Section 1 Incorporation

 Article 77 The incorporation of a joint stock limited company shall meet the following conditions:

(1)The number of initiators meets the quorum;

 (2) The capital share subscribed for and raised by the initiators reaches the minimum amount of the statutory capital;

 (3) The issuance of shares and the preparatory work accord with the provisions of the law;

 (4) The articles of association are formulated by the initiators, and are adopted at the inaugural assembly if the company is to be launched by means of share offer;

 (5) The company has a name, and its organization accords with that of a joint stock limited company

 (6) The company has a domicile.

 Article 78 A joint stock limited company may be established by means of promotion or share offer. The incorporation of a company by promotion means that the initiators establish a company by subscribing for all of the shares that should be issued by the company. The incorporation of a company by share offer means that the initiators establish a company by subscribing for some of the shares that should be issued by the company and offering the remaining shares to the general public or to particular objects for subscription. 

 Article 79 To establish a joint stock limited company, there shall be not less than 2 but not more than 200 initiators, of whom half or more shall have a domicile within the territory of China.

 Article 80 The initiators of a joint stock limited company shall undertake the preparatory work of the company. They shall conclude an agreement of initiators to clarify their respective rights and obligations during the course of establishing the company.

 Article 81 Where a joint stock limited company is established by promotion, its registered capital shall be the total capital stocks subscribed for by all the initiators as registered in the company registration authority. The minimum amount of initial capital contributions to be made by all initiators shall be not less than 20% of the total registered capital, and the remaining amount shall be paid off by the initiators within 2 years as of the day when the company is established, while for an investment company, the remaining amount may be paid off within 5 years. Before the registered capital is paid off, no share may be offered to others for subscription.

Where a joint stock limited company is established by share offer, its registered capital shall be the total actually paid-up capital as registered in the company registration authority. The minimum amount of the registered capital of a joint stock limited company shall be RMB 5 million Yuan. If any law or administrative regulation prescribes a relatively higher minimum amount of registered capital, such provision shall be followed. 

 Article 82 The articles of association of a joint stock limited company shall specify the following matters:

 (1) the name and domicile of the company;

 (2) the scope of business of the company;

 (3) the form of company incorporation;

 (4) total shares, value of each share, and the amount of registered capital of the company;

 (5) the name of every initiator, the shares it has subscribed for, as well as the form and date of capital contributions;

 (6) the composition, authorities, term of office, and rules of procedure of the board of directors,

 (7) the legal representative of the company;

(8) the composition, authorities, term of office, and rules of procedure of the board of supervisors;

 (9) the methods for profit distribution of the company;

 (10) the reasons for dissolution of the company and liquidation methods;

 (11) the methods for issuing notices or public announcements of the company; and 

 (12) other matters deemed necessary by the assembly of shareholders.

 Article 83 The form of capital contributions of initiators shall be subject to the provisions in Article 27 of this Law. 

 Article 84 When establishing a joint stock limited company by promotion, the initiators shall subscribe, in writing, for the full amount of shares prescribed in the articles of association. In the case of paying the capital contributions at one time, the initiators shall make the payment in a lump sum; in the case of paying the capital contributions by installments, the initiators shall make the initial payment immediately. In the case of making capital contributions in non-currency properties, the initiators shall go through the procedures for the transfer of property rights according to law.

If any of the initiators fails to make capital contributions by following the provisions of the preceding paragraph, it shall bear the liabilities for breach of contract according to the stipulations in the initiators agreement. After the initiators have made their down payment, they should elect the board of directors and the board of supervisors. The board of directors shall file a registration application with the company registration authority and submit thereto the articles of association, the capital verification report as issued by a lawfully established capital verification institution, as well as other documents as stimulated by the laws and administrative regulations. 

 Article 85 For a joint stock limited company established by share offer, the shares subscribed for by the initiators shall not be less than 35 % of the total shares. However, if it is otherwise provided for by any law or administrative regulation, such law or administrative regulation shall prevail. 

