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BIZCHINA / Company laws

Company Law of the People's Republic of China (revised in 2005)

Updated: 2006-04-17 10:09

Article 33 A limited liability company shall prepare a register of shareholders, which shall specify the following:
 (1) the name of every shareholder and his/its domicile thereof;
 (2) the amount of capital contribution made by every shareholder;
 (3) the serial number of every capital contribution certificate. The shareholders recorded in the register of shareholders may, in light of the register of shareholders, claim to and exercise the shareholder's rights. A company shall register every shareholder's name and the amount of its capital contribution in the company registration authority. Where any of the registered items is changed, it shall handle the modification of the registration. If the company fails to do so, it shall not, on the basis of the unregistered or un-modified registration item, stand up to any third party.

Article 34 The shareholder shall be entitled to consult and copy the articles of association, records of the shareholders' meetings, resolutions of the meetings of the board of directors, resolutions of the meetings of the board of supervisors, as well as financial reports.
The shareholder may request to consult the accounting books of the company. Where a shareholder requests to consult the accounting books of the company, it shall submit to the company a written request which shall state its motives. If the company, pursuant to any justifiable reason, considers that the shareholder's request to consult the accounting books for any improper purpose may damage the legitimate interests of the company, it may reject the request of the shareholder, and shall, within in 15 days after the shareholder submits a written request, give it a written reply which shall include an explanation. If the company rejects the request of any shareholder to consult the accounting books, the shareholder may plead the people's court to demand the company to approve consultation.

Article 35 The shareholders shall distribute dividends in light of the percentages of capital contributions actually made by them, unless all shareholders agree that the dividends are not distributed on the percentages of capital contributions. Where the company is to increase its capital, its shareholders have the preemptive right to contribute to the increased amount on the basis of the same percentages of the old capital contributions they have made, unless all shareholders agree that they will not contribute to the increased amount of capital on the basis of the percentages of the old capital contributions they have made.

Article 36 After the establishment of a company, no shareholder may illegally take away the contribution capital. Section 2 Organizational Structure

Article 37 The shareholders' meeting of a limited liability company shall comprise all the shareholders. It shall be the authority of the company, and shall exercise its authorities according to this Law.

Article 38 The shareholders' meeting shall exercise the following authorities:
 (1) determining the company's operation guidelines and investment plans;
 (2) electing and changing the director and supervisors assumed by non-representatives of the employees, and determining the matters concerning their remuneration;
 (3) deliberating and approving the reports of the board of directors;
 (4) deliberating and approving the reports of the board of supervisors or the supervisor;
 (5) deliberating and approving annual financial budget plans and final account plans of the company;
 (6) deliberating and approving profit distribution plans and loss recovery plans of the company;
 (7) making resolutions on the increase or decrease of the company's registered capital;
 (8) making resolutions on the issuance of corporate bonds;
 (9) adopting resolutions on the assignment, split-up, change of company form, dissolution, liquidation of the company;
 (10) revising the articles of association of the company;
 (11) other functions as specified in the articles of association. Where any of the matters as listed in the preceding paragraph is consented by all the shareholders it in writing, it is not required to convene a shareholders' meeting. A decision may be made directly with the signatures or seals of all the shareholders.

Article 39 The shareholders' meeting shall be convened and presided over by the shareholder who has made the largest percentage of capital contributions and shall exercise its authorities according to this Law.

Article 40 The shareholders' meetings shall be classified into regular meetings and temporary meetings. The regular meetings shall be timely held in pursuance with the articles of association. Where a temporary 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, or by the supervisors of the company with no board of supervisors, a temporary meeting shall be held.

Article 41 Where a limited liability company has set up a board of directors, 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 does not 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 does not perform his duties, the meetings shall be presided over by a director jointly recommended by half or more of the directors. Where a limited liability company has not set up the board of directors, the shareholders' meetings shall be convened and presided over by the acting director.
If the board of directors or the acting director is unable or does not perform the duties of convening the shareholders' meeting, the board of supervisors or the supervisor of the company with no board of supervisors may convene and preside over such meetings. If the board of supervisors or supervisor does not convene or preside over such meetings, the shareholder representing 1 / 10 or more of the voting rights may convene and preside over such meetings on his/its own initiative.

Article 42 Every shareholder shall be notified 15 days before a shareholders' meeting is held, unless it is otherwise prescribed by the articles of association or it is otherwise stipulated by all the shareholders. A shareholders' meeting shall make records for the decisions on the matters discussed at the meeting. The shareholders who attend the meeting shall affix their signatures to the records.

Article 43 The shareholders shall exercise their voting rights at the shareholders' meetings on the basis of their respective percentage of the capital contributions, unless it is otherwise stipulated by the articles of association.

Article 44 The discussion methods and voting procedures of the shareholders' meeting shall be prescribed in the articles of association, unless it is otherwise provided for by this Law. A resolution made at a shareholders' meeting on amending the articles of association, increasing or reducing the registered capital, merger, split-up, dissolution or change of the company form shall be adopted by the shareholders representing 2 / 3 or more of the voting rights.


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