The President of the People's Republic of China: Hu Jintao October 27, 2005 (Adopted at the fifth meeting of the standing committee of the eighth National People's Congress on December 29, 1993, revised for the first time in accorda nce with the Decision on Amending the Company Law of the People's Republic of China adopted at the 13th meeting of the Standing Committee of the 9th Nationa l People's Congress on December 25, 1999; revised for the second time in accor dance with the Decision on Amending the Company Law of the People's Republic o f China adopted at the 11th Meeting of the Standing Committee of the tenth Nat ional People's Congress on August 28, 2004; and revised for the third time in accordance with the Decision on Amending the Company Law of the People's Repub lic of China adopted at the 18th Meeting of the Standing Committee of the tent h National People's Congress on October 27, 2005 ) Chapter 1 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, share holders and creditors, to maintain socio-economic order and to promote the dev elopment of the socialist market economy. Article 2 The Term "company" referred to in this Law shall mean a limited liability comp any or a joint stock limited company incorporated within the territory of the People's Republic of China in accordance with this Law. Article 3 A company is an enterprise legal person, has independent property of legal per son, and shall enjoy the right to the entire property of the legal person. A c ompany shall be liable for its debts to the extent of all its assets. In the case of a limited liability company, shareholders shall assume liabilit y towards the company to the extent of the amount of the capital contribution subscribed for by them respectively; in the case of a joint stock limited comp any, shareholders shall assume liability towards the company to the extent of the shares subscribed for by them respectively. Article 4 The shareholders of a company shall, according to law, enjoy such rights of ow ners as benefiting from assets of the company, making major decisions and sele cting managerial personnel. Article 5 A company must, when engaging in business activities, abide by the laws and ad ministrative regulations, observe social morals and commercial ethics, be in i ntegrity and good faith, accept supervision of the government and the public, and undertake social liability. The legitimate rights and interests of companies shall be protected by law and shall be inviolable. Article 6 Application shall be made to the company registration authority for registrati on of the incorporation of a company. Companies meeting the conditions on inco rporation provided by this Law shall be registered as limited liability compan ies or joint stock limited companies respectively; while companies failing to meet the conditions on incorporation provided by this Law shall not be registe red as limited liability companies or joint stock limited companies. If the incorporation of a company must be reported for approval in accordance with the provisions of laws or administrative regulations, the procedure for a pproval shall be handled prior to the registration of the company according to law. The public may apply to the company registration authority for enquiry of the registered items of a company, and the company registration authority shall pr ovide the service of such enquiry. Article 7 The company registration authority shall issue a business license to a company incorporated according to law. The date of the issuance of the company's busi ness license shall be the date of the incorporation of the company. The business license of the company shall state such matters as the name, domi cile, registered capital, business scope and the name of the legal representat ive of the company. In case of any change in any item recorded in the company's business license, the company shall apply for registration of the change according to law, and t he company registration authority shall reissue the business license. Article 8 A limited liability company established according to this Law must clearly ind icate the words "limited Liability company" in its name. A joint stock limited company established according to this Law must clearly i ndicate the words "joint limited company" in its name. Article 9 If a limited liability company is to be converted into a joint stock limited c ompany, it shall satisfy the requirements for a joint stock limited company st ipulated 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 comp any or a joint stock limited company is converted into a limited liability com pany, the claims and debts of the original company shall be succeeded to the c onverted company. Article 10 A company's domicile shall be the place where its main administrative organiza tion is located. Article 11 Articles of association must be formulated according to 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 executives. Article 12 A company's scope of business shall be defined in its articles of association and registered according to law. The company may revise its articles of associ ation and change its business scope, provided that it shall apply for registra tion of such revision and change. Items within the company's business scope that shall be subject to approval un der laws, administrative regulations shall be approved according to law. Article 13 The post of a company's legal representative shall be held by the chairman of the board of directors, executive director or the manager of the company and s hall be registered according to law. If the company's legal representative is changed, the company shall handle the procedure for registration of the change . Article 14 A company may establish branches. The company shall, if establishing branches, apply to the company registration authority for registration of the establish ment and acquire the business license of the branches. The branches do not pos sess the status of legal person and their civil liabilities shall be borne by the company. A