Corporate Governance
Corporate Governance Legal Services
Last Updated: October 2, 2026We help companies build sound corporate governance structures and draw clear lines of authority and responsibility among shareholders, the board of directors and management. Who We Serve Startups and growth-stage companies, and companies with multiple shareholders; Companies whose equity structure needs restructuring or whose control needs stabilizing; Companies facing shareholder disagreements or with articles of...
Contribution Deadlines and Paid-in Registered Capital Under the New Company Law
Last Updated: October 3, 2026The new Company Law effective in 2024 adjusts the subscribed-capital system. It requires all shareholders of a limited liability company to fully pay their subscribed capital contributions within five years after the company’s establishment, in accordance with the articles of association. Promoters of a joint stock company shall fully pay for their subscribed shares before...
How Do Shareholders Fulfil Their Capital Contribution Obligations?
Last Updated: October 3, 2026Each shareholder shall pay in full and on time the capital contribution subscribed for in accordance with the articles of association. A shareholder making a monetary contribution shall deposit the full amount into the limited liability company’s bank account. For a non-monetary contribution, the procedures for transferring the relevant property rights shall be completed in...
How Do Subsidiaries and Branches Bear Civil Liability?
Last Updated: October 3, 2026A company may establish subsidiaries. A subsidiary has legal-person status and independently bears civil liability in accordance with law. A company may establish branches. A branch has no legal-person status, and its civil liabilities are borne by the company.
How Does Company Law Define an Affiliate Relationship?
Last Updated: October 3, 2026An affiliate relationship refers to the relationship between a company’s controlling shareholder, actual controller, directors, supervisors, or senior management personnel and an enterprise directly or indirectly controlled by any of them, as well as any other relationship that may result in a transfer of the company’s interests. However, enterprises controlled by the State are not...
How Is a Joint Stock Company Established?
Last Updated: October 3, 2026A joint stock company may be established by promotion or by share offering. Establishment by promotion means that the promoters establish the company by subscribing for all shares to be issued upon incorporation. Establishment by share offering means that the promoters subscribe for part of the shares to be issued upon incorporation and the remaining...
How Is Capital Contribution Liability Allocated After an Equity Transfer?
Last Updated: October 3, 2026Where a shareholder transfers an equity interest for which capital has been subscribed but the payment deadline has not yet arrived, the transferee assumes the obligation to make the contribution. If the transferee fails to pay the contribution in full and on time, the transferor bears supplementary liability for the unpaid contribution. Where a shareholder...
How May a Company Choose Between an Audit Committee and a Board of Supervisors?
Last Updated: October 3, 2026Limited Liability Companies A limited liability company may, as provided in its articles of association, establish within its board of directors an audit committee composed of directors to exercise the statutory powers of the board of supervisors, in which case no board of supervisors or supervisor is established. An employee representative serving on the board...
Restrictions on Share Transfers by a Joint Stock Company
Last Updated: October 3, 2026Shares issued before a company’s public offering may not be transferred within one year after the company’s shares are listed and traded on a stock exchange. Where laws, administrative regulations, or the securities regulatory authority under the State Council provide otherwise regarding transfers by shareholders or actual controllers of listed companies, those provisions shall prevail....
What Are the Consequences and Liabilities for an Unlawful Capital Reduction?
Last Updated: October 3, 2026Under the new Company Law effective in 2024, where registered capital is reduced in violation of law, the shareholders shall return the funds they received, and any reduction or exemption of shareholders’ capital contributions shall be restored to its original state. If losses are caused to the company, the shareholders and the responsible directors, supervisors,...
What Are the General Rules on the Definition, Issuance, and Trading of Corporate Bonds?
Last Updated: October 3, 2026Corporate bonds are negotiable securities issued by a company under which principal and interest are to be repaid according to an agreed schedule. Corporate bonds may be issued publicly or non-publicly. The issuance and trading of corporate bonds shall comply with the Securities Law of the People’s Republic of China and other applicable laws and...
What Are the Legal Consequences of Acts by a Legal Representative?