 Article 86 When raising shares in the public, the initiators shall publish a prospectus and prepare share subscription forms. The share subscription form shall involve the items listed in Article 87, and a subscriber shall fill in the number and amount of shares he subscribes for and his domicile, and shall affix his signature or seal thereto. The subscriber shall pay the shares pursuant to the number of shares he has subscribed for.

 Article 87 The prospectus shall be accompanied by the articles of association formulated by the initiators and shall state the following:

 (1) the number of shares subscribed for by the initiators;

 (2) the value and issuing price of each share;

 (3) the total number of unregistered shares issued;

 (4) the purposes of the funds raised;

 (5) the rights and obligations of the subscribers; and

 (6) the beginning and ending dates for the public offer and a statement that the subscribers may revoke their subscriptions if the offer is under-subscribed at the close of the offer.

 

 Article 88 The public offer shares shall be underwritten by a lawfully established securities company, and an underwriting agreement shall be concluded.

 Article 89 As for the public offer shares, the initiators shall sign an agreement with the receiving bank.

The receiving bank shall receive and hold, as an agent, the payments for shares in light of the agreement, issue receipts to subscribers who have made the payments and be obliged to issue evidence of receipt of payments to the relevant departments.

 Article 90 After the full payment for the public offer shares, they shall be verified by a legally established capital verification institution, and a certification shall be issued thereby. The initiators shall hold a company inaugural assembly within 30 days, which shall comprise the subscribers. If the public offer shares are not fully subscribed for at the expiration of the time limit prescribed in the prospectus, or the initiators fail to hold an inaugural assembly within 30 days after the full payment for the public offer shares, the subscribers may demand the initiators to make repayments for the public offer shares plus an interest calculated at the bank deposit interest rate for the same period.

 Article 91 The initiators shall notify every subscriber of the date of the inaugural assembly or make a public announcement on the meeting 15 days in advance. The inaugural assembly may not be held, unless subscribers representing at least half of the shares appear. The inaugural assembly shall exercise the following authorities:

 (1) deliberating the report on the activities prepared by the sponsors prior to the incorporation;

 (2) adopting the articles of association;

 (3) electing members of the board of directors;

 (4) electing members of the board of supervisors;

 (5) checking the expenses incurred for the incorporation of the company 

 (6) checking the value of the assets contributed by the initiators in lieu of pecuniary payment for the shares;

 (7) Where any force majeure or major change of the operation conditions directly affect the incorporation of the company, the resolution not to establish the company may be adopted. A resolution adopted at the inaugural assembly on any of the matters as mentioned in the previous paragraph requires affirmative votes by subscribers representing more than half of the votes of those attending the assembly.

 Article 92 The initiators and subscribers shall not withdraw their share capital after making payments for the shares they have subscribed for or after making capital contributions by using non-currency properties, unless the public offer shares have not been fully subscribed within the time limit, the initiators fail to convene the inaugural assembly within the time limit or the inaugural assembly has decided not to set up the company. 

 Article 93 The board of directors shall, within 30 days after the inaugural assembly ends, file an application for registration with the company registration authority and submit the following documents to it:

 (1) a company registration application;

 (2) the records of the inaugural assembly;

 (3) the articles of association;

 (4) a capital verification report;

 (5) the appointment documents and identification certificate of the legal representative, directors and supervisors;

 (6) the qualification certificates for the legal person status or identification certificates for the natural person status of the initiators; and 

 (7) the documents on the right use of the domicile of the company.

As for a joint stock limited company established by share offer that makes public share offers, in additions to the aforementioned documents, it shall submit to the company registration authority the approval document issued by the securities regulatory institution of the State Council.

 Article 94 After the incorporation of a joint stock limited company, if any of the initiators fails to make full payment for the capital contributions as provided for in the articles of association, it shall make up the arrears, and the other initiators shall bear joint liabilities. After the incorporation of a joint stock limited company, if it is found that the actual value of the non-currency properties used as capital contributions for the incorporation of the company is obviously lower than that as prescribed in the articles of association, the initiator who has made the capital contribution shall make up the balance, and the other initiators shall bear joint liabilities.

