Contents
Introduction:
The Company Law of the People’s Republic of China (2024 Revision) was enacted in response to significant structural changes in China’s economy and corporate environment. As China’s market system has matured, the previous Company Law framework increasingly revealed limitations in addressing modern corporate practices, capital structures, and governance risks. The 2024 revision represents a comprehensive legislative effort to modernize China’s corporate legal system and to enhance legal certainty, market discipline, and investor confidence.
One of the key reasons for introducing the Company Law of the People’s Republic of China (2024 Revision) lies in the widespread use of subscribed capital arrangements without realistic contribution timelines. In practice, excessively high registered capital figures with long or undefined payment periods weakened creditor protection and distorted the principle of limited liability. The revised law responds by reinforcing capital contribution obligations and emphasizing substantive responsibility over formal compliance, thereby strengthening the credibility of company registration in China.
Another driving factor behind the 2024 revision is the need to improve corporate governance and accountability. As corporate structures became more complex, issues such as unclear decision-making authority, insufficient supervision of directors and senior management, and the abuse of control by actual controllers became increasingly prominent. The revised Company Law enhances governance mechanisms, clarifies fiduciary duties, and introduces clearer liability rules for those who exercise de facto control over companies, even without formal titles.
The Company Law of the People’s Republic of China (2024 Revision) also reflects China’s broader policy objective of aligning its corporate governance framework with international standards while maintaining its own regulatory principles. By strengthening shareholder rights, improving information disclosure, and refining rules on liquidation and deregistration, the law aims to balance corporate flexibility with market order and social responsibility.
For foreign investors, multinational enterprises, and cross-border advisors, the China Company Law 2024 has direct and practical implications. It affects how companies are established, how capital is contributed, how internal governance is structured, and how legal liabilities may arise during operation, financing, or exit. This English translation is provided as an authoritative reference to facilitate legal understanding, compliance planning, and investment decision-making under the revised PRC Company Law.
Chapter I General Provisions
Article 1
This Law is enacted in accordance with the Constitution for the purpose of regulating the organization and conduct of companies, protecting the lawful rights and interests of companies, shareholders, employees, and creditors, maintaining the order of the socialist market economy, and promoting its development.
Article 2
For the purposes of this Law, a company refers to a limited liability company or a joint stock limited company established within the territory of the People’s Republic of China in accordance with this Law.
Article 3
A company is an enterprise legal person, possessing independent legal person property and enjoying legal person property rights. A company shall bear liability for its debts with all of its property.
Article 4
Shareholders of a limited liability company shall bear liability to the company to the extent of their subscribed capital contributions. Shareholders of a joint stock limited company shall bear liability to the company to the extent of the shares they have subscribed for.
Article 5
In conducting business activities, a company shall comply with laws and administrative regulations, observe social ethics and business ethics, uphold honesty and good faith, accept supervision by the government and the public, and assume social responsibilities.
Article 6
To establish a company, an application for registration of establishment shall be submitted to the company registration authority in accordance with the law. Where the conditions for establishment prescribed by this Law are satisfied, the company registration authority shall register the company and issue a business license. The date of issuance of the business license shall be the date of the company’s establishment.
Article 7
A company’s business license shall state the company’s name, domicile, registered capital, business scope, name of the legal representative, and other relevant matters.
Article 8
A company shall have its domicile at the location of its principal business office.
Article 9
Where a limited liability company is converted into a joint stock limited company, it shall meet the conditions prescribed by this Law for a joint stock limited company. Where a joint stock limited company is converted into a limited liability company, it shall meet the conditions prescribed by this Law for a limited liability company.
Article 10
A company’s industry classification shall be determined based on the principal content of its business activities.
Article 11
The articles of association of a company shall be binding upon the company, its shareholders, directors, supervisors, and senior management personnel.
Chapter II Company Establishment
Article 12
The establishment of a company shall comply with the provisions of laws and administrative regulations. Where the establishment of a company is subject to approval, such approval shall be obtained in accordance with the law.
Article 13
To establish a company, its articles of association shall be formulated in accordance with the law.
Article 14
A company shall have a name. The name of a company shall be registered in accordance with the law. A company shall enjoy the exclusive right to use its name.
Article 15
A company may establish branches. To establish a branch, an application for registration shall be submitted to the company registration authority, and a business license shall be obtained. A branch does not have legal person status, and its civil liabilities shall be borne by the company.
A company may establish subsidiaries, which shall have legal person status and independently bear civil liabilities in accordance with the law.
Article 16
Where a company invests in other enterprises or provides guarantees for others, a resolution shall be adopted in accordance with its articles of association by the board of directors or the shareholders’ meeting or the general meeting of shareholders. Where laws or administrative regulations require that a resolution be adopted by the shareholders’ meeting or the general meeting of shareholders, such provisions shall apply.
If a company provides guarantees for its shareholders or actual controllers, such matters shall be subject to a resolution adopted by the shareholders’ meeting or the general meeting of shareholders. The shareholder or actual controller that is the beneficiary of such guarantee shall not participate in the voting, and the resolution shall be adopted by other shareholders holding more than half of the voting rights.
