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.