 Article 95 The initiators of a joint stock limited company shall bear the following responsibilities:

  (1) In the case of failure to establish the company, bearing joint liabilities for the debts and expenses resulted from the activities prior to the incorporation of the company;

 (2) In the case of failure to establish the company, bearing joint liabilities for refunding the paid-up capital as well as the interests thereof computed at the bank interest rate for the same period; and 

 (3) If the company's interest is injured in the course of its incorporation due to the negligence of the initiators, being liable for making compensations to the company. 

 Article 96 Where a limited liability company is changed into a joint stock limited company, the total amount of the paid-up capital shall be not less than the total amount of the net assets. Where a limited liability company is changed into a joint stock limited company, the public offer shares issued for the purpose of increasing the capital shall comply with laws.

 Article 97 A joint stock limited company shall prepare and keep in the company the articles of association, register of the shareholders, counterfoil of corporate bonds, records of the shareholders' assemblies, records of the meetings of the board of directors, records of the meetings of the board of supervisors, and financial reports.

 Article 98 The shareholders shall be entitled to refer to the articles of association, register of the shareholders, counterfoil of corporate bonds, records of the shareholders' assemblies, records of the meetings of the board of directors, records of the meetings of the board of supervisors and financial reports, and may bring forward proposals or raise questions about the business operation of the company.   

Section 2 Shareholders' Assembly

 

 Article 99 The shareholders' assembly of a joint stock limited company shall comprise all the shareholders. It is the company's organ of power, which shall exercise its authorities according to this Law. 

 Article 100 The provisions regarding the authorities of the shareholders' meeting of a limited liability company as prescribed in the first paragraph of Article 38 of this Law shall apply to the shareholders'assembly of a joint stock limited company.

 Article 101 An annual session of the shareholders'assembly shall be held each year. Under any of the following circumstances, a temporary shareholders' assembly shall be held within 2 months:

 (1) The number of directors is less than two-thirds of the number of directors as required by this Law or the number of directors as prescribed in the articles of association;

 (2) The un-recovered losses of the company reach one-third of the total pain-up capital;

 (3) At the request of the shareholders separately or aggregately holding 10% or more of the company's shares;

 (4) The board of directors deems it necessary; 

 (5) At the request of the board of supervisors; and

 (6) Other circumstances as prescribed in the articles of association. 

 Article 102 A session of the shareholders' assembly shall be convened by the board of directors and be presided over by the chairman of the board of directors. If the chairman is unable or fails to perform his duties, the assembly thereof shall be presided over by the deputy chairman of the board of directors. If the deputy chairman of the board of directors is unable or fails to perform his duties, the assembly shall be presided over by a director jointly recommended by half or more of the directors.

If the board of directors or the executive director is unable or fails to fulfill the obligation of convening the shareholders' assembly, the board of supervisors shall convene and preside over such assembly. If the board of supervisors does not convene or preside over such assembly, the shareholders separately or aggregately holding 1/10 or more of the shares may convene and preside over such assemblies on their own initiative.

 Article 103 As for a shareholders' assembly  to be held, a notice shall be given to every shareholder 20 days in advance, which shall state the time and place of the assembly as well as the matters to be deliberated at the assembly. As for a temporary shareholders' assembly , a notice shall be given to every shareholder 15 days in advance. As for the issuance of unregistered shares, the time and place of the assembly as well as the matters to be deliberated at the assembly shall be announced 30 days in advance.

The shareholders separately or aggregately holding 3% or more of the shares of the company may put forward a written temporary proposal to the board of directors 10 days before a shareholders' assembly  is held. The board of directors may notify other shareholders within 2 days and submit the temporary proposal to the shareholders' assembly  for deliberation. The contents of a temporary proposal shall fall within the scope to be decided by the shareholders' assembly , and the temporary proposal shall have a clear topic for discussion and matters to be decided. The shareholders' assembly  shall not make any decision on any matter not listed in the notice as mentioned in the preceding two paragraphs. If the holders of unregistered shares attend the shareholders' assembly , they shall have their shares preserved in the company during the period from 5 days before the assembly is held to the day when the shareholders' assembly  is closed.