Article 17
A company shall protect the lawful rights and interests of its employees, sign labor contracts with employees in accordance with the law, participate in social insurance, and strengthen labor protection to ensure workplace safety.
A company shall, through workers’ congresses or other forms, practice democratic management in accordance with the provisions of the Constitution and relevant laws.
Article 18
Employees of a company shall, in accordance with the law, organize a trade union to carry out trade union activities and safeguard the lawful rights and interests of employees. The company shall provide necessary conditions for the activities of the trade union.
Article 19
In companies with Chinese Communist Party organizations, such organizations shall carry out Party activities in accordance with the Constitution of the Communist Party of China. Companies shall provide necessary conditions for the activities of Party organizations.
Chapter III Limited Liability Companies
Section 1 Establishment
Article 20
A limited liability company shall be established by one or more shareholders.
Article 21
A limited liability company shall have articles of association formulated by its shareholders.
Article 22
The articles of association of a limited liability company shall specify the following matters:
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the name and domicile of the company;
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the business scope of the company;
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the registered capital of the company;
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the names of the shareholders;
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the amount, method, and time limit of capital contributions made by shareholders;
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the organization of the company and its methods of formation, functions, and rules of procedure;
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the legal representative of the company;
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other matters deemed necessary by the shareholders.
Article 23
A limited liability company shall meet the following conditions:
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the number of shareholders complies with the provisions of this Law;
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the shareholders have subscribed for capital contributions in accordance with the articles of association;
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the articles of association comply with the provisions of this Law;
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the company has a name and an organizational structure that complies with the requirements for limited liability companies;
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the company has a domicile.
Article 24
Shareholders shall make capital contributions in full and on time in accordance with the articles of association.
Where a shareholder fails to make capital contributions in accordance with the articles of association, the company shall urge the shareholder to fulfill the obligation, and the shareholder shall be liable for breach of contract in accordance with the law.
Article 25
Where, after the establishment of a company, it is discovered that a shareholder has made a false capital contribution or failed to make capital contributions as scheduled, the company shall demand that such shareholder make corrections. If losses are caused to the company, the shareholder shall bear liability for compensation.
Article 26
The registered capital of a limited liability company shall be the total amount of capital contributions subscribed by all shareholders as registered with the company registration authority.
The subscribed capital contributions of shareholders shall be paid in full within a reasonable time limit as stipulated in the articles of association, except as otherwise provided by laws or administrative regulations.
Article 27
Where shareholders make capital contributions in currency, the full amount shall be deposited into the bank account of the limited liability company.
Where capital contributions are made in non-currency property such as physical assets, intellectual property rights, land use rights, equity interests, or creditor’s rights, the property shall be valued, and the transfer of property rights shall be completed in accordance with the law.
Article 28
Shareholders shall not make capital contributions with labor services, credit, the name of a natural person, goodwill, franchise rights, or property pledged as security, except as otherwise provided by laws or administrative regulations.
Article 29
After a limited liability company is established, the board of directors shall verify the capital contributions made by shareholders and prepare a capital contribution verification report.
Article 30
Where, after the establishment of a company, shareholders fail to make capital contributions in full and on time as stipulated in the articles of association, the company shall issue a written demand requiring such shareholders to fulfill their obligations within a specified period.
If shareholders fail to fulfill their obligations within the specified period, the company may, in accordance with the articles of association or a resolution of the shareholders’ meeting, impose liability for breach of contract, restrict shareholder rights, or take other measures.
Article 31
Where shareholders fail to make capital contributions in accordance with the provisions of this Law and cause losses to the company or its creditors, the shareholders shall bear civil liability in accordance with the law.
Article 32
A limited liability company shall prepare a register of shareholders, recording the following matters:
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the names and domiciles of shareholders;
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the amount, method, and date of capital contributions made by shareholders;
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the capital contribution certificates issued to shareholders.
Shareholders recorded in the register of shareholders may claim and exercise shareholder rights in accordance with the law.
Article 33
Shareholders shall have the right to consult and copy the articles of association, minutes of shareholders’ meetings, resolutions of the board of directors, resolutions of the board of supervisors, and financial and accounting reports of the company.
Shareholders may request to consult the accounting books and accounting vouchers of the company. Where a shareholder requests to consult accounting books or accounting vouchers, a written request stating the purpose shall be submitted. If the company has reasonable grounds to believe that the shareholder’s request is made for improper purposes and may harm the legitimate interests of the company, it may refuse the request and shall give a written reply to the shareholder stating the reasons within a reasonable period.
Article 34
Shareholders shall receive dividends in proportion to their paid-in capital contributions, unless otherwise agreed by all shareholders.
When a company increases capital, shareholders shall have the preemptive right to subscribe for the newly increased capital in proportion to their paid-in capital contributions, unless otherwise agreed by all shareholders.
Article 35
After a company is established, no shareholder may withdraw its capital contribution.
Article 36
Shareholders’ meetings shall be composed of all shareholders. The shareholders’ meeting is the authority of the company and shall exercise its powers in accordance with this Law.
