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Copyright Law of The People’s Republic of China
(Adopted at the 15th Meeting of the Standing Committee of the Seventh National People’s Congress on September 7, 1990, promulgated by Order No. 31 of the President of the People’s Republic of China on September 7, 1990, and effective as of June 1, 1991)
Table of Content
Table of Content
Chapter I General Provisions
Chapter II Copyright
Section 1 Copyright Owners and Their Rights
Section 2 Ownership of Copyright
Section 3 Term of Protection of Rights
Section 4 Limitations on Rights
Chapter III Copyright Licensing Contracts
Chapter IV Publication, Performance, Sound Recording, Video Recording and Broadcasting
Section 1 Publication of Books, Newspapers and Periodicals
Section 2 Performance
Section 3 Sound Recording and Video Recording
Section 4 Broadcasting by Radio Station or Television Station
Chapter V Legal Liability
Chapter VI Supplementary Provisions
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 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 that 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 be 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 that 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 percent 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 labor protection and bring about production safety.
A company should use various means to enhance vocational education and n-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
Section 1 Establishment
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, RMB 100,000 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 that are capital contributions, a valuation shall be carried out and the property contributed verified, without overvaluation or under valuation. 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 license. Where the conditions of this Law are not met, the company is not registered.
The date of issue of the business license 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 license(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).
Article 30
An investment certificate shall be issued to each of the shareholders upon the establishment of a limited liability company.
An investment certificate shall set out the following:
(1) the company’s name;
(2) the company’s date of registration;
(3) the company’s registered capital;
(4) the shareholder’s name and the amount and date of payment of capital contribution; and
(5) the number and date of issue of the investment certificate.
An investment certificate is sealed with the company’s seal.
Article 31
A limited liability company shall establish a register of shareholders setting out the following:
(1) the shareholders’ names and domiciles;
(2) the shareholders’ amounts of capital contributions; and
(3) the numbers of the investment certificates.
Article 32
Shareholders have the right to examine the minutes of shareholders’ meetings and the company’s financial and accounting reports.
Article 33
Shareholders are entitled to receive dividends in accordance with the proportions of their capital contributions. Shareholders have a preemptive right to subscribe capital when a company increases its capital.
Article 34
Shareholders shall not withdraw their capital contributions after the registration of a company.
Article 35
Shareholders may transfer among themselves all or part of their capital contributions.
Where a shareholder transfers its capital contribution to a person other than a shareholder, the consent of more than half of all shareholders shall be required. A shareholder objecting to such transfer shall purchase the capital contribution to be transferred and such shareholder is deemed to have agreed to the transfer if he does not purchase the capital contribution.
For a transfer of capital contribution which is transferred with the consent of the shareholders, other shareholders have a pre-emptive right to purchase it on the same conditions.
Article 36
After a shareholder transfers its capital contribution in accordance with the law, the company records in the register of shareholders the name of the transferee, its domicile and the amount of the capital contribution transferred.
Section 2 Organizational Structures
Article 37
The shareholder’s meetings of a limited liability company are made up of all shareholders. The shareholders’ meeting is the company’s authoritative organization, exercising its powers in accordance with this Law.
Article 38
The shareholders’ meeting exercises the following powers:
(1) to decide on the company’s operational policies and investment plans;
(2) to elect and replace directors and decide on matters relating to
the remuneration of directors;
(3) to elect and replace the supervisors who are representatives of the shareholders, and decide on matters relating to the remuneration of supervisors;
(4) to examine and approve reports of the board of directors;
(5) to examine and approve reports of the board of supervisors or any supervisor(s);
(6) to examine and approve the company’s proposed annual financial budget and final accounts;
(7) to examine and approve the company’s plans for profit distribution and recovery of losses;
(8) to decide on increases in or reductions of the company’s registered capital;
(9) to decide on the issue of bonds by the company;
(10) to decide on transfers of capital contribution by shareholders to
a person other than a shareholder;
(11) to decide on issue such as merger, division, change in corporate
form or dissolution and liquidation of the company; and
(12) to amend the company’s articles of association.
Article 39
Except as otherwise provided in this Law, methods of discussion and voting procedures for shareholders’ meetings are specified in the company’s articles of association.
A resolution for an increase in or reduction of registered capital, division, merger, dissolution or change in corporate form of the company shall be passed by shareholders representing two-thirds or more of the voting rights.
Article 40
A company may amend its articles of association. A resolution to amend the company’s articles of association shall be passed by shareholders representing two-thirds or more of the voting rights.
