Company Law of the People's Republic of China (2023 Revision)

Company Law of the People's Republic of China (2023 Revision)

Order of the President of the People's Republic of China

(No.15)

The Company Law of the People's Republic of China, as revised and adopted at the 7th Session of the Standing Committee of the Fourteenth National People's Congress of the People's Republic of China on December 29, 2023, is hereby issued, and shall come into force on July 1, 2024.

Xi Jinping, President of the People's Republic of China

December 29, 2023

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; amended for the first time in accordance with the Decision on Amending the Company Law of the People's Republic of China adopted at the 13th Session of the Standing Committee of the Ninth National People's Congress on December 25, 1999; amended for the second time in accordance with the Decision on Amending the Company Law of the People's Republic of China adopted at the 11th Session of the Standing Committee of the Tenth National People's Congress on August 28, 2004; revised for the first time at 18th Session of the Standing Committee of the Tenth National People's Congress on October 27, 2005; and amended for the third time in accordance with the Decision on Amending Seven Laws Including the Marine Environment Protection Law of the People's Republic of China adopted at the Sixth Session of the Standing Committee of the 12th National People's Congress on December 28, 2013; amended for the fourth time in accordance with the Decision of the Standing Committee of the National People's Congress on Amending the Company Law of the People's Republic of China (2018) adopted at the Sixth Session of the Standing Committee of the 13th National People's Congress on October 26, 2018; revised for the second time at the 7th Session of the Standing Committee of the Fourteenth National People's Congress on December 29, 2023)

Contents

Chapter I General Provisions

Chapter II Company Registration

Chapter III Establishment and Organizational Structure of a Limited Liability Company

Section 1 Establishment

Section 2 Organizational Structure

Chapter IV Transfer of Equities of a Limited Liability Company

Chapter V Establishment and Organizational Structure of a Joint Stock Limited Company

Section 1 Establishment

Section 2 Shareholders' Meeting

Section 3 The Board of Directors and Manager

Section 4 Board of Supervisors

Section 5 Special Provisions on the Organizational Structure of a Listed Company

Chapter VI Issuance and Transfer of Shares of a Joint Stock Limited Company

Section 1 Issuance of Shares

Section 2 Transfer of Shares

Chapter VII Special Provisions on the Organizational Structure of State-funded Companies

Chapter VIII Qualifications and Obligations of the Directors, Supervisors and Senior Managers of a Company

Chapter IX Corporate Bonds

Chapter X Financial Affairs and Accounting of a Company

Chapter XI Merger and Split-up of Company; Increase and Deduction of Registered Capital

Chapter XII Dissolution and Liquidation of a Company

Chapter XIII Branches of Foreign Companies

Chapter XIV Legal Liabilities

Chapter XV Supplementary Provisions

Chapter I General Provisions

Article 1 This Law is enacted according to the Constitution for the purposes of regulating the organization and operation of companies, protecting the legitimate rights and interests of companies, shareholders, employees, and creditors, improving the modern enterprise system with Chinese characteristics, promoting the entrepreneurial spirit, maintaining the socialist economic order, and promoting the development of the socialist market economy

Article 2 The term "company" as mentioned in this Law refers to a limited liability company or a joint stock company limited set up within the territory of the People's Republic of China according to the provisions of this Law.

Article 3 A company is an enterprise legal person, which has independent legal person property and enjoys the right to legal person property. It shall bear the liabilities for its debts with all its property.

The legitimate rights and interests of a company shall be protected by laws and may not be trespassed.

Article 4 For a limited liability company, a shareholder shall be liable for the company to the extent of the capital contributions it has paid. For a joint stock limited company, a shareholder shall be liable for the company to the extent of the shares it has subscribed to.

The shareholders of a company shall be entitled to enjoy the capital proceeds, participate in making important decisions, choose managers and other rights in the company.

Article 5 A company established according to this Law shall formulate its bylaws, which is binding on the company, its shareholders, directors, supervisors and officers.

Article 6 A company shall have a name. The name of the company shall comply with relevant provisions issued by the state.

The right of name of the company shall be protected by law.

Article 7 A limited liability company established according to this Law shall include the words of "limited liability company" or "limited company" in its name.

A joint stock limited company established according to this Law shall include words of "joint stock limited company" or "joint stock company."