Article 37
The shareholders’ meeting shall exercise the following powers:
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deciding on the company’s business policies and investment plans;
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electing and replacing directors and supervisors, and deciding on matters concerning their remuneration;
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examining and approving reports of the board of directors;
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examining and approving reports of the board of supervisors;
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examining and approving the company’s annual financial budget plans and final accounts plans;
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examining and approving plans for profit distribution and loss recovery;
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deciding on increases or reductions of the company’s registered capital;
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deciding on the issuance of corporate bonds;
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deciding on the merger, division, dissolution, liquidation, or change of company form;
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amending the articles of association;
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other powers stipulated in the articles of association.
Article 38
Shareholders shall exercise their voting rights at the shareholders’ meeting in proportion to their capital contributions, unless otherwise provided in the articles of association.
Article 39
Shareholders’ meetings shall be held in accordance with the provisions of the articles of association.
Where a shareholders’ meeting is held, shareholders shall be notified in advance in accordance with the articles of association.
Article 40
Resolutions of the shareholders’ meeting shall be adopted by shareholders representing more than half of the voting rights, unless otherwise provided by this Law or the articles of association.
Resolutions on amendments to the articles of association, increases or reductions of registered capital, mergers, divisions, dissolution, or change of company form shall be adopted by shareholders representing at least two-thirds of the voting rights.
Section 2 Organizational Structure
Article 41
A limited liability company shall establish a board of directors, except where it is otherwise provided by this Law that an executive director may be appointed instead.
The board of directors shall be composed of three to thirteen members, unless otherwise provided by this Law.
Article 42
A limited liability company with a relatively small scale or a small number of shareholders may appoint one executive director instead of establishing a board of directors. The executive director may concurrently serve as the manager of the company.
Article 43
The board of directors shall be responsible to the shareholders’ meeting and shall exercise the following powers:
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convening shareholders’ meetings and reporting its work to the shareholders’ meeting;
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implementing resolutions of the shareholders’ meeting;
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deciding on the company’s business plans and investment plans;
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formulating the company’s annual financial budget plans and final accounts plans;
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formulating plans for profit distribution and loss recovery;
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formulating plans for increases or reductions of the company’s registered capital and for the issuance of corporate bonds;
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formulating plans for mergers, divisions, dissolution, or change of company form;
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deciding on the establishment of the company’s internal management departments;
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deciding on the appointment or removal of the company’s manager and determining matters relating to the manager’s remuneration;
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deciding on the appointment or removal of the company’s deputy managers and financial officer, based on the manager’s nomination, and determining matters relating to their remuneration;
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formulating the company’s basic management system;
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other powers stipulated in the articles of association.
Article 44
Meetings of the board of directors shall be convened and presided over by the chairperson of the board. Where the chairperson is unable or fails to perform such duties, the meetings shall be convened and presided over by the vice chairperson. Where the vice chairperson is unable or fails to perform such duties, the meetings shall be convened and presided over by a director jointly elected by more than half of the directors.
Article 45
Meetings of the board of directors shall be held in accordance with the provisions of the articles of association.
A resolution of the board of directors shall be adopted by more than half of all directors.
Article 46
A limited liability company shall have a manager, who shall be appointed or removed by the board of directors. The manager shall be responsible to the board of directors and shall exercise the following powers:
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taking charge of the company’s production and business operations and organizing the implementation of resolutions of the board of directors;
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organizing the implementation of the company’s annual business plans and investment plans;
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drafting plans for the establishment of the company’s internal management departments;
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drafting the company’s basic management system;
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formulating specific rules of the company;
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proposing the appointment or removal of the company’s deputy managers and financial officer;
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deciding on the appointment or removal of other management personnel, except for those whose appointment or removal shall be decided by the board of directors;
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other powers granted by the board of directors.
Article 47
A limited liability company shall establish a board of supervisors, except where it is otherwise provided by this Law that no board of supervisors is required.
The board of supervisors shall be composed of at least three members. The board of supervisors shall include representatives of shareholders and an appropriate proportion of representatives of the company’s employees. The specific proportion of employee representatives shall be stipulated in the articles of association.
Article 48
A limited liability company with a relatively small scale or a small number of shareholders may appoint one supervisor instead of establishing a board of supervisors.
Article 49
The board of supervisors or the supervisor shall exercise the following powers:
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inspecting the financial affairs of the company;
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supervising the performance of duties by directors and senior management personnel, and proposing the removal of directors or senior management personnel who violate laws, administrative regulations, the articles of association, or resolutions of the shareholders’ meeting;
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requiring directors and senior management personnel to make corrections where their actions harm the interests of the company;
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proposing the convening of shareholders’ meetings, and convening and presiding over shareholders’ meetings where the board of directors fails to perform such duties as required by this Law;
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submitting proposals to shareholders’ meetings;
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initiating legal proceedings against directors and senior management personnel in accordance with Article 189 of this Law;
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other powers stipulated in the articles of association.
Article 50
Supervisors shall attend meetings of the board of directors as non-voting participants and may raise inquiries or suggestions regarding matters resolved by the board of directors.
