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BIZCHINA / Company laws

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

Updated: 2006-04-17 10:09

Article 45 The board of directors established by a limited liability company shall comprise 3 up to 13 members, unless it is otherwise provided for in Article 51 of this Law. If a limited liability company established by 2 or more state-funded enterprises or other state-funded investors, the board of directors shall comprise the representatives of employees of this company. The board of directors of any other limited liability company may also comprise the representatives of employees of the company concerned. The employees' representatives who are to serve as the board of directors shall be democratically elected by the employees of the company through the general meeting of the representatives of employees, employees' meeting of the company or in any other way. The board of directors shall have one board chairman and may have one or more deputy chairman. The appointment of the chairman and deputy chairman shall be prescribed in the articles of association.

Article 46 The terms of office of the directors shall be provided for in the articles of association, but each term of office shall not exceed 3 years. The directors may, after the expiry of their term of office, hold a consecutive term upon re-election. If no reelection is timely carried out after the expiry of the term of office of the directors, or if the number of the members of the board of directors is less than the quorum due to the resignation of some directors from the board of directors prior to the expiry of their term of office, the original directors shall, before the newly elected directors assume their posts, exercise the authorities of the directors according to laws, administrative regulations as well as the articles of association.

Article 47 The board of directors shall be responsible for the shareholders' meeting and exercise the following authorities:
 (1) convening shareholders' meetings and reporting the status on work thereto;
 (2) carrying out the resolutions made at the shareholders' meetings;
 (3) determining the operation plans and investment plans;
 (4) working out the company's annual financial budget plans and final account plans;
 (5) working out the company's profit distribution plans and loss recovery plans;
 (6) working out the company's plans on the increase or decrease of registered capital, as well as on the issuance of corporate bonds;
 (7) working out the company's plans on merger, split-up, change of the company form, dissolution, and etc.;
 (8) making decisions on the establishment of the company's internal management departments;
 (9) making decisions on hiring or dismissing the company's manager and his remuneration, and, according to the nomination of the manager, deciding on the hiring or dismissing of vice manager(s) and the person in charge of finance as well as their remuneration;
 (10) working out the company's basic management system; and
 (11) other functions as prescribed in the articles of association.

Article 48 The meeting of the board of directors shall be convened and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable or does not perform his duties, the meeting may be convened or presided over by the deputy chairman of the board of directors. If the deputy chairman of the board of directors is unable or does not perform his duties, the meeting may be convened or presided over by a director jointly recommended by half or more of the directors.

Article 49 The discussion methods and voting procedures of the board of directors shall be prescribed by the articles of association, unless it is otherwise provided for by this Law. The board of directors shall make records of the decisions on the matters discussed at the meetings thereof. The shareholders who attend the meeting shall affix their signatures to the records.
In the voting on a resolution of the board of directors, one person shall have one vote.

Article 50 A limited liability company may have a manager who shall be hired or dismissed upon the decision of the board of directors. The manager shall be responsible for the board of directors and shall exercise the following authorities:
 (1) taking charge of the management of the production and business operations of the company, and organizing to implement the resolutions of the board of directors;
 (2) organizing the execution of the company's annual operational plans and investment plans;
 (3) drafting plans on the establishment of the company's internal management departments;
 (4) drafting the company's basic management system;
 (5) formulating the company's concrete bylaws;
 (6) proposing to hire or dismiss the company's vice manager(s) and person(s) in charge of finance;
 (7) deciding on the hiring or dismissing of the persons-in-charge other than those who shall be decided by the board of directors; and
 (8) other authorities conferred by the board of directors.
If the articles of association prescribe otherwise the authorities of managers, the provisions in the articles of association shall be followed. The manager attends the meetings of the board of directors as a non-voting delegate.

Article 51 As for a limited liability company with relatively less shareholders or a relatively small limited liability company, it may have an acting director and no board of directors. The acting director may concurrently hold the post of the company's manger.
The authorities of the acting director shall be prescribed in the articles of association.


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