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

Updated: 2006-04-17 10:09

(Adopted at the Fifth Session of the Standing Committee of the Eighth
National People's Congress on December 29, 1993. Revised for the first
time on December 25, 1999 in accordance with the Decision of the
Thirteenth Session of the Standing Committee of the Ninth People's
Congress on Amending the Company Law of the People's Republic of China.
Revised for the second time on August 28, 2004 in accordance with the
Decision of the 11th Session of the Standing Committee of the 10th
National People's Congress of the People's Republic of China on Amending
the Company Law of the People's Republic of China. Revised for the third
time at the 18th Session of the 10th National People's Congress of the
People's Republic of China on October 27, 2005)

Chapter I General Provisions

Article 1 This Law is formulated for the purposes of regulating the
organization and operation of companies, protecting the legitimate rights
and interests of companies, shareholders and creditors, 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 established within the
territory of the People's Republic of China in accordance with the
provisions of this law.

Article 3 A company is an enterprise juridical person, which has
independent juridical person property and enjoys the property right of
the juridical person. And it shall bear the liabilities for its debts
with all its property. As for a limited liability company, the
shareholders shall be responsible for the company to the extent of the
capital contributions they have paid. As for a joint stock limited
company, the shareholders shall be responsible for the company to the
extent of the shares they have subscribed to.

Article 4 The shareholders of a company shall be entitled to enjoy the
capital proceeds, participate in making important decisions, choose
managers and enjoy other rights.

Article 5 When undertaking business operations, a company shall comply
with the laws and administrative regulations, social morality and
business morality. It shall act in good faith, accept the supervision of
the government and the general public, and bear social responsibilities.
The legitimate rights and interests of a company shall be protected by
laws and may not be infringed.

Article 6 For the establishment of a company, an application for
establishment and registration shall be filed with the company
registration authority. If the application meets the requirements for
establishment of this Law, the company registration authority shall
register the company as a limited liability company or a joint stock
limited company. If the application fails to meet the requirements for
establishment of this Law, it shall not be registered as a limited
liability company or a joint stock limited company.

If any law or administrative regulation stipulates that the establishment
of a company shall be subject to approval, the relevant approval
formalities shall be gone through prior to the registration of the
company.
The general public may consult the relevant matters on company
registration at a company registration authority, which shall provide
consulting services.

Article 7 For a lawfully established company, the company registration
authority shall issue the company business license to it, and 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, actually paid capital, business
scope, the name of the legal representative and etc. If any of the items
as stated in the business license is changed, the company shall modify
the registration, and the company registration authority shall replace
the old business license by a new one.

Article 8 For a limited liability company established according to this
Law, it shall indicate in its company name the words "limited liability
company" or "limited company". For a joint stock limited company
established according to this Law, it shall indicate in its company name
the words "joint stock limited company" or "joint stock company".

Article 9 The change of a limited liability company to a joint stock
limited company shall satisfy the requirements as prescribed in this Law
for joint stock limited companies. The change of a joint stock limited
company to a limited liability company shall meet the conditions as
prescribed in this Law for limited liability companies. Under any of the
aforesaid circumstances, the creditor's rights and debts of the company
prior to the change shall be succeeded by the company after the change.

Article 10 A company shall regard the locus of its main office as its
domicile.

Article 11 The company established according to this law shall formulate
its articles of association which are binding on the company, its
shareholders, directors, supervisors and senior managers.

Article 12 The company's business scope shall be defined in its articles
of association and shall be registered according to law. The company may
change its business scope by modifying its articles of association, but
shall go through the formalities for modifying the registration. If the
business scope of a company covers any item subject to approval pursuant
to laws or administrative regulations, the approval shall be obtained
according to law.

Article 13 The legal representative of a company shall, according to the
provisions of its articles of association, be assumed by the chairman of
the board of directors, acting director or manager, and shall be
registered according to law. If the legal representative of the company
is changed, the company shall go through the formalities for modifying
the registration.

Article 14 The company may set up branches. To set up a branch, the
company shall file a registration application with the company
registration authority, and shall obtain the business license. The branch
shall not enjoy the status of an enterprise juridical person, and its
civil liabilities shall be born by its parent company.
The company may set up subsidiaries which enjoy the status of an
enterprise juridical person and shall be independently bear civil
liabilities.

Article 15 A company may invest in other enterprises. However, it shall
not become a capital contributor that shall bear the joint liabilities
for the debts of the enterprises it invests in, unless it is otherwise
provided for by any law.

Article 16 Where a company intends to invest in any other enterprise or
provide guarantee for others, it shall, according to the provisions of
its articles of association, be decided at the meeting of the board of
directors or shareholders or shareholders' convention. If the articles of
association prescribe any limit on the total amount of investments or
guarantees, or on the amount of a single investment or guarantee, the
aforesaid total amount or amount shall not exceed the responsive limited
amount. If a company intends to provide guarantee to a shareholder or
actual controller of the company, it shall make a resolution through the
shareholder's meeting or shareholders' convention.
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.

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