Article 1 This Law is enacted in accordance with the Constitution， in order to
meet the needs of establishing a modern enterprise system， to regulate the
organization and conduct of companies， to protect the lawful rights and
interests of companies as well as the shareholders and creditors thereof， to
maintain social and economic order， and to promote the development of the
socialist market economy.
Article 2 A company referred to herein means a limited liability company or a
joint stock limited company established within China in accordance herewith.
Article 3 Limited liability companies and joint stock limited companies are
enterprise legal persons.
In the case of a limited liability company， the shareholders are liable
thereto to the extent of their capital contribution， and the company is liable
for its debts to the extent of all of its assets.
In the case of a joint stock limited company， its total capital is divided
into stocks of equal value， and the shareholders are liable thereto to the
extent of their share holdings， and the Company is liable for its debts to the
extent of all of its assets.
Article 4 As contributors of capital， the shareholders of a company enjoy the
rights of proprietors in proportion to their respective share of capital
contributions to the company， such as deriving benefits from its assets， making
major decisions， and selecting its management.
The company enjoys the full property rights of a legal person in respect of
assets resulting from the investment by its shareholders， and enjoys civil
rights and bears civil liabilities in accordance with the law.
Title to the state-owned assets in the company shall vest in the State.
Article 5 A company， with all of its assets owned by it as a legal person，
shall operate autonomously and be responsible for its own profit and loss in
accordance with the law.
The company shall， under the state's macro-regulation， organize its production
and operation autonomously in light of market demand， with a view to improving
economic return and productivity， and accomplishing the preservation and
increase of the value of its assets.
Article 6 A company shall adopt an internal management system which clearly
sets out the rights and responsibilities of the relevant parties， is conducive
to scientific management， and combines incentive with check and balance.
Article 7 If a state-owned enterprise is to be reorganized into a company， it
must， in accordance with the conditions and requirements prescribed by national
statutes and administrative regulations， change its operating mechanism， and
orderly identify and verify its assets， determine the respective owners of the
property rights therein， settle its creditor's rights and liabilities， conduct
assets appraisal， and set up standard internal management organs.
Article 8 The establishment of a limited liability company or a joint stock
limited company is subject to the requirements prescribed herein. An entity
meeting the requirements prescribed herein may be registered as a limited
liability company， or a joint stock limited company， as the case may be； an
entity failing to meet the requirements prescribed herein may not be registered
as a limited liability company， or a joint stock limited company， as the case
Where the establishment of a company is subject to examination and approval as
required by the relevant national statutes or administrative regulations，
examination and approval procedure must be carried out in accordance with the
law prior to its registration.
Article 9 The name of a limited liability company established in accordance
herewith must contain the words “limited liability company”。
The name of a joint stock limited company established in accordance herewith
must contain the words “joint stock limited company”。
Article 10 The Company shall be domiciled at the place where its principal
executive office is located.
Article 11 In order to establish a company， its articles of association must
be prepared in accordance herewith. The articles of association of the company
are binding upon the company and its shareholders， directors， supervisors and
The company's business scope shall be prescribed by its articles of
association and be registered in accordance with the law. If an item in the
Company's business scope is subject to any restriction prescribed by any
national statute or administrative regulation， approval for such item shall be
obtained in accordance with the law.
The company shall conduct its business within its registered business scope.
The Company may change its business scope by amending its articles of
association in accordance with legally prescribed procedure and registering such
amendment with the company registration authority.
Article 12 A Company may invest in another limited liability company or joint
stock limited company， and is liable to such company to the extent of its
Except for an investment company or a holding company stipulated by the State
Council， where a company is to invest in other limited liability companies or
joint stock limited companies， its cumulative investment may not exceed 50
percent of its net assets， provided that if after the investment， the capital is
increased using profit distribution received from the company in which it
invested， the increased amount shall not be included.
Article 13 A company may establish branch companies， which do not have the
status of enterprise legal persons， and the civil liabilities thereof shall be
borne by the company.
The company may establish subsidiary companies， which have the status of
enterprise legal persons and bear civil liabilities independently in accordance
with the law.
Article 14 In conducting its business， a company must abide by the law，
observe industry ethics， strengthen the development of socialist spiritual
civilization， and subject itself to supervision by the government and the
The company's lawful rights and interests are protected by law and shall not
be infringed upon.
Article 15 A company must protect the lawful rights and interests of its
workers， strengthen labor protection， and achieve workplace safety.
The company shall strengthen the professional education and on the job
training of its workers in various forms， so as to improve their quality.
Article 16 The workers of a company shall organize a labor union， which shall
conduct union activities and safeguard the lawful rights and interests of the
workers in accordance with the law. The Company shall provide the necessary
conditions for its labor union to conduct its activities.