Article 41
Shareholders shall exercise voting rights at shareholders’ meetings in accordance with the proportions of their capital contribution.
Article 42
The first shareholders’ meeting is convened and presided over by the shareholder whose capital contribution is the largest. Such shareholder exercises its rights in accordance with this Law.
Article 43
Shareholders’ meetings are divided into regular meetings and interim meetings.
Regular meeting shall be convened on time in accordance with the provisions of the articles of association. Shareholders representing one-fourth or more of the voting rights or one-third or more of the directors or supervisors may request that an interim meeting be convened.
Where a limited liability company has a board of directors, shareholders’ meetings are convened by the board of directors and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable to perform his duties for a particular reason, the vice-chairman or another director designated by the chairman resides over the meeting.
Article 44
When convening a shareholders’ meeting, notice shall be given to all
shareholders fifteen days before the meeting is convened.
Shareholders’ meetings shall keep minutes of the decisions made on matters discussed. The minutes shall be signed by the shareholders present at the meeting.
Article 45
A limited liability company has a board of directors with three tothirteen members.
For a limited liability company established with the investment of two or more state-owned enterprises or two or more state-owned investment entities, members of its board of directors shall include representatives of the staff and workers of the company. Representatives of staff and workers on the board of directors are chosen by the company’s staff and workers by democratic election.
The board of directors has one chairman and may have one or two vice-chairmen. The method of election of the chairman and vice-chairmen is specified in the articles of association.
The chairman of the board of directors is the legal representative of the company.
Article 46
The board of directors is responsible to the shareholders’ meetings and exercises the following powers:
(1) to be responsible for convening shareholders’ meetings and accountable to the shareholders’ meeting;
(2) to implement the resolutions of the shareholders’ meeting;
(3) to decide on the operational plans and investment plan of the
company;
(4) to formulate the company’s proposed annual financial budget and final accounts;
(5) to formulate plans for profit distribution and recovery of losses;
(6) to formulate plans for increases in or reductions of the company’s
registered capital;
(7) to prepare plans for merger, division, change in corporate form
and dissolution of the company;
(8) to decide on the set up of the company’s internal management structure;
(9) to appoint or dismiss the company’s manager (general manager) (the "manager") and pursuant to the manager’s nominations to appoint or dismiss the deputy manager and the financial officers of the company and decide upon their remuneration; and
(10) to formulate the company’s basic management system.
Article 47
The term of office of the directors is as provided in the company’s articles of association, provided that each term shall not be longer than three years. At the end of a director’s term, the director may serve another term if re-elected.
The shareholders’ meeting shall not without reason remove a director from office before the expire of that director’s term.
Article 48
Meetings of the board of directors are convened and presided over by the chairman. When the chairman is unable to perform his duties for a particular reason, the vice-chairman or another director designated by the chairman convenes and presides over the meetings. One-third or more of the directors may request that an interim meeting be convened.
Article 49
Except as otherwise provided in this Law, methods of discussion and voting procedures for the board of directors are provided for in the company’s articles of association.
When convening a meeting of the board of directors, notice of the meeting shall be given to all directors ten days before the meeting is convened.
The board of directors shall keep minutes of the decisions made on matters discussed. Such minutes shall be signed by the directors present at the meeting.
Article 50
A limited liability company has a manager who is appointed or dismissed by the board of directors. The manager is responsible to the board of directors and exercises the following powers:
(1) to be in charge of the company’s production, operations and management and organize the implementation of the resolutions of the board of directors;
(2) to organize the implementation of the company’s annual business plan and investment plan;
(3) to propose plans for the putting in place of the company’s internal management structure;
(4) to propose the company’s basic management system;
(5) to formulate specific rules and regulations for the company;
(6) to propose the appointment or dismissal of the company’s deputy manager(s) and financial officers;
(7) to appoint or dismiss management officers other than those required to be appointed or dismissed by the board of directors; and
(8) other powers conferred by the company’s articles of association and the board of directors.
The manager is present at meetings of the board of directors.
Article 51
A limited liability company with a relatively small number of shareholders and of a relatively small scale may have one executive director and no board of directors. The executive director may also be the company’s manager.
The powers of the executive director shall be specified in the company’s articles of association with reference to the provisions of
Article 46 of this Law.
Where a limited liability company has no board of directors, the executive director is the legal representative of the company.
Article 52
A limited liability company with a relatively large scale of operations shall have a board of supervisors with not less than three members. The board of supervisors elects a convener from among its members.