Article 8 A company shall regard its main office as its domicile.

Article 9 A company's business scope shall be defined in its bylaw. The company may modify its business scope by modifying its bylaws.

If the law or administrative regulations so require, any matter in the business scope of the company shall be approved according to the law.

Article 10 The legal representative of a company shall be the director or manager who represents the company in attending to company affairs in accordance with the company's bylaw.

If a director serving as the legal representative or manager resigns, he shall be deemed to have resigned as the legal representative concurrently.

If the legal representative resigns, the company shall determine a new legal representative within 30 days of resignation of the legal representative.

Article 11 The legal consequences of civil activities performed by a legal representative in the name of the company shall be borne by the company.

Any restriction on the power of the legal representative imposed by the company's bylaw or shareholders' meeting shall not be set up against bona fide opposite parties.

Where the legal representative causes damage to any other person in the performance of duties, the company shall assume civil liability for such damage. The company may, after assuming such civil liability, claim reimbursement from the legal representative at fault in accordance with the law or its bylaws.

Article 12 A limited liability company to be changed into a joint stock limited company shall satisfy the requirements as prescribed in this Law for joint stock limited companies. A joint stock limited company to be changed into a limited liability company shall conform to the conditions as prescribed in this Law for limited liability companies.

In either of the aforesaid cases, the creditor's rights and debts of the company prior to the change shall be succeeded by the company after the change.

Article 13 A company may set up subsidiaries which enjoy the status of an enterprise legal person and shall be independently responsible for their own civil liabilities.

A company may set up branches. A branch shall not enjoy the status of an enterprise legal person and its civil liabilities shall be borne by its parent company.

Article 14 A company may invest in other enterprises,

subject to the law under which it shall not become a capital contributor severally and jointly liable for the debts of the enterprises in which it invests.

Article 15 Where a company intends to invest in any other enterprise or provide guaranty for others, the company shall make a resolution through the board of directors, shareholders' meeting according to its bylaw. If the bylaw prescribes any limit on the total amount of investments or guaranties, or on the amount of a single investment or guaranty, the aforesaid total amount or amount shall not exceed the limited amount.

If a company intends to provide guaranty to a shareholder or actual controller of the company, it shall make a resolution through the shareholder's meeting.

The shareholder as mentioned in the preceding paragraph or the shareholder dominated by the actual controller as mentioned in the preceding paragraph shall not participate in voting on the matter as mentioned in the preceding paragraph. Such matter requires the affirmative votes of more than half of the other shareholders attending the meeting.

Article 16 Every company shall protect the lawful rights and interests of its employees, sign employment contracts with its employees, buy social insurances, and strengthen labor protection so as to ensure work safety.

Every company shall, in various forms, intensify the professional education and in-service training of its employees so as to improve their personal quality.

Article 17 The employees of a company shall, according to the Labor Union Law of the People's Republic of China, organize a labor union, which shall carry out union activities and safeguard the lawful rights and interests of the employees. The company shall provide necessary conditions for its labor union to carry out activities. The labor union shall, on behalf of the employees, sign collective contracts with the company with respect to the remuneration, working hours, rest and leave, work safety and sanitation, insurance and welfare, and other matters.

In accordance with the Constitution and other relevant laws, a company shall establish and improve a democratic management system in the form of assembly of the representatives of the employees, and adopt democratic management in such form or any other ways.

To make a decision on restructuring, dissolution, application for bankruptcy, or any important issue relating to business operations, or to formulate any important bylaw, a company shall solicit the opinions of its labor union, and shall solicit the opinions and proposals of the employees through the assembly of the representatives of the employees or in any other way.

Article 18 The Chinese Communist Party may, according to the Constitution of the Chinese Communist Party, establish its branches in companies to carry out activities of the Chinese Communist Party. The company shall provide necessary conditions to facilitate the activities of the Party.

Article 19 When conducting business operations, a company shall comply with the laws, regulations, social morality, and business morality, act in good faith, and accept the supervision of the government and general public.

Article 20 When conducting business operations, a company shall fully consider the interests of the company's employees, consumers, and other stakeholders and ecological and environmental protection and other public interests, and assume social responsibility.

The state shall encourage companies to participate in public welfare activities and publish social responsibility reports.