Last Updated: October 3, 2026The legal consequences of civil activities conducted by the legal representative in the company’s name are borne by the company. Restrictions imposed by the articles of association or the shareholders’ meeting on the legal representative’s powers may not be asserted against a good-faith counterparty. Where the legal representative causes harm to another person while performing...
What Are the Powers of a Director Where No Board Is Established?
Last Updated: October 3, 2026A limited liability company or joint stock company that is relatively small or has relatively few shareholders may establish no board of directors and instead appoint one director to exercise the statutory powers of the board. That director may concurrently serve as the company’s manager.
What Are the Registered Capital Requirements for a Joint Stock Company?
Last Updated: October 3, 2026The registered capital of a joint stock company is the total share capital of the issued shares registered with the company registration authority. No shares may be offered to other persons until the shares subscribed for by the promoters have been fully paid. Where laws, administrative regulations, or decisions of the State Council provide otherwise...
What Are the Registered Capital Requirements for a Limited Liability Company?
Last Updated: October 3, 2026The registered capital of a limited liability company is the total amount of capital contributions subscribed for by all shareholders and registered with the company registration authority. All shareholders shall fully pay their subscribed contributions within five years after the company’s establishment, as provided in the articles of association. Where laws, administrative regulations, or decisions...
What Forms of Capital Contribution May Be Made to a Limited Liability Company?
Last Updated: October 3, 2026A shareholder may contribute currency or non-monetary property that can be valued in currency and lawfully transferred, such as tangible property, intellectual property rights, land-use rights, equity interests, or claims, except property that laws or administrative regulations prohibit from being used as a capital contribution.
What Is a Dissenting Shareholder’s Right to Request a Share Repurchase?
Last Updated: October 3, 2026Where any of the following circumstances applies to a joint stock company, a shareholder who voted against the relevant resolution of the shareholders’ meeting may request that the company purchase its shares at a reasonable price, except in the case of a company that publicly issues shares: (1) the company has failed to distribute profits...
What Is a Shareholder’s Right to Request an Equity Repurchase?
Last Updated: October 3, 2026Where any of the following circumstances applies to a limited liability company, a shareholder who voted against the relevant resolution of the shareholders’ meeting may request that the company purchase its equity interest at a reasonable price: (1) the company has failed to distribute profits to its shareholders for five consecutive years, despite having made...
What Matters Must Be Included in the Articles of Association of a Limited Liability Company?
Last Updated: October 3, 2026The articles of association of a limited liability company shall state: (1) the company’s name and domicile; (2) its business scope; (3) its registered capital; (4) the names of its shareholders; (5) the amount, form, and date of each shareholder’s capital contribution; (6) the company’s bodies, the methods for forming them, their powers, and their...
What Powers Does the Board of Directors Exercise?
Last Updated: October 3, 2026The board of directors exercises the following powers: (1) convening shareholders’ meetings and reporting its work to the shareholders’ meeting; (2) implementing resolutions of the shareholders’ meeting; (3) deciding the company’s business plans and investment proposals; (4) formulating the company’s profit distribution and loss recovery plans; (5) formulating plans to increase or reduce registered capital...
What Powers Does the Shareholders’ Meeting Exercise?
Last Updated: October 3, 2026The shareholders’ meeting exercises the following powers: (1) electing and replacing directors and supervisors, and deciding their remuneration; (2) reviewing and approving reports of the board of directors; (3) reviewing and approving reports of the board of supervisors; (4) reviewing and approving the company’s profit distribution and loss recovery plans; (5) adopting resolutions on increases...
Who Is Bound by a Company’s Articles of Association?
Last Updated: October 3, 2026The articles of association bind the company, its shareholders, directors, supervisors, and senior management personnel. Senior management personnel include the company’s manager, deputy managers, person in charge of finance, the board secretary of a listed company, and other persons specified in the articles of association.
Who May Serve as a Company’s Legal Representative?
Last Updated: October 3, 2026Under the articles of association, the company’s legal representative shall be the director or manager who represents the company in carrying out company affairs. A director or manager serving as legal representative is deemed to resign from that role at the same time as resigning as director or manager. When the legal representative resigns, the...