DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS REGARDING THE REVISION OF COMPANY LAW

    Chapter I  General Provisions

    Chapter II  Incorporation and Organizational Structure of          

                Limited Liability Companies

        Section 1  Incorporation

        Section 2  Organizational Structure

        Section 3  Wholly State-owned Companies

    Chapter III  Incorporation and Organizational Structure of Joint  

                 Stock Limited Companies

        Section 1  Incorporation

        Section 2  Shareholders’ General Meetings

        Section 3  Board of Directors, and Manager

        Section 4  Supervisory Board

    Chapter IV  Issue and Transfer of Shares of Joint Stock Limited Companies

        Section 1  Issue of Shares

        Section 2  Transfer of Shares

        Section 3  Listed Companies

    Chapter V  Company Bonds

    Chapter VI  Financial Affairs and Accounting of Companies

    Chapter VII  Merger and Division of Companies

    Chapter VIII  Bankruptcy, Dissolution and Liquidation of Companies

    Chapter IX  Branches of Foreign Companies

    Chapter X  Legal Liability

    Article 1  This Law is formulated in accordance with the
Constitution of the People’s Republic of China in order to meet the
needs of establishing a modern enterprise system, to standardize
the organization and activities of companies, to protect the
legitimate rights and interests of companies, shareholders and
creditors, to maintain social and economic order and to promote the
development of the socialist market economy.

    Article 2 The  term “company” mentioned in this Law refers to
a limited liability company or a joint stock limited company
incorporated within the territory of the People’s Republic of China
in accordance with this Law.

    Article 3  A “limited liability company” or “joint stock
limited company” is an enterprise legal person.

    In the case of a limited liability company, shareholders shall
assume liability towards the company to the extent of their
respective capital contributions, and the company shall be liable
for its debts to the extent of all its assets.

    In the case of a joint stock limited company, its total
capital shall be divided into equal shares, shareholders shall
assume liability towards the company to the extent of their
respective shareholdings, and the company shall be liable for its
debts to the extent of all its assets.

    Article 4  The shareholders of a company shall, in their
capacity of contributors of capital, enjoy such rights of owners as
benefitting from assets of the company, making major decisions and
selecting managerial personnel in accordance with the amount of their respective capital investment in the company.

    A company shall enjoy the right to the entire property of the
legal person formed by the investments of the shareholders and
shall possess civil rights and bear the civil liabilities in
accordance with the law.

    The ownership of State-owned assets in a company shall vest in
the State.

    Article 5  A company shall, with all its legal person assets,
operate independently and be responsible for its own profits and
losses according to law.

    A company shall, under the macro-adjustment and control of the
State, organize its production and operation independently in
accordance with market demand for the purpose of raising economic
benefits and labour productivity and maintaining and increasing the
value of its assets.

    Article 6  An internal management mechanism shall be
implemented within companies, which is characterized by clear
definition of powers and responsibilities, scientific management
and combination of encouragement and restraint.

    Article 7  State-owned enterprises restructured to form
companies must transform their operating mechanism, gradually
produce an inventory of their assets and verify their funds,
delimit their property rights, clear off their claims and debts,
evaluate their assets and establish a standard internal management
mechanism in accordance with the conditions and requirements set by
laws, administrative rules and regulations.

    Article 8  Incorporation of limited liability companies or
joint stock limited companies must meet the conditions stipulated
by the present Law. Companies meeting the conditions set by this
Law shall be registered as limited liability companies or joint
stock limited companies; while companies failing to meet the
conditions set by this Law shall not be registered as limited
liability companies or joint stock limited companies.

    Where laws or administrative rules and regulations provide
that incorporation of companies must be subject to examination and
approval, the procedures of examination and approval shall be
completed according to law prior to the registration of such
companies.

    Article 9  A limited liability company established according to
this Law must clearly indicate the words “limited liability
company” in its name.

    A joint stock limited company established according to this
Law must clearly indicate the words “joint stock limited company”
in its name.