Article 21 A shareholder of a company shall abide by the laws, administrative regulations, and the company's bylaw and exercise shareholder's rights under the law, and may not injure the interests of the company or of other shareholders by abusing the shareholder's rights.

A shareholder of the company shall be liable for any loss caused to the interests of the company or other shareholders by abusing shareholder's rights.

Article 22 Neither the controlling shareholder, nor the actual controller, nor any of the directors, supervisors or senior management of the company may injure the interests of the company by taking advantage of its connection relationship.

Anyone who causes any loss to the company due to violating the preceding paragraph shall be liable for the compensation.

Article 23 Where a shareholder of a company evades the payment of its debts by abusing the independent status of legal person or the shareholder's limited liabilities, if it seriously injures the interests of any creditor, it shall bear several and joint liabilities for the debts of the company.

If the shareholder uses two or more companies under its control to commit the act prescribed in the preceding paragraph, each company shall be jointly and severally liable for the debts of any of the other companies.

If the shareholder of a company with only one shareholder is unable to prove that the property of the company is independent from his own property, he shall bear joint liabilities for the debts of the company.

Article 24 A shareholders' meeting or meeting of the board of directors or board of supervisors of a company, or a vote at such meeting, may be held by electronic communication, unless otherwise stipulated in the company's bylaw.

Article 25 A resolution of the shareholders' meeting or board of directors of the company that is in violation of any law or administrative regulation shall be null and void.

If the procedures for calling a shareholders' meeting or meeting of the board of directors, or the voting form, is in violation of any law, administrative regulation or the bylaw, or if a resolution is in violation of the bylaw of the company, the shareholders may, within 60 days from the day when the resolution is made, request the people's court to revoke it, unless the procedures or the voting form contains a minor defect without a substantial impact on the resolution.

If a shareholder has not been given notice of participation in the shareholders' meeting, the shareholder may request the people's court to revoke the resolution within 60 days from the date when the shareholder knows or should know that the resolution has been made; if the shareholder fails to exercise the right of revocation within one year from the date the resolution is made, the right of revocation shall be extinguished.



Article 27 Under any of the following circumstances, a resolution of the shareholders' meeting or the board of directors of a company shall be untenable:



(1) The resolution is adopted without holding a shareholders' meeting or a meeting of the board meeting.



(2) A matter to be decided fails to be put to a vote at a shareholders' meeting and a meeting of the board of directors.



(3) The number of attendees at a meeting, or the number of voting rights held, is less than the quorum or the number of voting rights held as specified by this Law or the company's bylaw.



(4) The number of attendees at a meeting, or the number of voting rights held, is less than that specified by this Law or the company's bylaw.



Article 28 If a people's court declares invalid, revokes, or confirms the untenability of a resolution of the shareholders' meeting or board of directors of a company, the company shall apply to the company registration authority for revocation of the registration which has been made based on the resolution.

If a people's court declares invalid, revokes, or confirms the untenability of a resolution of a shareholders' meeting or board of directors, a civil legal relation established between the company and a bona fide opposite party based on the resolution shall not be affected.



Chapter II Company Registration



Article 29 To establish a company, an application for establishment registration shall be filed with the company registration authority.

If any law or administrative regulation provides that the establishment of a company shall be subject to approval, and relevant approval formalities shall be gone through prior to the registration of the company.



Article 30 To apply for the establishment of a company, an application for establishment registration, the company's bylaw, and other documents shall be submitted, and the relevant materials submitted shall be authentic, lawful, and valid.

If the application materials are incomplete or are not in the statutory form, the company registration authority shall give notification of required supplements and corrections at one time.



Article 31 If an application for establishment of a company meets the establishment requirements of this Law, the company registration authority shall register the company as a limited liability company or joint stock limited company. If the application does not meet the establishment requirements of this Law, it shall not be registered as a limited liability company or joint stock limited company.



Article 32 Company registration matters shall include:



(1) name;



(2) domicile;



(3) registered capital;



(4) business scope;



(5) the name of the legal representative; and



(6) the names of shareholders, in the case of a limited liability company, or the names of promoters, in the case of a joint stock limited company.

The company registration authority shall publish company registration matters as specified in the preceding paragraph on the National Enterprise Credit Information Publicity System.



