Company Law of the People's Republic of China

Company Law of the People's Republic of China

(Adopted at the Fifth session of the Standing Committee of theEighth National People's Congress on December 29, 1993) Whole document Company Law of the People's Republic of China (Adopted at the Fifth session of the Standing Committee of the Eighth National People's Congress on December 29, 1993) 

Chapter 1 General Provisions Article 1 This Law is formulated in accordance with the Constitution in order to adapt to the needs to establish a modem enterprise system, standardize the organization and activities of companies, protect the legitimate rights and interests of companies, shareholders and creditors, safeguard social and economic order and promote the development of the socialist market economy. Article 2 In this Law, the term "company" refers to a limited liability company or a company limited by shares established within Chinese territory in accordance with this Law. 

Article 3 All limited liability companies and companies limited by shares are enterprise legal persons. In the case of a limited liability company, a shareholder is liable to the company to the extent of the amount of the shareholder's capital contribution. A limited liability company is liable for the debts of the company with all its assets. In the case of a company limited by shares, its entire capital is divided into shares of equal value and shareholders shall be liable to the company to the extent of the shares held by them. A company limited by shares is liable for the debts of the company with all its assets. 

Article 4 The shareholders of a company, as capital contributors, have the right to enjoy the benefits of the assets of the company, make major decisions, choose managers etc. in accordance with the amount of capital they have invested in the company. A company enjoys all legal person property rights constituted by the shareholders' investment, enjoys civil rights and assumes civil liabilities in accordance with law. Ownership of the State-owned assets in a company belongs to the state. 

Article 5 With respect to all its corporate property, a company conducts its business autonomously in accordance with law and is responsible for its own profits and losses. Under the state's macro regulation and control adjustment, a company organizes its production and operations autonomously according to market demand with the objectives of raising economic efficiency and labour productivity and preserving and increasing the value of assets. 

Article 6 A company implements an internal management structure with a clear division of rights and responsibilities, scientific management and combined incentives and restrictions.

 Article 7 A state owned enterprise which is being reorganized as a company shall replace its system of operation, gradually and systematically take inventory of its assets and verify its capital, determine property rights, clear creditors' rights and indebtedness, value assets and set up a standardized internal management structure in accordance with the law and conditions and requirements of administrative regulations. 

Article 8 The establishment of a limited liability company or a company limited by shares shall comply with the conditions set out in this Law. A company complying with the conditions of this Law is registered as a limited liability company or a company limited by shares. A Company which does not comply with the conditions set out in this Law shall not be registered as a limited liability company or a company limited by shares. Where the law or administrative regulations require that the establishment of a company be submitted for examination and approval, the procedures for such examination and approval are carried out before the company is registered. 

Article 9 A limited liability company established in accordance with this Law shall have the words "limited liability company" in its name. A company limited by shares established in accordance with this Law shall have the words "company limited by shares" in its name. 

Article 10 The domicile of a company is the place where its principal place of business is located. 

Article 11 In establishing a company, the company's articles of association shall prepared in accordance with this Law. The articles of association are binding on the company, the shareholders, directors, supervisors and managers. A company's business scope is specified in its articles of association and registered in accordance with the law. For items in a company's business scope which are restricted by law or administrative regulations, approval shall be obtained in accordance with the law. A company shall conduct business activities within its registered business scope. A company may change its business scope by amendments to its articles of association in accordance with procedures provided by law and after changing its registration with the company registration authority. 

Article 12 A company may invest in other limited liability companies or companies limited by shares and be liable to the companies which it has invested in to the extent of the amount of capital invested in such companies. Except for investment companies and holding companies specified by the State Council, where a company invests in other limited liability companies or companies limited by shares, the aggregate amount of investment shall not exceed fifty per cent of the net assets of the company, not including any increase in the capital of the other limited liability companies or companies limited by shares in which the company invests arising from any conversion of profits of these companies into capital following such investment. 

Article 13 A company may set up branches. Branches of a company do not have the status of enterprise legal persons and the company assumes the civil liabilities of its branches. A company may set up subsidiaries. Subsidiaries of a company have the status of enterprise legal persons and assume civil liabilities independently in accordance with the law.

 Article 14 In conducting its business activities, a company shall abide by the law and by business ethics, strengthen the construction of socialist spiritual civilization and accept the supervision of the government and the public. The legitimate rights and interests of a company are protected by law and shall not be infringed. 

Article 15 A company shall protect the legitimate rights and interests of its staff and workers, strengthen labour protection and bring about production safety. A company should use various means to enhance vocational education and on-the-job training for staff and workers to increase their work quality. 

Article 16 The staff and workers of a company organize a trade union in accordance with the law to carry out union activities and protect the lawful rights and interests of the staff and workers. A company shall provide the necessary conditions for activities of the trade union of the company. Limited liability companies established with investment by a wholly state-owned company and those established with investment by two or more state-owned enterprises or two or more other state-owned investment entities practice democratic management in accordance with the provisions of the Constitution and of relevant laws through the representative conferences of the staff and workers and otherwise.

 Article 17 The activities of the base-level organizations of the Communist Party of China in the company are dealt with in accordance with the Charter of the Communist Party of China. 

Article 18 The Law applies to limited liability companies with foreign investment. Where the laws on Sino-foreign equity joint venture enterprises, Sino-foreign co-operative joint venture enterprises and wholly-owned foreign enterprises otherwise provide, the provisions of such laws apply. Chapter 2 Establishment and Organizational Structure of A Limited Liability Company