    Article 10  A company’s domicile shall be the place where its
main administrative organization is located.

    Article 11  Articles of association must be formulated in
accordance with this Law when a company is incorporated. A
company’s articles of association shall have binding force on the
company, its shareholders, directors, supervisors and managers.

    A company’s scope of business shall be defined in its articles
of association and registered in accordance with the law. Items
within the company’s “scope of business” that are subject to
restrictions under laws, administrative rules and regulations shall
be approved in accordance with the law.

    Companies shall engage in business activities within their
registered scope of business. A company may change its scope of business by amending its articles of association in accordance with
statutory procedures and making such amendments registered with the
Company Registration Authority.

    Article 12  A company may invest in other limited liability
companies or joint stock limited companies and shall assume
liability towards the company so invested in to the extent of such
capital contributions.

    In case a company, other than an investment company or a
holding company as specified by the State Council, invests in other
limited liability companies or joint stock limited companies, the
aggregated amount of such investments shall not exceed fifty
percent of its net assets; after the initial investment, the
increase therein resulting from capitalization of the profit
derived from the company invested in shall not be included.

    Article 13  A company may establish branches, which shall not
possess the status of enterprise legal persons and whose civil
liabilities shall be borne by the company.

    A company may establish subsidiaries, which shall possess the
status of enterprise legal perons, and shall independently bear
civil liabilities according to law.

    Article 14  A company must, when engaging in business
activities, abide by the law, observe professional ethics,
strengthen the construction of socialist culture and ideology and
accept supervision of the government and the public.

    The legitimate rights and interests of companies shall be
protected by the law and shall be inviolable.

    Article 15  Companies must protect the lawful rights and
interests of their staff and workers, and strengthen labour
protection so as to achieve safety in production.

    Companies shall apply various forms to strengthen professional
education and on-the-job training of their staff and workers so as
to improve their quality.

    Article 16  Company’s staff and workers shall, in accordance
with the law, organize a trade union to carry out the trade union
activities and protect the lawful rights and interests of the staff
and workers. The company shall provide its trade union with
conditions necessary for carrying out its activities.

    Wholly State-owned companies and limited liability companies
invested in and established by two or more State-owned enterprises
or by two or more other State-owned investment entities shall,
through staff and workers’ congresses or other forms, practise
democratic management in accordance with the provisions of the
Constitution and relevant laws.

    Article 17  The grass-root organizations of the Communist Party
of China in companies shall carry out their activities in
accordance with the Constitution of the Communist Party of China.

    Section 1  Incorporation

    Article 19  The following conditions must be fulfilled for the
incorporation of a limited liability company:

    (1) the number of shareholders conforms to the statutory
number;

    (2) the capital contributions of the shareholders reach the
statutory minimum amount of capital;

    (3) the shareholders have jointly formulated the articles of association of the company ;

    (4) the company has name and an organizational structure
established in compliance with the requirements for a limited
liability company; and

    (5) there are fixed premises and necessary conditions for
production and operation.

    Article 20  A limited liability company shall be jointly
invested in and incorporated by not less than two and not more than
fifty shareholders.

    State-authorized investment institutions or departments
authorized by the State may independently invest in and establish
wholly State-owned limited liability companies.

    Article 21  If State-owned enterprises established prior to the
implementation of this Law comply with the conditions stipulated in
this Law for the incorporation of limited liability companies, they
may, in the case of enterprises with a single investing entity, be
restructured as wholly State-owned limited liability companies in
accordance with this Law, or in the case of enterprises with
multiple investing entities, be restructured as limited liability
companies as specified in the first paragraph of the preceding
Article.

     The implementation procedures and specific measures for
restructuring State-owned enterprises as companies shall be
formulated separately by the State Council.