Article 33 For a lawfully established company, the company registration authority shall issue a company business license to the company. The date of issuance of the company business license shall be the date of establishment of the company.

The company business license shall state the name, domicile, registered capital, business scope, legal representative, etc.

The company registration authority may issue an electronic business license. The electronic business license shall have the same legal effect as a paper one.



Article 34 If a company registration matter is modified, the modification shall be registered in accordance with the law.

A company registration matter without being registered or without its modification being registered shall not be set up against bona fide opposite parties.



Article 35 When a company applies for registration of modification, it shall submit to the company registration authority an application for registration of modification signed by the company's legal representative, a modification resolution or decision made in accordance with the law, and other documents.

If the modification of the company registration matter involves the amendment of the company's bylaws, the company's bylaws as amended shall be submitted.

If the company modifies its legal representative, the application for registration of modification shall be signed by the replacement legal representative.



Article 36 If any matter as stated in the business license is modified, the company registration authority shall issue a replacement business license, after the company registers the modification.



Article 37 If dissolution, declaration of bankruptcy, or any other statutory cause entails termination of a company, the company shall apply to the company registration authority for deregistration according to the law, and the company registration authority shall announce the termination of the company.



Article 38 To set up a branch, a company shall file a registration application with the company registration authority and shall obtain a business license.



Article 39 Where company establishment registration is obtained by misreporting registered capital, submitting false materials, or otherwise fraudulently concealing important facts, the company registration authority shall revoke the company establishment registration according to laws and administrative regulations.



Article 40 A company shall publish the following matters on the National Enterprise Credit Information Publicity System according to the applicable provisions:



(1) The amount of capital contribution subscribed for or paid by each shareholder, the method of capital contribution, and the date of capital contribution, in the case of a limited liability company, or the number of shares subscribed for by each promoter, in the case of a joint stock limited company.



(2) Information on modifications in the equities or shares of the shareholders of the limited liability company or the promoters of the joint stock limited company.



(3) Information on the obtainment, modification, and cancellation of administrative permission.



(4) Other information specified by laws and administrative regulations.

The company shall ensure that the information published in the preceding paragraph is authentic, accurate, and complete.



Article 41 The company registration authority shall optimize the process of company registration, improve the efficiency of company registration, strengthen informatization, promote easy methods such as online processing, and improve the facilitation of company registration.

The market supervision and administration department of the State Council shall formulate specific measures for company registration in accordance with this Law and relevant laws and administrative regulations.



Chapter III Establishment and Organizational Structure of a Limited Liability Company



Section 1 Establishment



Article 42 A limited liability company shall be established by not less than one but not more than 50 shareholders that make capital contributions.



Article 43 Shareholders at the time of establishment of a limited liability company may sign an establishment agreement, specifying their respective rights and obligations during the establishment of the company.



Article 44 A limited liability company shall bear the consequences of the civil activities in which shareholders at the time of establishment of the company engage for establishment of the company.

If the company is not established, the legal consequences shall be borne by the shareholders at the time of establishment of the company; if there are two or more shareholders at the time of establishment, they shall enjoy joint and several claims and bear joint and several debts.

A third party shall, at its option, have the right to request the company or its shareholders at the time of establishment to assume the civil liability arising from the civil activities in which the shareholders at the time of establishment engage in their own name in order to establish the company.

If a shareholder at the time of establishment causes damage to another person by performing the duty of establishment of the company, the company or the shareholder not at fault may exercise recovery against the shareholder at fault after paying compensatory liability.



Article 45 To establish a limited liability company, shareholders shall jointly formulate its bylaws.



Article 46 A limited liability company shall state the following items:



(1) The name and domicile of the company;



(2) The business scope of the company;



(3) The company's registered capital;



(4) Names of shareholders;



(5) Amount, method, and date of capital contributions made by shareholders;



(6) The organizations of the company and its formation, their functions and rules of procedure;



(7) Methods for the selection and modification of the legal representative of the company;



(8) Other matters deemed necessary by the shareholders' meeting.

The shareholders should affix their signatures or seals to the bylaw of the company.



Article 47 The registered capital of a limited liability company shall be the amount of capital contributions subscribed for by all its shareholders as registered with the company registration authority. The capital contributions subscribed for by all shareholders shall be fully paid within five years of establishment of the company in accordance with the company's bylaw.