 Article 104 When a shareholder attends the shareholders' assembly , he shall have one voting right for each share he holds. However, the company has no voting right for its own shares it holds. When any resolution is to be made by the  shareholders’assembly, it shall be adopted by shareholders representing more than half of the voting rights of the shareholders in presence. However, when the  shareholders’assembly makes a decision to modify the articles of association or to increase or reduce the registered capital, or a resolution about the merger, division, dissolution or change of the company form, the resolution shall be adopted by shareholders representing 2/3 or more of the voting rights of the shareholders in presence.

 Article 105 For the important matters such as company transfer, being assignee of any important asset or providing guarantee for any other person, which shall be decided through the shareholders' assembly  under this Law and the articles of association, the board of directors shall timely call a shareholders' assembly  for voting.

  Article 106 When the shareholders' assembly  elects directors or supervisors, it may, according to the articles of association or resolution of the shareholders' assembly , adopt a cumulative voting system. 

The term "cumulative voting system" as mentioned in this Law refers to a system of voting by shareholders for the election of directors or supervisors at a session of the shareholders' assembly  in which the shareholder can multiply his voting rights by the number of candidates and vote them all for one candidate for director or supervisor.

 Article 107 A shareholder may entrust an agent to attend a shareholders' assembly . The agent shall present a power of attorney issued by the shareholder to the company, and shall exercise his voting rights within the authorization scope.

 Article 108 The shareholders' assembly  shall prepare records regarding the decisions on the matters discussed by it. The chairman of the assembly and the directors in presence shall affix their signatures to the records, which shall be preserved together with the book of signatures of the shareholders in presence as well as the power of attorney thereof.

 Section 3 The Board of Directors and Manager

 Article 109 A joint stock limited company shall set up a board of directors, which shall comprise 5-19 persons.

The board of directors may include representatives of the company's employees. The representatives of the employees who serve as board directors shall be democratically elected through the assembly of the representatives of the employees, the assembly of employees or otherwise.

The provisions in Article 46 of this Law on the term of office of the directors of a limited liability company shall apply to that of the director of a joint stock limited company. The provisions in Article 47 of this Law on the functions of the board of directors of a limited liability company shall apply to that of the board of directors of a joint stock limited company.

 Article 110 The board of directors shall have one chairman, and may have deputy chairmen. The chairman and deputy chairmen shall be elected by more than half of all the directors. The chairman of the board of directors shall convene and preside over the meetings of the board of directors and examine the implementation of the resolutions of the board of directors. The deputy chairmen shall assist the chairman to work. If the chairman is unable or fails to perform his duties, the deputy chairmen shall perform such duties. If the deputy chairmen of the board of directors is unable or fails to perform his duties, the director who is jointly recommended by half or more of the directors shall perform such duties.

 Article 111 The board of directors shall convene at least two meetings every year, and shall notice all directors and supervisors 10 days before it holds a meeting. The shareholders representing 1/10 or more of the voting rights, or 1/3 of the directors, or the board of supervisors may bring forward a proposal on holding a temporary meeting of the board of directors. The chairman of the board of directors shall, within 10 days after he receives such a proposal, convene and preside over a meeting of the board of directors. If the board of directors holds a temporary meeting, it may separately decide the method and time limit for the notification on convening meetings of the board of directors. 

 Article 112 No meeting of the board of directors may be held, unless more than half of the directors are present. When the board of directors makes a resolution, it shall be adopted by more than half of all the directors.

As for the voting on a resolution of the board of directors, a director shall have one vote only.

 Article 113 The directors shall attend in person the meetings of the board of directors. Where any director is unable to attend the meeting for a certain reason, he may, by issuing a written power of attorney, entrust another director to attend the meeting on his behalf, and the scope of authorization shall be stated in the power of attorney.