The board of supervisors is made up of representatives of shareholders and a reasonable proportion of representatives from the company’s staff and workers, the specific proportion to be provided in the company’s articles of association. Representatives of the staff and workers on the board of supervisors are chosen by the company’s staff and workers by democratic election.
A limited liability company with a relatively small number of shareholders and of a small scale may have one to two supervisors. The directors, manager and financial officers of the company shall not act concurrently as supervisors.
Article 53
The term of office of the supervisors is three years. At the end of a supervisor’s term, the supervisor may serve another term, if reelected.
Article 54
The board of supervisors as supervisor (s) exercises the following powers:
(1) to inspect the company’s financial situation;
(2) to exercise supervision over the acts of the directors and manager
carried out while performing their corporate functions which violate laws, regulations or the company’s articles of association;
(3) to demand remedies from a director or manager when the acts of uch director or manager are harmful to the company’s interests;
(4) to propose the convening of an interim shareholders’ meeting; and
(5) other powers specified in the company’s articles of association.
The supervisors are present at meetings of the board of directors.
Article 55
When considering and deciding on the wages, welfare and production safety of the staff and workers and labour protection, labour insurance and other issues involving the personal interests of the staff and workers, the company shall first solicit and consider the opinions of the company’s trade union and staff and workers, and shall invite representatives from the trade union and the staff and workers to attend the relevant meetings.
Article 56
When considering and deciding on major issues relating to the company’s production and operations and formulating important rules and regulations, the company shall solicit and consider the opinions and proposals of the company’s trade union and staff and workers.
Article 57
Any of the following persons shall not serve as a director, supervisor or manager of a company:
(1) persons without civil capacity or with restricted civil capacity;
(2) persons who have committed the offences of corruption, bribery, infringement of property, misappropriation of property or sabotaging the socioeconomic order, and have been sentenced to criminal penalties, where less than five years have elapsed since the date of completion of the sentence; or persons who have been deprived of their political rights due to criminal offences, where less than five years have elapsed since the date of the completion of implementation of this deprivation;
(3) persons who are former directors, factory directors or managers of a company or enterprise which has become bankrupt and been liquidated as a
result of mismanagement and are personally liable for the bankruptcy of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise;
(4) persons who were legal representatives of a company or enterprise which had its business licence revoked due to a violation of the law and who are personally liable, where less than three years have elapsed since the date of the revocation of the business licence; or
(5) persons who have a relatively large amount of debts due and outstanding.
Where a company elects, nominates or appoints any director or supervisor or employs a manager contrary to the provisions of the preceding clause, such election, appointment or employment is ineffective.
Article 58
State civil servants shall not act concurrently as a company’s director, supervisor or manager.
Article 59
The directors, supervisors or managers shall abide by the company’s articles of association, faithfully execute their official duties and rotect the company’s interests. They shall not exploit their position and power in the company to advance their own private interests.
The directors, supervisors or managers of a company shall not exploittheir position to accept bribes or other illegal income or wrongfully take over company property.
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 right 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 Partyof 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
Section 1 Establishment
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, RMB 500,000 yuan;
(2) for a company engaging principally in wholesaling commodities, RMB 500,000 yuan;
(3) for a company engaging principally in commercial retailing, RMB 300,000 yuan;
(4) for a company engaging principally in technology development, consultancy and services, RMB 100,000 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 investing 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 ccordance 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 otherwisespecified 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 license 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).
Article 30
An investment certificate shall be issued to each of the shareholders upon the establishment of a limited liability company.
An investment certificate shall set out the following:
(1) the company’s name;
(2) the company’s date of registration;
(3) the company’s registered capital;
(4) the shareholder’s name and the amount and date of payment of capital contribution; and
(5) the number and date of issue of the investment certificate.
An investment certificate is sealed with the company’s seal.
Article 31
A limited liability company shall establish a register of shareholders
setting out the following:
(1) the shareholders’ names and domiciles;
(2) the shareholders’ amounts of capital contributions; and
(3) the numbers of the investment certificates.
Article 32
Shareholders have the right to examine the minutes of shareholders’ meetings and the company’s financial and accounting reports.
Article 33
Shareholders are entitled to receive dividends in accordance with the
proportions of their capital contributions. Shareholders have a preemptive right to subscribe capital when a company increases its capital.
Article 34
Shareholders shall not withdraw their capital contributions after the registration of a company.
Article 35
Shareholders may transfer among themselves all or part of their capital contributions.