Where any law or administrative regulation or any decision of the State Council provides otherwise for the paid-in registered capital, the minimum amount of registered capital of a limited liability company, or the period for shareholders to make capital contributions, such provisions shall prevail.



Article 48 A shareholder may make capital contributions in cash, in kind, or intellectual property right, land use right, equities, claims, or other non-monetary properties that may be assessed on the basis of currency and may be transferred according to the law, excluding the properties that shall not be treated as capital contributions under any law or administrative regulation.

The value of the non-monetary properties as capital contributions shall be assessed and verified, which shall not be over-valued or under-valued. If any law or administrative regulations provides for the value assessment, such law or administrative regulation shall be followed.



Article 49 Each shareholder shall make full payment for the capital contributions he has subscribed to according to the bylaw.

If a shareholder makes his capital contribution in cash, he shall deposit the full amount of such cash capital contribution into a temporary bank account opened for the limited liability company. If any capital contributions are made in non-monetary properties, the appropriate transfer procedures for the property rights therein shall be followed according to law.

Where a shareholder fails to make his capital contribution in full within the specified period, he shall not only make his capital contribution in full to the company but also bear the liabilities for the losses caused to the company.



Article 50 Where, at the time of establishment of a limited liability company, a shareholder fails to pay the capital contribution according to the company's bylaw, or the value of the non-monetary property as capital contribution is apparently lower than the capital contribution subscribed for, the other shareholders at the time of establishment shall be jointly and severally liable to the extent of the shortfall in the shareholder's capital contribution.



Article 51 After formation of a limited liability company, its board of directors shall check the capital contributions of its shareholders, and the company shall issue a written demand for payment to a shareholder, demanding payment of capital contribution, if it discovers that the shareholder has not made full payment of capital contributions on schedule according to the company's bylaw.

If the board of directors fails to promptly perform its obligations specified in the preceding paragraph and causes losses to the company, any liable director shall be liable for compensation.



Article 52 When a shareholder fails to pay capital contribution as required by the company's bylaw, and the company issues a written demand for payment of capital contribution in accordance with paragraph 1 of the preceding article, it may specify a grace period for payment of capital contribution, which grace period shall not be less than 60 days from the date when the company issues the written demand. If a shareholder fails to perform the obligation of capital contribution after expiration of the grace period, the company may, under the resolution introduced by the board of directors, issue a notice of forfeiture to the shareholder in written form. The shareholder shall forfeit the equities with respect to which it has not paid the capital contribution, on the date of issuance of the notice of forfeiture.

The equities forfeited in accordance with the provisions of the preceding paragraph shall be transferred in accordance with the law, or the registered capital shall be reduced accordingly, with the equities canceled; if no transfer or cancellation is made within six months, the other shareholders of the company shall pay the corresponding capital contribution in full in proportion to their capital contributions.

If the shareholder challenges the forfeiture, it shall, within 30 days of receiving the notice of forfeiture, sue in the people's court.



Article 53 After the establishment of a company, no shareholder may illegally take away the registered capital.

If the provisions of the preceding paragraph are violated, the shareholder shall return the registered capital illegally taken away; if losses are caused to the company, any liable director, supervisor, or officer shall be jointly and severally liable for compensation with the shareholder.



Article 54 Where a company is unable to discharge debts when they become due, the company or creditors to whom the due debts are owed shall have the right to require shareholders who have subscribed for capital contributions to pay the capital contributions before expiration of the period of payment of capital contribution.



Article 55 After the establishment of a limited liability company, each shareholder shall be issued a capital contribution certificate, specifying the following:



(1) the company's name;



(2) The date of establishment of the company;



(3) The company's registered capital;



(4) The name of the shareholder, the subscribed and paid-in capital contribution, the method of capital contribution, and the date of capital contribution;



(5) The serial number and date of issuance of the capital contribution certificate.

The capital contribution certificate shall be signed by the legal representative and sealed by the company.



Article 56 A limited liability company shall prepare a registry of shareholders and the registry shall record the following information:



(1) The name and domicile of each shareholder;



(2) The subscribed and paid-in capital contribution, the method of capital contribution, and the date of capital contribution of each shareholder;



(3) The serial numbers for all capital contribution certificates;



(4) The date of obtaining and losing shareholder's qualifications.

