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China Company Law-Company Law of People’s Republic of China part 2

Time:2014-03-13 Hit:215

China Company Law-Company Law of People's Republic of China part 2


Shareholder's rights:

The general rights of shareholders are as follows:

For common interests:

1. Right to sue

2. Right to question and suggest

3. Right to participate and vote in the shareholders' meeting

4. Right of proposing an extraordinary general meeting

5. Right to check and make a copy of the article of association, the minutes of the shareholders meeting, the resolutions of the board of directors or supervisory committee, company financial and accounting report


For private interests:

1. Rights to transfers

2. Priority in subscribing new shares

3. Right to claim stock

4. Rights to claim surplus property

5. Right to claim dividends


  The minority shareholders of the company limited by shares may adopt accumulative voting in electing directors and supervisors if the articles of association or shareholder's meeting resolution provide so, the way by which to strengthen the voting power of the minority shareholders. The shareholders also have the right to sell their shares to the company at a reasonable price if the company has failed to distribute profits to shareholders for five consecutive years while it's in profit and meets the conditions for profit distribution.

  The minority shareholders also have the right to apply for nullifying or rescinding the improper resolutions of the shareholder meeting and the board of directors, the minority enjoys the rights of suing the directors, supervisors and managers who violate their rights. Minority shareholders, holding the 1% of the corporate shares or for more than 180 days in a company limited by shares, may use the rights of a representative to sue the wrongdoers on behalf of the company.  

Shareholders general meeting

There are two types of shareholders' meeting: regular and interim shareholder's meeting. A regular shareholders' meeting shall be convened once every year.

  The shareholder's meeting consisting of all shareholders is the power organ of the company. With the highest organizational authority for the company, the shareholders meeting's powers and functions are as follows:

1. To consider the promoters' report concerning the preparation of the establishment of the company

2. Approval of the operational policies and investment plans of the company

3. Election and replacement of the directors and supervisors who are not representatives of employees, and determination of their remuneration

4. Examination and approval of the reports of the board of directors or supervisors and the company's proposed annual financial budget and final accounts or plans for profits distribution and recovery of losses

5. Decisions regarding the increase or reduction of the company registered capital, issuance of bonds, and transfer of capital contributions by the shareholders to third parties

6. Decisions on the merger, division, change of corporate form, dissolution and liquidation of the company

7. Amendments to the company's article of association


  Shareholders exercise their voting rights in proportion to their capital contribution unless its article of association stipulated otherwise. The ordinary resolution only requires a simple majority, which is ½ of the affirmative votes hold by the present shareholders. The special resolution requires two-third affirmative votes hold by present shareholders which applies to a corporate merger, division and dissolution, amendment of the article of association, increase and decrease of registered capital, and change of organizational form.


Board of directors:

The number of a director differs in the limited liability company and the company limited by shares, the minimum number is five and the maximum is thirteen in the limited liability company, and 5-19 for the company limited by shares. The board of directors is responsible for the shareholders' meeting. The functions of the shareholders are as follows:

1. To convene shareholders meeting and report on the status of work

2. To carry out the resolution made at the shareholders' meeting

3. To decide on the operation plans and investment plans

4. To work out the corporate annual financial budget plans, final account plans, loss recovery plans, etc

5. To determine the organizational structure of the company;

6. To make decisions on appointment and dismissal of directors, accounting managers and their remuneration

7. To establish an internal management structure for the company

8. To perform other functions as vested by the company article of association


Board of supervisors:

  As an internal supervisory body, the board of supervisors is designed to closely monitor the directors, managers and other officers. The supervisory board has the functions and powers as below:

1. To examine the company's financial affairs;

2. To supervise the performance of duties by directors and senior management personnel and propose to remove a director or senior management personnel who violates the provision of the laws and administrative regulations and the articles of association of the company to make the correction

3. To request any director or officer to rectify if his act has injured the interests of the company

4. To propose the holding of extraordinary shareholders' meeting and, in the event that the board of directors fails to perform its duty of convening and presiding over a shareholders' meeting, to convene and preside over such a meeting

5. To bring forward proposals at a shareholders meeting

6. To initiate actions against directors and officers in accordance with the law

7. Other functions and powers specified in the company's articles of associations.






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