In accordance with the Constitution and other relevant national statutes，
democratic management in the form of workers' assembly and other forms shall be
adopted in a wholly state-owned company or a limited liability company
established through investment by two or more state-owned enterprises or by two
or more state-owned investment entities of other kinds.
Article 17 Activities of the elementary-level cell of the Chinese Communist
Party in a company shall be conducted in accordance with the Charter of the
Chinese Communist Party.
Article 18 Limited liability companies with foreign investment are subject to
this Law， provided that where the provisions of national statutes governing
Sino-foreign equity joint venture enterprises， Sino-foreign cooperative joint
venture enterprises， and wholly foreign owned enterprises stipulate otherwise，
the stipulations therein shall prevail.
第二章：有限责任公司的设立和组织机构Chapter Two： Establishment And Organs Of A Limited Liability
第一节：设立Section One Establishment
Article 19 The establishment of a limited liability company is subject to the
（i） The number of shareholders meets legal requirement；
（ii） The amount of shareholders' capital contribution reaches the minimum
level prescribed by law；
（iii） The shareholders jointly prepare the articles of association；
（iv） There is a company name， and the organs meeting the requirements for a
limited liability company are established；
（v） There is a permanent place of business and there are necessary conditions
for production and operation.
Article 20 A limited liability company shall be established through joint
investment by not fewer than 2 but not more than 50 shareholders.
A state authorized investment entity or state authorized department may
establish wholly state-owned limited liability companies as the sole investor.
Article 21 In the case of a state-owned enterprise established before this Law
becomes operative， if it meets the conditions prescribed herein for the
establishment of a limited liability company， it may be reorganized into a
wholly state-owned limited liability company in accordance herewith if it was
established by a single investment entity， or it may be reorganized into a
limited liability company pursuant to Paragraph 1 of the previous Article if it
was established by more than one investment entities.
The implementing procedures and detailed measures for reorganizing state-owned
enterprises into companies shall be separately prescribed by the State Council.
Article 22 The articles of association of a limited liability company shall
set forth the following：
（i） its name and domicile；
（ii） its business scope；
（iii） its registered capital；
（iv） the names of its shareholders；
（v） the rights and obligations of its shareholders；
（vi） the forms and amounts of capital contribution made by shareholders；
（vii） the conditions under which the shareholders' shares of capital
contribution may be assigned；
（viii） its organs， the manners in which they are established and their
respective powers， and the rules governing their conduct of business；
（ix） its legal representative；
（x） the causes for its dissolution and the method for its liquidation；
（xi） other matters which shareholders deem necessary to provide for.
Shareholders shall sign or impress their chops on the articles of association.
Article 23 The registered capital of a limited liability company is the amount
of capital contribution actually paid up by all shareholders and registered with
the company registration authority.
The registered capital of a limited liability company shall not be less than：
（i） Renminbi 500，000 Yuan if it primarily engages in production；
（ii） Renminbi 500，000 Yuan if it primarily engages in commodity wholesale；
（iii） Renminbi 300，000 Yuan if it primarily engages in commodity retail；
（iv） Renminbi 100，000 Yuan if it engages in scientific and technical
development， consulting or service.
If for a specific industry， the required minimum registered capital exceeds
any of the minimum levels prescribed above， such minimum requirement shall be
separately prescribed by the relevant national statute or administrative
Article 24 Shareholders may contribute their capital in the form of cash， as
well as in the forms of tangible goods， industrial property， non-patented
technology and land use rights at certain value. If any tangible goods，
industrial property， non-patented technology or land use rights are contributed
as capital， they must be appraised and the property rights therein must be
verified， and the contributed items may not be over-valued or under-valued.
Appraisal on land use rights shall be carried out in accordance with the
provisions of the relevant national statute and administrative regulations.
Where industrial property or non-patented technology is contributed as capital
at certain value， its valuation shall not exceed 20 percent of the total
registered capital， except where the state makes special provisions for
companies utilizing high and new technologies.
Article 25 Each shareholder shall invest in full the capital contribution
which he has subscribed for in accordance with the articles of association. If a
shareholder makes his capital contribution in cash， he shall deposit in full the
amount of such cash capital contribution into a temporary bank account opened
for the contemplated limited liability company； If capital contribution is made
in the form of tangible goods， industrial property， non-patented technology or
land use rights， the appropriate transfer procedure for the property rights
therein shall be carried out in accordance with the law.
A shareholder who fails to invest the capital contribution which he has
subscribed for in accordance with the previous Paragraph is liable for breach of
contract to those shareholders who have invested in full the capital
contribution they have subscribed for.