    Article 22  The articles of association of limited liability
companies shall specify the following particulars:

    (1) the name and domicile of the company;

    (2) the scope of business of the company;

    (3) the registered capital of the company;

    (4) the names or post_titles of the shareholders;

    (5) the rights and obligations of the shareholders;

    (6) the method and amount of capital contributions by the
shareholders;

    (7) the conditions for transfer of capital contributions by
shareholders;

    (8) the organization of the company, its method of creation,
functions and powers and the rules of procedure;

    (9) the legal representative of the company;

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

    (11) other items which the shareholders deem necessary to be
specified.

    The shareholders shall sign and affix their seals to the
company’s articles of association.

    Article 23  The registered capital of a limited liability
company shall be the amount of the paid-up capital contributions of all its shareholders as registered with the Company Registration
Authority.

    The registered capital of a limited liability company shall be
no less than the following minima:

    (1) RMB 500,000 yuan for a company engaged mainly in production
and operation;

    (2) RMB 500,000 yuan for a company engaged mainly in commodity
wholesale;

    (3) RMB 300,000 yuan for a company engaged mainly in
commercial retailing; and

    (4) RMB 100,000 yuan for a company engaged in science and
technology development, consultancy or services.

    Where the minimum registered capital of a limited liability
company in specified trades needs to be higher than those
stipulated in the preceding paragraph, it shall be stipulated by
the laws and administrative rules and regulations separately.

    Article 24  A shareholder may make its capital contributions to
a company in currency or by contributing material objects,
industrial property rights, non-patented technology and land use
rights at their appraised value. The material objects, industrial
property rights, non-patented technology or land use rights to be
contributed as capital must undergo an asset valuation and
verification, and shall not be overvalued or undervalued. The
appraisal and valuation of land use rights shall be handled in
accordance with the laws and administrative rules and regulations.

    The investment in the form of industrial property rights and
non-patented technology at their appraised value shall not exceed
twenty percent of the registered capital of a limited liability
company, except where special State regulations inrespect of the
application of high and new technological achievement provide
otherwise.

    Article 25  Each shareholder shall make in full the amount of the capital contribution subscribed for under the articles of association
of the company. Where a shareholder makes its capital
contribution in currency, it shall deposit the full amount of such
capital contribution in crurrency in the interim bank account
opened by the limited liability company to be established. Where a
shareholder makes its capital contribution in the form of material
objects, industrial property rights, non-patented technology or
land use rights, the transfer procedures for the property rights
shall be handled in accordance with the law.

    Shareholders failing to make the capital contributions they
subscribed for in accordance with the preceding paragraph shall be
liable for breach of contract towards the shareholders who have
made in full their capital contributions.

    Article 26  After all shareholders have made their capital
contributions in full, such contributions must be verified by a
statutory capital verification institution which shall issue
capital verification certificates.

    Article 27  After the total capital contributions of the
shareholders have been verified by a statutory capital verification
institution, application shall be made to the Company Registration
Authority for registration of the incorporation of the company by
a representative designated by all the shareholders or by an agent
jointly entrusted by them, who shall submit such documents as an
application for registration, the articles of association and the
capital verification certificate.

    Where the examination and approval of the relevant authorities
is required by the laws or administrative rules and regulations,
the approval documents shall be submitted on application for
registration of incorporation.

    The Company Registration Authority shall grant registration
and issue a business licence to a company that meets the
requirements stipulated in this Law; the Company Registration
Authority shall not register a company failing to meet the
requirements stipulated in this Law.

    The date of the issuance of the company business license shall
be the date of the incorporation of a limited liability company.

    Article 28  Where, after the incorporation of a limited
liability company, it is discovered that the actual value of the
material objects, industrial property rights, non-patented
technology or land use rights contributed as capital is notably
less than the value stated in the articles of association, the
shareholders that made such contributions shall make up the
discrepancy. Those who are shareholders at the time of the
incorporation of the company shall bear joint and several liability
therefor.

    Article 29  Where branches are established simultaneously with
the incorporation of a limited liability company, application for
registration of the branches established shall be made to, and
business licences obtained from the Company Registration Authority.

