BIZCHINA / Company laws
Company Law of the People's Republic of China (revised in 2005)
Updated: 2006-04-17 10:09
Article 52 A limited liability company may set up a board of supervisors,
which shall comprise at least 3 persons. A limited liability company,
which has relatively less shareholders or is relatively small in scale,
may have 1 or 2 supervisors, and does not have to establish a board of
supervisors. The board of supervisors shall include representatives of
shareholders and representatives of the employees of the company at an
appropriate ratio which shall be specifically stimulated in the articles
of association. The employees' representatives, who are to serve as
members of the board of supervisors, shall be democratically elected by
the employees of the company through the meeting of the employees'
representatives or employees' meeting, or by any other means. The board
of supervisors shall have one chairman, who shall be elected by half or
more 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 to or does not
perform his duties, the supervisor 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 work as a supervisor.
Article 53 Every term of office of the supervisors shall be 3 years. The
supervisors 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 supervisors, or 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 supervisors prior to
the expiry of their term of office, the original supervisors shall,
before the newly elected supervisors assume their posts, exercise the
authorities of the supervisors according to laws, administrative
regulations as well as the articles of association.
Article 54 The board of supervisors or supervisor of a company with no
board of supervisors may exercise the following authorities:
(1) checking the financial affairs of the company;
(2) supervising the duty-related acts of the directors and senior
managers, and bringing forward proposals on the removal of any director
or senior manager who violates any law, administrative regulation, the
articles of association or any resolution of the shareholders' meeting;
(3) demanding any director or senior manager to make corrections if his
act has injured the interests of the company;
(4) proposing to convening temporary shareholders' meetings, and
convening and presiding over shareholders' meetings when the board of
directors does not exercise the functions of convening and presiding over
the shareholders' meetings as prescribed in this Law;
(5) bringing forward proposals at shareholders' meetings;
(6) initiating actions against directors or senior managers according to
Article 152 of this Law; and
(7) other duties as prescribed by the articles of association.
Article 55 The supervisors may attend the meetings of the board of
directors as non-voting delegates, and may raise questions or suggestions
on the matters to be decided by the board of directors.
If the board of supervisors or supervisor of the company with no board of
directors finds that the company is running abnormally, it (he) may make
investigations. Where necessary, it (he) may hire an accounting firm to
help it (him) with the relevant expenses being born by the company.
Article 56 The board of supervisors shall hold meetings at least once a
year. The supervisors may propose to hold 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 stimulated in this Law.
The resolution of the board of supervisors shall be adopted by half or
more of the supervisors. The board of supervisors shall make records for
the resolutions on the matter it discusses, which shall be signed by the
supervisors in presence.
Article 57 The expenses necessary for the board of supervisors or the
supervisor of a company with no board of supervisors to perform its (his)
duties shall be borne by the company.
Section 3 Special Provisions on One-person Limited Liability Companies
Article 58 The provisions of this Section shall apply to the
establishment and organizational structure of a one-person limited
liability. As for any matter not prescribed in this Section, it shall be
subject to the provisions of Sections 1 and 2 of this Chapter.
The term "one-person limited liability company" as mentioned in this Law
refers to a limited liability company with only one natural person
shareholder or a juridical person shareholder.
Article 59 The minimum amount of registered capital of a one-person
limited liability company shall be RMB 100, 000 Yuan. The shareholder
shall, in a lump sum, pay the capital contribution as specified in the
articles of association.
One natural person is allowed to establish merely one one-person limited
liability company which shall not set up any further one-person limited
liability company.
Article 60 A one-person limited liability company shall, in the company
registration, give a clear indication that it is solely-funded by one
natural person or one juridical person, and the same shall be specified
in the business license of the company.
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