The shareholders recorded in the registry of shareholders may, pursuant to the registry of shareholders, claim to and exercise the shareholder's rights.



Article 57 Every shareholder shall be entitled to review and duplicate the company's bylaw, registry of shareholders, the minutes of the shareholders' meetings, the resolutions of the board of directors' meetings, the resolutions of the board of supervisors' meetings, as well as the financial reports.

Every shareholder may request to review the accounting books and accounting vouchers of the company. Where a shareholder requests to review the accounting books and accounting vouchers of the company, it shall submit a written request, which shall state his motives. If the company, has the legitimate reason to believe that the shareholder's requests to review the accounting books and accounting vouchers has an improper motive and may impair the legitimate interests of the company, it may reject the request of the shareholder to review the books and shall, within in 15 days after the shareholder submits a written request, give the shareholder a written reply, which shall include an explanation. If the company rejects the request of any shareholder to review the accounting books, the shareholder may initiate action in the people's court.

The shareholder may retain an accounting firm, a law firm, or any other intermediary to review the materials specified in the preceding paragraph.

The shareholder and the accounting firm, law firm, or other intermediary retained by it shall comply with the provisions of laws and administrative regulations on the protection of state secrets, trade secrets, personal privacy, and personal information, among others, when reviewing and duplicating the relevant materials.

If a shareholder requests for a review or reproduction of the relevant materials of the company's wholly-owned subsidiary, the provisions of the preceding four paragraphs shall apply.



Section 2 Organizational Structure



Article 58 The shareholders' meeting of a limited liability company shall be composed of all the shareholders. It is the company's organ of power, which shall exercise its powers according to this Law.



Article 59 The shareholders' meeting shall exercise the following functions:



(1) Electing and changing the directors and supervisors and deciding the matters relating to their salaries and compensations;



(2) Deliberating and approving reports of the board of directors;



(3) Deliberating and approving reports of the board of supervisors;



(4) Deliberating and approving company profit distribution plans and loss recovery plans;



(5) Making resolutions about the increase or reduction of the company's registered capital;



(6) Making resolutions about the issuance of corporate bonds;



(7) Adopting resolutions about the assignment, split-up, change of company form, dissolution, liquidation of the company;



(8) Revising the bylaw of the company;



(9) Other functions as specified in the bylaw.

The shareholders' meeting may authorize the board of directors to adopt resolutions on the issuance of corporate bonds.

If all the shareholders consent to any of the matters listed in the paragraph 1 of this article by writing, they do not need to hold a shareholders' meeting and may made decisions and have the decisions signed and sealed by all the shareholders.



Article 60 A limited liability company with only one shareholder has no board of directors. When the shareholder makes a decision on any of the matters as listed in paragraph 1 of the preceding article, he shall make it in writing, sign or seal it, and keep it in the company.



Article 61 The first shareholders' meeting shall be convened and presided over by the shareholder who made the largest capital contributions, and he shall exercise his powers according to this Law.



Article 62 The shareholders' meetings shall be classified into regular meetings and interim meetings.

Regular meetings shall be called according to the provisions of the articles of association of the company. Where an interim meeting is proposed by the shareholders representing 1/10 of the voting rights or more, or by directors representing 1/3 of the voting rights or more, or by the board of supervisors, an interim meeting shall be held.



Article 63 The shareholders' meetings shall be convened by the board of directors and presided over by the chairman of the board of directors. If the chairman is unable or fails to perform his duties, the meetings thereof shall be presided over by the deputy chairman of the board of directors. If the deputy chairman of the board of directors is unable or fails to perform his duties, the meetings shall be presided over by a director elected by a majority of the directors.

If the board of directors is unable or fails to fulfill the duties of convening the shareholders' meeting, the board of supervisors may convene and preside over such meetings. If the board of supervisors does not convene or preside over such meetings, the shareholders representing 1 / 10 or more of the voting rights may convene and preside over such meetings on their own initiatives.



Article 64 Every shareholder shall be given a notice 15 days before a shareholders' meeting is held unless it is otherwise specified by the bylaw or it is otherwise stipulated by all the shareholders.