Where a shareholder transfers its capital contribution to a person other than a shareholder, the consent of more than half of all shareholders shall be required. A shareholder objecting to such transfer shall purchase the capital contribution to be transferred and such shareholder is deemed to have agreed to the transfer if he does not purchase the capital contribution.
For a transfer of capital contribution which is transferred with the consent of the shareholders, other shareholders have a pre-emptive right to purchase it on the same conditions.
Article 36
After a shareholder transfers its capital contribution in accordance with the law, the company records in the register of shareholders the name of the transferee, its domicile and the amount of the capital contribution transferred.
Section 2 Organizational Structure
Article 37
The shareholder’s meetings of a limited liability company are made up of all shareholders. The shareholders’ meeting is the company’s authoritative organization, exercising its powers in accordance with this Law.
Article 38
The shareholders’ meeting exercises the following powers:
(1) to decide on the company’s operational policies and investment plans;
(2) to elect and replace directors and decide on matters relating to the remuneration of directors;
(3) to elect and replace the supervisors who are representatives of the shareholders, and decide on matters relating to the remuneration of supervisors;
(4) to examine and approve reports of the board of directors;
(5) to examine and approve reports of the board of supervisors or any supervisor(s);
(6) to examine and approve the company’s proposed annual financial budget and final accounts;
(7) to examine and approve the company’s plans for profit distribution and recovery of losses;
(8) to decide on increases in or reductions of the company’s registered capital;
(9) to decide on the issue of bonds by the company;
(10) to decide on transfers of capital contribution by shareholders to a person other than a shareholder;
(11) to decide on issue such as merger, division, change in corporate form or dissolution and liquidation of the company; and
(12) to amend the company’s articles of association.
Article 39
Except as otherwise provided in this Law, methods of discussion and voting procedures for shareholders’ meetings are specified in the company’s articles of association.
A resolution for an increase in or reduction of registered capital, division, merger, dissolution or change in corporate form of the company shall be passed by shareholders representing two-thirds or more of the voting rights.
Article 40
A company may amend its articles of association. A resolution to amend
the company’s articles of association shall be passed by shareholders representing two-thirds or more of the voting rights.
Article 41
Shareholders shall exercise voting rights at shareholders’ meetings in accordance with the proportions of their capital contribution.
Article 42
The first shareholders’ meeting is convened and presided over by the shareholder whose capital contribution is the largest. Such shareholder exercises its rights in accordance with this Law.
Article 43
Shareholders’ meetings are divided into regular meetings and interim meetings.
Regular meeting shall be convened on time in accordance with the provisions of the articles of association. Shareholders representing one-fourth or more of the voting rights or one-third or more of the directors or supervisors may request that an interim meeting be convened.
Where a limited liability company has a board of directors, shareholders’ meetings are convened by the board of directors and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable to perform his duties for a particular reason, the vice-chairman or another director designated by the chairman presides over the meeting.
Article 44
When convening a shareholders’ meeting, notice shall be given to all shareholders fifteen days before the meeting is convened.
Shareholders’ meetings shall keep minutes of the decisions made on matters discussed. The minutes shall be signed by the shareholders present at the meeting.
Article 45
A limited liability company has a board of directors with three to thirteen members.
For a limited liability company established with the investment of two or more state-owned enterprises or two or more state-owned investment entities, members of its board of directors shall include representatives
of the staff and workers of the company. Representatives of staff and workers on the board of directors are chosen by the company’s staff and workers by democratic election.
The board of directors has one chairman and may have one or two vice-chairmen. The method of election of the chairman and vice-chairmen is specified in the articles of association.
The chairman of the board of directors is the legal representative of the company.
Article 46
The board of directors is responsible to the shareholders’ meetings and exercises the following powers:
(1) to be responsible for convening shareholders’ meetings and accountable to the shareholders’ meeting;
(2) to implement the resolutions of the shareholders’ meeting;
(3) to decide on the operational plans and investment plan of the
company;
(4) to formulate the company’s proposed annual financial budget and final accounts;
(5) to formulate plans for profit distribution and recovery of losses;
(6) to formulate plans for increases in or reductions of the company’s
registered capital;
(7) to prepare plans for merger, division, change in corporate form
and dissolution of the company;
(8) to decide on the set up of the company’s internal management
structure;
(9) to appoint or dismiss the company’s manager (general manager) (the "manager") and pursuant to the manager’s nominations to appoint or dismiss the deputy manager and the financial officers of the company and decide upon their remuneration; and
(10) to formulate the company’s basic management system.