Article 51
Directors, supervisors, and senior management personnel shall comply with laws, administrative regulations, and the articles of association, and shall bear duties of loyalty and diligence to the company.
Article 52
Directors, supervisors, and senior management personnel shall not take advantage of their positions to seek improper benefits for themselves or others, and shall not encroach upon the property of the company.
Article 53
Where directors, supervisors, or senior management personnel violate laws, administrative regulations, or the articles of association in the performance of their duties and cause losses to the company, they shall bear liability for compensation.
Article 54
Shareholders holding individually or jointly at least one percent of the company’s voting rights may, in writing, request the board of supervisors or the supervisor to initiate legal proceedings against directors or senior management personnel. Where the board of supervisors or the supervisor refuses to initiate legal proceedings, or fails to do so within thirty days after receiving the request, or where an emergency situation exists that may cause irreparable damage to the interests of the company, the shareholders may directly initiate legal proceedings in the people’s court.
Where directors or senior management personnel violate laws, administrative regulations, or the articles of association and cause losses to shareholders, shareholders may initiate legal proceedings in accordance with the law.
Article 55
Where a director or senior management personnel participates in a transaction between the company and himself or herself, or between the company and an enterprise in which he or she holds a material interest, such transaction shall be approved in accordance with the provisions of the articles of association or by the shareholders’ meeting or the board of directors.
Article 56
Directors, supervisors, and senior management personnel shall not, without the consent of the shareholders’ meeting or the board of directors, take advantage of their positions to seek business opportunities that belong to the company for themselves or others, or operate for themselves or others businesses similar to that of the company.
Article 57
A limited liability company shall, in accordance with the provisions of laws and administrative regulations, establish a financial and accounting system.
Article 58
A limited liability company shall prepare financial and accounting reports at the end of each fiscal year, which shall be audited by an accounting firm in accordance with the law.
Article 59
A limited liability company shall distribute profits after making up losses and withdrawing statutory common reserve funds in accordance with the law.
Article 60
The statutory common reserve fund shall be drawn at ten percent of the company’s after-tax profits. Where the cumulative amount of the statutory common reserve fund reaches fifty percent of the company’s registered capital, further withdrawal may be discontinued.
Article 61
A limited liability company may, after withdrawing the statutory common reserve fund, withdraw discretionary common reserve funds in accordance with a resolution of the shareholders’ meeting.
Article 62
The statutory common reserve fund shall be used to make up losses, expand production and business operations, or increase the registered capital of the company.
Article 63
Where the statutory common reserve fund is used to increase the registered capital, the remaining amount shall not be less than twenty-five percent of the company’s registered capital prior to the increase.
Article 64
A limited liability company shall appoint an accounting firm to audit its financial and accounting reports.
Article 65
A limited liability company shall prepare and maintain accounting books and accounting vouchers in accordance with the law.
Section 3 Equity Transfer
Article 66
Shareholders may transfer all or part of their equity to other shareholders.
Article 67
Where a shareholder intends to transfer its equity to a person other than a shareholder, the consent of more than half of the other shareholders shall be obtained. The shareholder shall notify the other shareholders in writing of the proposed equity transfer. If other shareholders do not reply within thirty days after receipt of the written notice, they shall be deemed to have consented to the transfer.
Where more than half of the other shareholders do not consent to the transfer, the non-consenting shareholders shall purchase the equity to be transferred. If they do not purchase the equity, they shall be deemed to have consented to the transfer.
Article 68
Under the same conditions, other shareholders shall have the preemptive right to purchase the equity to be transferred.
Where two or more shareholders claim the preemptive right, they shall determine their respective purchase proportions through consultation. If consultation fails, the preemptive right shall be exercised in proportion to their respective capital contributions at the time of transfer.
Article 69
Where the articles of association otherwise provide for equity transfer, such provisions shall prevail.
Article 70
After the equity is transferred in accordance with the law, the company shall cancel the capital contribution certificate of the original shareholder, issue a capital contribution certificate to the new shareholder, and revise the register of shareholders and the articles of association accordingly.
Article 71
A people’s court may, in accordance with the law, enforce the transfer of a shareholder’s equity.
Article 72
Where a shareholder’s equity is inherited by a lawful heir, the heir may succeed to the shareholder status, unless otherwise provided in the articles of association.
Section 4 Dissolution and Liquidation
Article 73
A limited liability company shall be dissolved upon the occurrence of any of the following circumstances:
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the term of operation stipulated in the articles of association expires or other causes for dissolution stipulated in the articles of association occur;
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a resolution to dissolve the company is adopted by the shareholders’ meeting;
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the company needs to be dissolved due to merger or division;
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the business license of the company is revoked, or the company is ordered to close down or dissolved in accordance with the law;
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other circumstances prescribed by laws or administrative regulations.
Article 74
Where a company is dissolved, a liquidation group shall be formed within fifteen days from the date of occurrence of the cause for dissolution to begin liquidation.
The liquidation group shall be composed of shareholders, unless otherwise provided by laws or administrative regulations.