A shareholders' meeting shall make the minutes for the decisions about the matters discussed at the meeting. The shareholders who attended the meeting shall affix their signatures or seals to the minutes.



Article 65 The shareholders shall exercise their voting rights at the shareholders' meetings based on their respective percentage of the capital contributions unless it is otherwise prescribed by the bylaw.



Article 66 Methods of discussion and voting procedures of the meeting of shareholders shall be provided for in the articles of association except otherwise provided for by this Law.

Resolutions adopted at the shareholders' meeting shall be passed by shareholders representing a majority of the voting rights.

A resolution made at a shareholders' meeting on revising the bylaw, increasing or reducing the registered capital, merger, split-up, dissolution or change of the company form shall be adopted by the shareholders representing two-thirds or more of the voting rights.



Article 67 A limited liability company shall establish a board of directors, subject to Article 75 of this Law.

The board of directors shall exercise the following functions:



(1) Convening shareholders' meetings and presenting reports thereto;



(2) Implementing the resolutions made at the shareholders' meetings;



(3) Determining the company's business and investment plans;



(4) Working out the company's profit distribution plans and loss recovery plans;



(5) Working out the company's plans on the increase or reduction of registered capital, as well as on the issuance of corporate bonds;



(6) Working out the company's plans on merger, split, change of the company form, or dissolution, etc.;



(7) Making decisions on the establishment of the company's internal management departments;



(8) Making decisions on hiring or dismissing the company's manager and his salary and compensation, and, according to the nomination of the manager, deciding on the hiring or dismissal of vice manager(s) and the persons in charge of finance as well as their salaries and compensations;



(9) Working out the company's basic management system; and



(10) Other functions as specified in the company's bylaw or conferred by the shareholders' meeting.

Any restriction on the power of the board of directors imposed by the company's bylaws or shareholders' meeting shall not be set up against bona fide opposite parties.



Article 68 The board of directors of a limited liability company shall have three or more members, who may include a representative of the company's employees. The board of directors of a limited liability company which has 300 or more employees shall include representatives of the employees of the company, unless a board of supervisors has been established in accordance with the law and has representatives of the employees of the company. The representatives of the employees who serve as board directors shall be democratically elected through the assembly of the representatives of the employees, the assembly of employees, or other methods.

The board of directors shall have one chairman and may have deputy chairmen. The appointment of the chairman and deputy chairman shall be specified in the bylaw.



Article 69 A limited liability company may establish an audit committee composed of directors of the board of directors in accordance with the company's bylaw which exercises the functions of the board of supervisors specified in this Law, and is not required to have a board of supervisors or supervisors. Employee representatives who are members of the company's board of directors may serve as members of the audit committee.



Article 70 The term of office of the directors shall be provided for by the bylaw, but each term of office shall not exceed 3 years. The directors may, after the expiry of their term of office, hold a consecutive term upon re-election.

If no reelection is timely carried out after the expiry of the term of office of the directors, or if the number of the members of the board of directors is less than the quorum due to the resignation of some directors from the board of directors prior to the expiry of their term of office, the original directors shall, before the newly elected directors assume their posts, perform the powers of the directors according to the laws, administrative regulations, as well as the bylaw.

Where a director resigns, he shall notify the company in writing, and the resignation shall take effect on the day the company receives the notice, provided that if there is a circumstance specified in the preceding paragraph, the director shall continue to perform his powers.



Article 71 The shareholders' meeting may resolve to remove a director, with effect on the date of resolution.

If a director is removed before expiration of his term of office without good reason, the director may request compensation from the company.



Article 72 A meeting of the board of directors shall be convened and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable or fails to perform his duties, it may be convened or presided over by the deputy chairman of the board of directors. If the deputy chairman of the board of directors is unable or fails to perform his duties, it may be convened or presided over by a director elected by a majority of the directors.



Article 73 Unless it is otherwise provided for by this Law, the discussion methods and voting procedures of the board of directors shall be specified by the bylaw.

No meeting of the board of directors may be held unless a majority of the directors are present. When the board of directors makes a resolution, it shall be adopted by a majority of all the directors.

For the voting on a resolution of the board of directors, each director shall have one vote only.

The board of directors shall make minutes of the decisions about the matters discussed at the meetings thereof. The shareholders who attend the meeting shall affix their signatures to the minutes.