Article 47
The term of office of the directors is as provided in the company’s articles of association, provided that each term shall not be longer than three years. At the end of a director’s term, the director may serve another term if re-elected.
The shareholders’ meeting shall not without reason remove a director from office before the expire of that director’s term.
Article 48
Meetings of the board of directors are convened and presided over by the chairman. When the chairman is unable to perform his duties for a particular reason, the vice-chairman or another director designated by the chairman convenes and presides over the meetings. One-third or more of the directors may request that an interim meeting be convened.
Article 49
Except as otherwise provided in this Law, methods of discussion and voting procedures for the board of directors are provided for in the company’s articles of association.
When convening a meeting of the board of directors, notice of the meeting shall be given to all directors ten days before the meeting is convened.
The board of directors shall keep minutes of the decisions made onmatters discussed. Such minutes shall be signed by the directors presentat the meeting.
Article 50
A limited liability company has a manager who is appointed or dismissed by the board of directors. The manager is responsible to the board of directors and exercises the following powers:
(1) to be in charge of the company’s production, operations and management and organize the implementation of the resolutions of the boardof directors;
(2) to organize the implementation of the company’s annual business plan and investment plan;
(3) to propose plans for the putting in place of the company’s internal management structure;
(4) to propose the company’s basic management system;
(5) to formulate specific rules and regulations for the company;
(6) to propose the appointment or dismissal of the company’s deputy manager(s) and financial officers;
(7) to appoint or dismiss management officers other than those required to be appointed or dismissed by the board of directors; and
(8) other powers conferred by the company’s articles of association and the board of directors.
The manager is present at meetings of the board of directors.
Article 51
A limited liability company with a relatively small number of shareholders and of a relatively small scale may have one executive director and no board of directors. The executive director may also be the company’s manager.
The powers of the executive director shall be specified in the company’s articles of association with reference to the provisions of
Article 46 of this Law.
Where a limited liability company has no board of directors, the executive director is the legal representative of the company.
Article 52
A limited liability company with a relatively large scale of operations shall have a board of supervisors with not less than three members. The board of supervisors elects a convener from among its members.
The board of supervisors is made up of representatives of shareholders and a reasonable proportion of representatives from the company’s staff and workers, the specific proportion to be provided in the company’s articles of association. Representatives of the staff and workers on the board of supervisors are chosen by the company’s staff and workers by democratic election.
A limited liability company with a relatively small number of shareholders and of a small scale may have one to two supervisors.
The directors, manager and financial officers of the company shall not act concurrently as supervisors.
Article 53
The term of office of the supervisors is three years. At the end of asupervisor’s term, the supervisor may serve another term, if reelected.
Article 54
The board of supervisors as supervisor (s) exercises the following powers:
(1) to inspect the company’s financial situation;
(2) to exercise supervision over the acts of the directors and manager carried out while performing their corporate functions which violate laws, regulations or the company’s articles of association;
(3) to demand remedies from a director or manager when the acts of such director or manager are harmful to the company’s interests;
(4) to propose the convening of an interim shareholders’ meeting; and
(5) other powers specified in the company’s articles of association.
The supervisors are present at meetings of the board of directors.
Article 55
When considering and deciding on the wages, welfare and production safety of the staff and workers and labour protection, labour insurance
and other issues involving the personal interests of the staff and workers, the company shall first solicit and consider the opinions of the company’s trade union and staff and workers, and shall invite representatives from the trade union and the staff and workers to attend the relevant meetings.
Article 56
When considering and deciding on major issues relating to the company’s production and operations and formulating important rules and regulations, the company shall solicit and consider the opinions and proposals of the company’s trade union and staff and workers.
Article 57
Any of the following persons shall not serve as a director, supervisor or manager of a company:
(1) persons without civil capacity or with restricted civil capacity; (2) persons who have committed the offences of corruption, bribery, infringement of property, misappropriation of property or sabotaging the socioeconomic order, and have been sentenced to criminal penalties, where less than five years have elapsed since the date of completion of the sentence; or persons who have been deprived of their political rights due to criminal offences, where less than five years have elapsed since the date of the completion of implementation of this deprivation;
(3) persons who are former directors, factory directors or managers of a company or enterprise which has become bankrupt and been liquidated as a result of mismanagement and are personally liable for the bankruptcy of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise;
(4) persons who were legal representatives of a company or enterprise which had its business licence revoked due to a violation of the law and who are personally liable, where less than three years have elapsed sincethe date of the revocation of the business licence; or
(5) persons who have a relatively large amount of debts due and o