company may establish subsidiaries, which shall possess the status of legal person, and shall independently bear civil liabilities according to law. Article 15 A company may invest in other enterprises; provided that, the company shall no t become the investor undertaking the joint and several liability for the debt s of the invested enterprises, except as otherwise provided by laws. Article 16 Where a company is to invest in other enterprise or provide guarantee for othe rs, it shall be decided by the board of directors or the shareholders meeting or the shareholders general meeting in accordance with the provisions of its a rticles of association; if the articles of association of the company stipulat e the limit of the total amount of the investment or the guarantee, or the amo unt of the investment or the guarantee in single item, then, the limit shall n ot be exceeded. If a company is to provide guarantee for its shareholders or actual controller s, it shall be decided by the shareholders meeting or the shareholders general meeting. The shareholders as provided in the preceding Paragraph and the shareholders c ontrolled by the actual controllers as provided in the preceding Paragraph sha ll not participate in the voting for the matter provided in the preceding Para graph. Such voting shall be passed based on more than half of the voting right s held by other shareholders attending the meeting. Article 17 Companies must protect the lawful rights and interest of their staff and worke rs, sign labor contracts with their staff and workers according to law, partic ipate in social insurance, and strengthen labor protection so as to achieve sa fety in production. Companies shall apply various forms to strengthen professional education and o n-the-job training for their staff and workers so as to improve their quality. Article 18 Company's staff and workers shall, in accordance with the Trade Union Law of t he People's Republic of China, organize a trade union to carry out the trade u nion activities and protect the lawful rights and interests of the staff and w orkers. The company shall provide its trade union with conditions necessary fo r carrying out its activities. The trade union of the company shall, on behalf of the staff and works of the company and according to law, sign with the com pany a collective contract on such matters as labor salaries, working hours, w elfare, insurance and labor safety and health of the staff and works. Companies shall, through the staff and workers congress or other forms, practi ce democratic management in accordance with the provisions of the Constitution and relevant laws. If a company is to make decision on system reform, major issues on business op eration or formulation of important rules and regulations, it shall solicit th e opinions of its trade union, and solicit the opinions and suggestions of its staff and workers through the staff and workers congress or other forms. Article 19 In accordance with the Constitution of the Communist Party of China, the organ ization of the Communist Party of China shall be established in a company so a s to carry out their activities of the communist Party. The company shall prov ide its communist organization with conditions necessary for carrying out its activities. Article 20 The shareholders of a company shall abide by laws, administrative regulations and the articles of association of the company, exercise their rights accordin g to law, and shall not abuse their rights to damage the interests of the comp any or other shareholders nor abuse the independent status of corporate legal person and shareholders' limited liability to damage the interests of the comp any's creditors. The shareholders, who abuse their rights so as to cause losses to the company or other shareholders, shall undertake the liability for compensation. If the shareholders of a company abuse the independent status of corporate leg al person and shareholders' limited liability to avoid debts and damage the in terests of the company's creditors, they shall undertake the joint and several liability for the company's debts. Article 21 The holding shareholders, actual controllers, directors, supervisors, senior e xecutives of a company shall not, by taking advantage of their affiliate relat ionship, damage the interests of the company. They shall, in violation of the provisions of the preceding Paragraph, underta ke the liability for compensation if any loss is caused to the company thereby . Article 22 The contents in the resolutions of the shareholders meeting or the shareholder s general meeting or the board of directors of a company, if in violation of t he laws or administrative regulations, shall be null and void. If the procedure for convening meetings or the voting method of the shareholde rs meeting or the shareholders general meeting or the board of directors of a company are in violation of the laws, administrative regulations or the articl es of association of the company, or the contents in the resolutions thereof a re in violation of the articles of association, the shareholders of the compan y may, within 60 days upon the date of making the resolution, request the peop le's court to cancel them. If the shareholders bring a lawsuit in accordance with the provisions of the p receding Paragraph, the people's court may, upon the request the company, requ ire the shareholders to provide the relevant guarantee. If the company has handled the procedure for registration of change in accorda nce with such resolutions of its shareholders meeting or the shareholders gene ral meeting or the board of directors, the people's court shall declare such r esolutions invalid, or, after such resolutions are cancelled, the company shal l apply to the company registration authority for cancellation of the registra tion of change. Chapter 2 Incorporation and Organizational Structure of the Limited Liabilit y Companies Section 1 Incorporation Article 23 The following conditions shall be fulfilled for the incorporation of a limited