    Where a limited liability company establishes branches after
its incorporation, the company’s legal representatiive shall apply
for the registration to, and obtain business licences from the
Company Registration Authority.

    Article 30  After a limited liability company has been
incorporated, it shall issue capital contribution certificates to
its shareholders.

    A capital contribution certificate shall specify the following
items:

    (1) the name of the company;

    (2) the registration date of the comany;

    (3) the registered capital of the company;

    (4) the name or post_title of the shareholder, the amount and date
of its capital contribution; and

    (5) the serial number of the capital contribution certificate
and the date of its verification and issuance.

    A capital contribution certificate shall bear the seal of the
company on it.

    Article 31  A limited liability company shall prepare a roster
of its shareholders with the following items therein:

    (1) the names or post_titles and domiciles of the shareholders;

    (2) the amounts of capital contributions of the shareholders;
and

    (3) the serial numbers of the capital contribution
certificates.

    Article 32  A shareholder shall have the right to look up the
minutes of shareholders’ meetings and the financial and accounting
reports of the company.

    Article 33  Shareholders shall draw dividends in proportion to
their capital contributions. Where a company increases capital, the
existing shareholders shall have priority in subscription for new
shares.

    Article 34  Once a company is registered, its shareholders may
not withdraw their capital contributions.

    Article 35  The shareholders of a company may assign among
themselves all or part of their capital contributions.

    Where a shareholder intends to assign its capital contribution
to persons who are not shareholders, the consent of over half of all the shareholders must be secured. Those shareholders
disapproving the assignment shall purchase the capital contribution
to be assigned. If such shareholders do not make the purchase, they
shall be deemed to have consented to the assignment.

    Other shareholders shall, under identical terms, have priority
in purchasing the capital contribution to be assigned with the
consent of the shareholders.

    Article 36  After a shareholder has assigned its capital
contribution according to law, the company shall record the name or
post_title and domicile of the consignee and the amount of the capital
contribution assigned in the roster of the shareholders.

    Section 2  Organizational Structure

    Article 37  The shareholders’ meeting of a limited liability
company shall be composed of all the shareholders. The
shareholders’ meeting shall be the organ of power of the company
and shall exercise its functions and powers in accordance with this
Law.

    Article 38  The shareholders’ meeting shall exercise the
following functions and powers:

    (1) to decide on the business policy and investment plan of the company;

    (2) to elect and recall members of the board of directors and
to decide on matters concerning the remuneration of directors;

    (3) to elect and recall supervisors appointed from among the
shareholders’ representatives, and to decide on matters concerning
the remuneration of supervisors;

    (4) to examine and approve reports of the board of directors;

    (5) to examine and approve reports of the supervisory board or
supervisors;

    (6) to examine and approve the annual financial budget plan
and final accounts plan of the company;

    (7) to examine and approve plans for profit distribution of the company and plans for making up losses;

    (8) to adopt resolutions on the increase or reduction of the
registered capital of the company;

    (9) to adopt resolutions on the issuance of company bonds;

    (10) to adopt resolutions on the assignment of capital
contribution by a shareholder to a person other than the
shareholders;

    (11) to adopt resolutions on matters such as the merger,
division, transformation, dissolution and liquidation of the
company; and

    (12) to amend the articles of association of the company.

    Article 39  The rules of deliberation and voting procedures of the shareholders’ meeting shall, except where provided for by this
Law, be stipulated by the articles of association of the company.

    Resolutions of the shareholders’ meeting on the increase or
reduction of the registered capital, the division, merger,
dissolution, or transformation of the company must be adopted by
shareholders of the company representing two-thirds or more of the
voting rights.

    Article 40  A company may amend its articles of association. A
resolution on the amendment of the articles of association must be
adopted by shareholders of the company representing two-thirds or
more of the voting rights.

    Article 41  Shareholders shall exercise their voting rights at
the shareholders’