Article 74 A limited liability company may have a manager, who shall be hired or dismissed upon decision of the board of directors.

The manager shall be responsible to the board of directors, and perform functions in accordance with the company's bylaw or under the authority of the board of directors. The manager attends the meetings of the board of directors as a non-voting representative.



Article 75 A limited liability company that is small or has a small number of shareholders is not required to establish a board of directors, and may have one director who exercises the functions of the board of directors as provided for in this Law. The director may concurrently hold the post of the company's manger.



Article 76 A limited liability company shall have a board of supervisors, except as otherwise provided for in Articles 69 and 83 of this Law.

The board of supervisors shall consist of three or more members. The members of the board of supervisors shall include representatives of shareholders and an appropriate percentage of representatives of the company's employees. The percentage of the representatives of employees shall account for no less than 1/3 of all the supervisors, but the concrete percentage shall be specified in the bylaw. The representatives of employees who serve as members of the board of supervisors shall be democratically elected through the assembly of representatives of the company's employees, the shareholders' assembly or by other means.

The board of supervisors shall have one chairman, who shall be elected by a majority of all the supervisors. The chairman of the board of supervisors shall convene and preside over the meetings of the board of supervisors. If the chairman of supervisors is unable or fails to perform his duties, the supervisor elected by a majority of the supervisors shall convene and preside over the meetings of the board of supervisors.

No director or senior manager may concurrently act as a supervisor.



Article 77 Each term of office of the supervisors shall be 3 years. The supervisors may, after the expiry of their term of office, hold a consecutive term upon reelection.

If no reelection is timely carried out after the expiry of the term of office of the supervisors, or if the number of the members of the board of directors is less than the quorum due to the resignation of some directors from the board of supervisors prior to the expiry of their term of office, the original supervisors shall, before the newly elected supervisors assume their posts, exercise the powers of the supervisors according to laws, administrative regulations, as well as the bylaw.



Article 78 The board of supervisors may exercise the following powers:



(1) To check the financial affairs of the company;



(2) To supervise the duty-related acts of the directors and senior managers, to put forward proposals to relieve any director or senior manager who violates any law, administrative regulation, the bylaw or any resolution of the shareholders' meeting;



(3) To demand any director or senior manager to make corrections if his act has injured the interests of the company;



(4) To propose to call interim shareholders' meetings, to call and preside over shareholders' meetings when the board of directors does not exercise the function of calling and presiding over shareholders' meetings as prescribed in this Law;



(5) To put forward proposals at shareholders' meetings;



(6) To initiate actions against directors or senior managers according to Article 189 of this Law; and



(7) Other duties as provided for by the bylaw.



Article 79 The supervisors may attend the meetings of the board of directors as non-voting attendees, and may raise questions or suggestions about the meeting agenda discussed by the board of directors.

If the board of supervisors finds that the company is running abnormally, they may conduct an investigation. Where necessary, they may hire an accounting firm to help them with the investigation and the related expenses shall be borne by the company.



Article 80 The board of supervisors may require directors and senior managers to submit reports on the performance of their duties.

Directors and senior managers shall truthfully provide relevant information and materials to the board of supervisors, and shall not obstruct the board of supervisors or supervisors in exercising their functions.



Article 81 The board of supervisors shall hold meetings at least once a year. Any supervisors may propose to hold interim meetings of the board of supervisors.

The discussion methods and voting procedures of the board of supervisors shall be specified in the bylaw unless it is otherwise provided for by this Law.

The resolution of the board of supervisors requires the approval of more than half of the members of board of supervisors.

For the voting on a resolution of the board of supervisors, each supervisor shall have one vote only.

The board of supervisors shall prepare minutes for the decisions about the matters discussed at the meeting, which shall be signed by the supervisors in presence.



Article 82 The expenses necessary for the board of supervisors to exercise its functions shall be borne by the company.



Article 83 A limited liability company that is small or has a small number of shareholders is not required to establish a board of supervisors, and may either have one supervisor who exercises the functions of the board of supervisors specified in this Law or have no supervisor with the unanimous consent of all shareholders.



Chapter IV Transfer of Equities of a Limited Liability Company



Article 84 All or some of the stock rights of the shareholders......