Article 75
The liquidation group shall exercise the following powers during liquidation:
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liquidating the company’s assets and preparing a balance sheet and an inventory of assets;
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notifying and making public announcements to creditors;
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handling unfinished business of the company related to liquidation;
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paying taxes owed;
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settling claims and debts;
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disposing of remaining assets after payment of debts;
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representing the company in civil litigation activities.
Article 76
The liquidation group shall notify known creditors within ten days from the date of its establishment and make public announcements in newspapers or through the national enterprise credit information publicity system within sixty days.
Creditors shall declare their claims to the liquidation group within the period specified in the notice.
Article 77
After liquidation expenses, employees’ wages, social insurance premiums, and statutory compensation are paid, and taxes owed are paid, the remaining assets shall be used to settle the company’s debts.
Article 78
After the company’s debts are fully settled, the remaining assets shall be distributed to shareholders in proportion to their capital contributions, unless otherwise provided in the articles of association.
Article 79
Upon completion of liquidation, the liquidation group shall prepare a liquidation report, which shall be submitted to the shareholders’ meeting or the relevant authority for confirmation, and then apply to the company registration authority for deregistration.
Article 80
Where members of the liquidation group perform their duties in violation of laws, administrative regulations, or the articles of association and cause losses to the company or creditors, they shall bear liability for compensation.
Chapter IV Joint Stock Limited Companies
Section 1 Establishment
Article 81
A joint stock limited company may be established by promotion or by share offer.
Article 82
A joint stock limited company established by promotion shall be established by two or more promoters, of whom more than half shall have domicile within the territory of the People’s Republic of China.
Article 83
The promoters of a joint stock limited company shall enter into a promoters’ agreement, specifying their respective rights and obligations in the course of company establishment.
Article 84
The articles of association of a joint stock limited company shall be formulated by the promoters.
Article 85
The articles of association of a joint stock limited company shall specify the following matters:
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the name and domicile of the company;
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the business scope of the company;
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the total number of shares of the company, the par value of each share, and the registered capital of the company;
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the form of share issuance;
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the names or titles of the promoters and the number of shares subscribed by each promoter;
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the rights and obligations of shareholders;
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the composition, functions, and rules of procedure of the board of directors;
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the legal representative of the company;
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the composition, functions, and rules of procedure of the board of supervisors;
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profit distribution methods of the company;
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dissolution and liquidation of the company;
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methods for amendment of the articles of association;
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other matters deemed necessary by the promoters.
Article 86
The registered capital of a joint stock limited company shall be the total amount of paid-in share capital registered with the company registration authority.
Article 87
Shares shall be issued in accordance with the principles of fairness, impartiality, and good faith. Shares of the same class shall have the same rights.
Article 88
Shares shall be issued in registered form, except as otherwise provided by laws or administrative regulations.
Article 89
Promoters shall subscribe for the shares to be subscribed by them as stipulated in the articles of association and shall pay the share capital in full and on time.
Article 90
After the promoters have fully paid the subscribed share capital, the board of directors shall verify the capital contributions and prepare a capital verification report.
Article 91
A joint stock limited company established by promotion shall be registered upon fulfillment of the conditions prescribed by this Law.
Article 92
Where a joint stock limited company is established by share offer, the promoters shall publish a prospectus and subscribe for the shares in accordance with the law.
Article 93
A joint stock limited company shall issue share certificates to shareholders.
Section 2 Shareholders’ General Meeting
Article 94
The shareholders’ general meeting shall be composed of all shareholders and shall be the authority of the company.
Article 95
The shareholders’ general meeting shall exercise the following powers:
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deciding on the company’s business policies and investment plans;
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electing and replacing directors and supervisors, and deciding on matters relating to their remuneration;
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examining and approving reports of the board of directors;
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examining and approving reports of the board of supervisors;
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examining and approving the company’s annual financial budget plans and final accounts plans;
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examining and approving plans for profit distribution and loss recovery;
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deciding on increases or reductions of the company’s registered capital;
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deciding on the issuance of corporate bonds;
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deciding on the merger, division, dissolution, liquidation, or change of company form;
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amending the articles of association;
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other powers stipulated by laws or the articles of association.
Article 96
Shareholders shall exercise voting rights at the shareholders’ general meeting in proportion to the number of shares held, unless otherwise provided by laws or the articles of association.
Article 97
The shareholders’ general meeting shall hold an annual meeting each year. Extraordinary shareholders’ general meetings shall be convened under any of the following circumstances:
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where the number of directors is less than two-thirds of that prescribed by this Law or the articles of association;
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where the company’s losses amount to one-third of its total share capital;
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where shareholders holding individually or jointly at least ten percent of the company’s shares request a meeting;
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where the board of directors deems it necessary;
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where the board of supervisors proposes to convene a meeting;
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other circumstances prescribed by laws or the articles of association.
Article 98
Shareholders shall be notified of shareholders’ general meetings in accordance with the articles of association.
Article 99
Resolutions of the shareholders’ general meeting shall be adopted by shareholders representing more than half of the voting rights, unless otherwise provided by this Law or the articles of association.
