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

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