liability company: (1) the number of shareholders shall conform to the statutory number; (2) the capital contributions of the shareholders shall reach the statutory mi nimum amount of capital; (3) the shareholders shall have jointly formulated the articles of association of the company; (4) the company shall have a name and an organizational structure established in compliance with the requirements for a limited liability company; and (5) the company shall have a domicile. Article 24 A limited liability company shall be jointly invested in and incorporated by n ot more than 50 shareholders. Article 25 The articles of association of a limited liability company shall specify the f ollowing 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 and amount of capital contributions by the shareholder; (6) the organization of the company, its method of creation, functions and pow ers and the rules of procedure; (7) the legal representative of the company; (8) other items which the shareholders meetings deem necessary to be specified . The shareholders shall sign and affix their seals to the company's articles of association. Article 26 The registered capital of a limited liability company shall be the amount of t he capital contributions subscribed for by all of its shareholders as register ed with the company registration authority. The amount of initial capital cont ributions paid by all the shareholders of the company shall not be less than 2 0% of the registered capital of the company nor less than the statutory minimu m amount of registered capital, and the remaining of the registered capital ma y be paid up by the shareholders within two year upon the incorporation of the company, provided that, in case of a investment company, it may be paid up wi thin five years upon the incorporation of the company. The minimum amount of the registered capital of a limited liability company sh all be RMB 30,000. If a higher minimum amount of the registered capital of a l imited liability company than that as stipulated in the preceding sentence is provided by laws or administrative regulations, such provisions shall prevail. Article 27 A shareholder may make its capital contributions to a company in currency or b y contributing such non-currency property as material objects, intellectual pr operty rights, land-use rights at their appraised value that may be evaluated in currency and may be transferred according to law; except those properties t hat shall not be contributed as capital in accordance with the provisions of l aws or administrative regulations. The non-currency property contributed as capital shall undergo an appraisal, v aluation and verification, and shall not be overvalued or undervalued. If the appraisal and valuation of such property is provided by laws or administrative regulations, such provisions shall apply. The amount of capital contribution in currency by all shareholders shall not b e less than 30% of the registered capital of the limited liability company. Article 28 Each shareholder shall make in full the amount of the capital contribution sub scribed for by it under the articles of association of the company. Where a sh areholder makes its capital contribution in currency, it shall deposit the ful l amount of such capital contribution in currency in the bank account opened b y the limited liability company. Where a shareholder makes its capital contrib ution in the form of non-currency property, the transfer procedures for the pr operty rights shall be handled according to law. Shareholders failing to make the capital contributions in accordance with the preceding Paragraph shall be liable for breach of contract towards the shareho lders who have made their capital contributions in full and on time. Article 29 After all shareholders have made their capital contribution in full, such cont ributions must be verified by a statutory capital verification institution whi ch shall issue capital verification certificates. Article 30 After the total capital contributions of the shareholders have been verified b y a statutory capital verification institution, application shall be made to t he 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 cer tificate. Article 31 Where, after the incorporation of a limited liability company, it is discovere d that the actual value of the non-currency property as capital is notably les s than the value stated in the articles of association, the shareholders that made such contributions shall make up the deficiency; those who are shareholde rs at the time of the incorporation of the company shall bear joint and severa l liability therefor. Article 32 After a limited liability company has been incorporated, it shall issue capita l contribution certificates to its shareholders. A capital contribution certificate shall specify the following items: (1) the name of the company; (2) the date of the incorporation of the company; (3) the registered capital of the company; (4) the names or titles of the shareholders, the amount and date of their capi tal contribution; and (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. Article 33 A limited liability company shall prepare a roster of its shareholders with th e 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. The shareholders recorded in the roster may claim to exercise the shareholder' s right based on the roster. The company shall register with the company registration authority the names o r titles and the amounts of capital contributions of its shareholders; in case of change of such registered items, the registration of the change shall be h andled. If the company fails to register such items or such change, it shall n ot counter any third party. Article 34 A shareholder shall have the right to look up and copy the articles of associa tion, the minutes of shareholders meetings, the resolutions of the meeting of the board of directors, the resolutions of the meetings of the supervisory boa rd and the financial statements of the company. The shareholders may require to look up