Resolutions on amendments to the articles of association, increases or reductions of registered capital, mergers, divisions, dissolution, or change of company form shall be adopted by shareholders representing at least two-thirds of the voting rights.
Section 3 Board of Directors and Senior Management
Article 100
A joint stock limited company shall establish a board of directors.
The board of directors shall be composed of five to nineteen members, unless otherwise provided by this Law.
Article 101
The board of directors shall have one chairperson and may have one or more vice chairpersons.
Article 102
The board of directors shall be responsible to the shareholders’ general meeting and shall exercise the following powers:
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convening shareholders’ general meetings and reporting its work to the shareholders’ general meeting;
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implementing resolutions of the shareholders’ general meeting;
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deciding on the company’s business plans and investment plans;
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formulating the company’s annual financial budget plans and final accounts plans;
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formulating plans for profit distribution and loss recovery;
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formulating plans for increases or reductions of the company’s registered capital and the issuance of corporate bonds;
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formulating plans for mergers, divisions, dissolution, or change of company form;
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deciding on the establishment of the company’s internal management departments;
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appointing or removing the company’s manager and determining matters relating to the manager’s remuneration;
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appointing or removing the company’s deputy managers and financial officer, based on the manager’s nomination, and determining matters relating to their remuneration;
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formulating the company’s basic management system;
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other powers stipulated by the articles of association.
Article 103
Meetings of the board of directors shall be convened and presided over by the chairperson of the board. Where the chairperson is unable or fails to perform such duties, the meetings shall be convened and presided over by a vice chairperson. Where the vice chairperson is unable or fails to perform such duties, the meetings shall be convened and presided over by a director jointly elected by more than half of the directors.
Article 104
Meetings of the board of directors shall be held in accordance with the provisions of the articles of association.
A resolution of the board of directors shall be adopted by more than half of all directors.
Article 105
A joint stock limited company shall have a manager, who shall be appointed or removed by the board of directors. The manager shall be responsible to the board of directors and shall exercise the following powers:
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taking charge of the company’s production and business operations and organizing the implementation of resolutions of the board of directors;
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organizing the implementation of the company’s annual business plans and investment plans;
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drafting plans for the establishment of the company’s internal management departments;
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drafting the company’s basic management system;
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formulating specific rules of the company;
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proposing the appointment or removal of the company’s deputy managers and financial officer;
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deciding on the appointment or removal of other management personnel, except for those whose appointment or removal shall be decided by the board of directors;
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other powers granted by the board of directors.
Article 106
Directors, supervisors, and senior management personnel of a joint stock limited company shall comply with laws, administrative regulations, and the articles of association, and shall bear duties of loyalty and diligence to the company.
Article 107
Directors, supervisors, and senior management personnel shall not take advantage of their positions to seek improper benefits for themselves or others, and shall not encroach upon the property of the company.
Article 108
Where directors, supervisors, or senior management personnel violate laws, administrative regulations, or the articles of association in the performance of their duties and cause losses to the company, they shall bear liability for compensation.
Article 109
The provisions of Articles 54 to 56 of this Law shall apply mutatis mutandis to joint stock limited companies.
Section 4 Board of Supervisors
Article 110
A joint stock limited company shall establish a board of supervisors.
The board of supervisors shall be composed of at least three members. The board of supervisors shall include representatives of shareholders and an appropriate proportion of representatives of the company’s employees.
Article 111
The board of supervisors shall have one chairperson. Meetings of the board of supervisors shall be convened and presided over by the chairperson. Where the chairperson is unable or fails to perform such duties, the meetings shall be convened and presided over by a supervisor jointly elected by more than half of the supervisors.
Article 112
The board of supervisors shall exercise the following powers:
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inspecting the financial affairs of the company;
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supervising the performance of duties by directors and senior management personnel;
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proposing the removal of directors or senior management personnel who violate laws, administrative regulations, the articles of association, or resolutions of the shareholders’ general meeting;
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requiring directors and senior management personnel to make corrections where their actions harm the interests of the company;
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proposing the convening of shareholders’ general meetings, and convening and presiding over shareholders’ general meetings where the board of directors fails to perform such duties as required by this Law;
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submitting proposals to shareholders’ general meetings;
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initiating legal proceedings against directors and senior management personnel in accordance with the law;
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other powers stipulated by the articles of association.
Article 113
Supervisors shall attend meetings of the board of directors as non-voting participants and may raise inquiries or suggestions regarding matters resolved by the board of directors.
Section 5 Shares and Share Certificates
Article 114
The shares of a joint stock limited company shall be divided into equal parts, and each share shall have the same par value.
Article 115
Share certificates shall be paper-based or issued in other forms as prescribed by laws or administrative regulations.
Article 116
Share certificates shall state the following matters:
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the name of the company;
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the date of establishment of the company;
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the class and number of shares represented by the share certificate;
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the par value of the shares;
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the serial number of the share certificate;
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other matters prescribed by laws or administrative regulations.
Article 117
Shares may be transferred in accordance with the law.