The board of directors shall prepare records regarding the resolutions on the matters discussed at the meeting, which shall be signed by the directors in presence. The directors shall be responsible for the resolutions of the board of directors. In case a resolution of the board of directors is in violation of laws, administrative regulations, articles of association or resolutions of the shareholders' assemblies and causes any serious loss to the company, the directors who participate in adopting the resolution shall make compensation. However, if a director is proven to have expressed his objection to the voting on such resolution and his objection was recorded in the records, then the director may be exempted from liabilities. 

 Article 114 A joint stock limited company may have a manager, who shall be hired or dismissed by the board of directors.

The provisions of Article 50 of this Law on the authorities of the manager of a limited liability company shall apply to that of the manager of a joint stock limited company.

 Article 115 The board of directors of a company may decide to appoint a member of the board of directors to concurrently take the post of the manager.

 Article 116 No company may, directly or via its subsidiary, lend money to any of its directors, supervisors or senior managers.

 Article 117 A company shall regularly disclose to its shareholders the information about remunerations obtained by the directors, supervisors and senior managers from the company.

 Section 4 the Board of Supervisors

 Article 118 A joint stock limited company shall set up a board of supervisors, which shall comprise at least 3 persons.

 

The board of supervisors shall include representatives of shareholders and an appropriate percentage of representatives of the company's employees. The percentage of the representatives of employees shall account for not less than 1/3 of all the supervisors, but the concrete percentage shall be specified in the articles of association. The representatives of employees who serve as members of the board of supervisors shall be democratically elected through the assembly of representatives of the company's employees, the assembly of employees or by other means. The board of supervisors shall have one chairman, and may have a deputy chairman. The chairman and deputy chairman shall elected by more than half of all the supervisors. The chairman of the board of supervisors shall convene and preside over the meetings of the board of supervisors. If the chairman of the board of supervisors is unable or fails to perform his duties, the deputy chairmen of the board of supervisors shall convene and preside over the meeting of the board of supervisors. If the deputy chairmen of the board of supervisors is unable or fails to perform the duties, the supervisor jointly recommended by half or more of the supervisors shall convene and preside over the meetings of the board of supervisors. No director or senior manager may concurrently act as a supervisor.  

The provisions of Article 53 of this Law on the term of office of the supervisors of a limited liability company shall apply to that of the supervisors of a joint stock limited company.

  Article 119 The provisions of Articles 54 and 55 of this Law on the functions of a limited liability company shall apply to that of the board of supervisors of a joint stock limited company. The expenses necessary for the board of supervisors to exercise its authorities shall be borne by the company.

 Article 120 The board of supervisors shall hold at least one meeting every 6 months. The supervisors may propose to convene temporary meetings of the board of supervisors. The discussion methods and voting procedures of the board of supervisors shall be prescribed in the articles of association, unless it is otherwise provided for by this Law.

The board of supervisors shall prepare records for the decisions on the matters discussed at the meeting, which shall be signed by the supervisors in presence.

 Section 5 Special Provisions on the Organization of a Listed Company

  Article 121 The term "listed company" as mentioned in this Law refers to the joint stock limited companies whose shares are listed and traded in a share exchange.

 Article 122 Where a listed company purchases or sells any important assets, or provides a guarantee of which the amount exceeds 30% of its total assets, a resolution shall be made by the shareholders' assembly  and adopted by shareholders representing 2/3 of the voting rights of the shareholders in presence.

 Article 123 A listed company shall have independent directors. And the concrete measures shall be formulated by the State Council.

 Article 124 A listed company may have a secretary of the board of directors, who shall be responsible for the preparation of the sessions of shareholders' assembly  and meetings of the board of directors, preservation of documents, management of the company's share rights, information disclosure, and etc.

 

 Article 125 Where any of the directors has any relationship with the enterprise involved in the matter to be discussed at the meeting of the board of directors, he shall not vote on this resolution, nor may he vote on behalf of any other person. The meeting of the board of directors shall not be held unless more than half of the unrelated directors are present at the meeting. A resolution of the board of directors shall be adopted by more than half of the unrelated directors. If the number of unrelated directors in presence is less than 3 persons, the matter shall be submitted to the shareholders' assembly  of the listed company for deliberation.