Article 118
Shareholders shall transfer shares by endorsement or other methods prescribed by laws or administrative regulations.
Article 119
The transfer of registered shares shall take effect upon entry in the register of shareholders.
Article 120
A joint stock limited company shall prepare a register of shareholders, recording the following matters:
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the names or titles and domiciles of shareholders;
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the number of shares held by each shareholder;
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the serial numbers of the share certificates;
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other matters prescribed by laws or administrative regulations.
Article 121
The company shall keep the register of shareholders at its domicile. Shareholders may consult the register of shareholders.
Article 122
Where registered shares are lost, the shareholder may apply to the people’s court for public notice urging claimants to declare their rights, and may apply for the issuance of a new share certificate after the original share certificate is declared void.
Section 6 Corporate Bonds
Article 123
A joint stock limited company may issue corporate bonds in accordance with the law.
Article 124
Corporate bonds shall be issued in accordance with the principles of fairness, impartiality, and good faith.
Article 125
Corporate bonds shall be issued in registered form, except as otherwise provided by laws or administrative regulations.
Article 126
A joint stock limited company shall prepare a register of bondholders.
Article 127
Bondholders shall enjoy the rights stipulated in the terms of issuance of the bonds.
Article 128
The company shall protect the lawful rights and interests of bondholders.
Section 7 Financial Affairs and Accounting
Article 129
A joint stock limited company shall establish a financial and accounting system in accordance with laws, administrative regulations, and the provisions of the department of finance under the State Council.
Article 130
A joint stock limited company shall prepare financial and accounting reports at the end of each fiscal year, which shall be audited by an accounting firm in accordance with the law.
Article 131
A joint stock limited company shall, within the period prescribed by laws or administrative regulations, submit financial and accounting reports to the relevant authorities.
Article 132
A joint stock limited company shall distribute profits after making up losses and withdrawing statutory common reserve funds in accordance with the law.
Article 133
The statutory common reserve fund shall be drawn at ten percent of the company’s after-tax profits. Where the cumulative amount of the statutory common reserve fund reaches fifty percent of the company’s registered capital, further withdrawal may be discontinued.
Article 134
The statutory common reserve fund shall be used to make up losses, expand production and business operations, or increase the registered capital of the company.
Article 135
Where the statutory common reserve fund is used to increase the registered capital, the remaining amount shall not be less than twenty-five percent of the company’s registered capital prior to the increase.
Chapter V
Special Provisions on Companies with State-Owned Capital
Article 136
The State-owned assets supervision and administration authority of the State Council and local people’s governments shall, in accordance with laws and administrative regulations, perform the duties of investors with respect to companies in which the State invests, and exercise the rights and interests of investors.
Article 137
Companies with State-owned capital shall establish and improve internal supervision and management systems, strengthen risk control, and prevent the loss of State-owned assets.
Article 138
Where the State-owned capital is invested in a limited liability company or a joint stock limited company, the State shall, in accordance with the law, exercise the rights of shareholders through the State-owned assets supervision and administration authority or other authorized institutions.
Article 139
Companies with State-owned capital shall establish and improve corporate governance structures in accordance with the provisions of this Law and relevant State regulations.
Article 140
Where a company with State-owned capital establishes a board of directors, the board of directors shall include representatives of the investor and, where required by relevant State regulations, employee representatives.
Article 141
Companies with State-owned capital shall strengthen financial supervision and auditing in accordance with the law.
Article 142
The State encourages companies with State-owned capital to establish modern enterprise systems and improve operational efficiency.
Chapter VI Qualifications and Obligations of Directors, Supervisors, and Senior Management Personnel
Article 143
A person who falls under any of the following circumstances shall not serve as a director, supervisor, or senior management personnel of a company:
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a person who has no or limited capacity for civil conduct;
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a person who has been sentenced to criminal punishment for corruption, bribery, embezzlement, misappropriation of property, or disruption of the order of the socialist market economy, and for whom five years have not elapsed since completion of the sentence;
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a person who has been deprived of political rights for a criminal offense, and for whom five years have not elapsed since completion of the sentence;
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a person who served as a director, factory director, or manager of an enterprise that was bankrupt and liquidated due to mismanagement, and who was personally responsible for such bankruptcy, and for whom three years have not elapsed since the completion of the bankruptcy liquidation;
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a person who served as the legal representative of an enterprise whose business license was revoked or which was ordered to close down due to violation of the law, and who was personally responsible for such revocation or closure, and for whom three years have not elapsed since the date of revocation of the business license or closure order;
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a person who has a relatively large amount of unpaid personal debts that are due.
Article 144
Where a company elects or appoints a director or supervisor, or appoints senior management personnel in violation of the provisions of the preceding article, such election, appointment, or appointment shall be invalid.
Article 145
Directors, supervisors, and senior management personnel shall truthfully disclose relevant information in accordance with the law.
Article 146
Directors, supervisors, and senior management personnel shall not, without authorization, disclose the company’s secrets.
Article 147
Where directors, supervisors, or senior management personnel violate laws, administrative regulations, or the articles of association and cause losses to the company, they shall bear liability for compensation.
Article 148
The resignation of a director, supervisor, or senior management personnel shall not exempt such person from liability for acts committed during his or her term of office.
Chapter VII Corporate Mergers and Divisions; Capital Increase and Reduction
Article 149
A company may merge with other companies. A company merger may be effected by absorption or by establishment of a new company.
Article 150
Where a company merges with another company, the parties to the merger shall conclude a merger agreement and prepare balance sheets and inventories of assets.
Article 151
Within ten days from the date of the merger resolution, the company shall notify creditors and make public announcements within thirty days.
Article 152
Creditors may, within thirty days from receipt of the notice or within forty-five days from the date of public announcement, require the company to settle debts or provide corresponding guarantees.
Article 153
Upon merger, the surviving company or the newly established company shall succeed to the creditor’s rights and debtor’s obligations of the merged companies.
Article 154
Where a company is divided, its assets shall be divided accordingly.
Article 155
A company division shall follow procedures similar to those for a company merger.
Article 156
Where a company increases or reduces its registered capital, a resolution shall be adopted in accordance with the law.
Article 157
Where a company reduces its registered capital, it shall prepare a balance sheet and an inventory of assets.
Article 158
Within ten days from the date of the capital reduction resolution, the company shall notify creditors and make public announcements within thirty days.
Article 159
Creditors may, within thirty days from receipt of the notice or within forty-five days from the date of public announcement, require the company to settle debts or provide corresponding guarantees.
Chapter VIII Dissolution and Liquidation of Companies
Article 160
A company shall be dissolved upon the occurrence of any of the following circumstances:
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the term of operation stipulated in the articles of association expires or other causes for dissolution stipulated in the articles of association occur;
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a resolution to dissolve the company is adopted by the shareholders’ meeting or the shareholders’ general meeting;
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the company needs to be dissolved due to merger or division;
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the business license of the company is revoked, the company is ordered to close down, or the company is dissolved in accordance with the law;
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other circumstances prescribed by laws or administrative regulations.
Article 161
Where a company is dissolved, a liquidation group shall be formed within fifteen days from the date of occurrence of the cause for dissolution to begin liquidation.
Article 162
The liquidation group shall be composed of directors, unless otherwise provided by laws or administrative regulations.
Article 163
The liquidation group shall exercise the following powers during liquidation:
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liquidating the company’s assets and preparing a balance sheet and an inventory of assets;
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notifying and making public announcements to creditors;
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handling unfinished business of the company related to liquidation;
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paying taxes owed;
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settling claims and debts;
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disposing of remaining assets after payment of debts;
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representing the company in civil litigation activities.
Article 164
The liquidation group shall notify known creditors within ten days from the date of its establishment and make public announcements within sixty days.
Creditors shall declare their claims to the liquidation group within the period specified in the notice.
Article 165
After liquidation expenses, employees’ wages, social insurance premiums, and statutory compensation are paid, and taxes owed are paid, the remaining assets shall be used to settle the company’s debts.
Article 166
After the company’s debts are fully settled, the remaining assets shall be distributed to shareholders in proportion to their capital contributions or shareholdings, unless otherwise provided by the articles of association.
Article 167
Upon completion of liquidation, the liquidation group shall prepare a liquidation report, which shall be submitted to the shareholders’ meeting, the shareholders’ general meeting, or the relevant authority for confirmation, and then apply to the company registration authority for deregistration.
Article 168
Where members of the liquidation group perform their duties in violation of laws, administrative regulations, or the articles of association and cause losses to the company or creditors, they shall bear liability for compensation.
Chapter IX Legal Liability
Article 169
Where a company obtains registration by submitting false materials or by other fraudulent means, the company registration authority shall order it to make corrections or revoke its registration, and impose administrative penalties in accordance with the law.
Article 170
Where a shareholder makes a false capital contribution, withdraws capital contributions after the company is established, or fails to make capital contributions as stipulated, the shareholder shall be ordered to make corrections and may be subject to administrative penalties; where losses are caused, civil liability shall be borne in accordance with the law.
Article 171
Where directors, supervisors, or senior management personnel violate laws, administrative regulations, or the articles of association in the performance of their duties, administrative penalties shall be imposed in accordance with the law; where losses are caused, civil liability shall be borne.
Article 172
Where an actual controller abuses control rights and causes losses to the company or creditors, the actual controller shall bear liability in accordance with the law.
Article 173
Where shareholders, directors, supervisors, senior management personnel, or actual controllers use the company’s independent legal person status or shareholders’ limited liability to evade debts and seriously damage the interests of creditors, they shall bear joint and several liability for the company’s debts.
Article 174
Where a company violates laws or administrative regulations and constitutes a crime, criminal liability shall be pursued in accordance with the law.
Chapter X Supplementary Provisions
Article 175
This Law shall apply to foreign-invested enterprises in the territory of the People’s Republic of China, unless otherwise provided by laws on foreign investment.
Article 176
Where laws on foreign investment or other special laws provide otherwise, such provisions shall prevail.
Article 177
This Law shall enter into force on July 1, 2024.
