Order of the President of the People’s Republic of China

No. 42

The Companies Law of the People’s Republic of China has been revised and adopted at the 18th

Meeting of the Standing Committee of the Tenth National People’s Congress of the People’s

Republic of China on October 27, 2005, and its revised version is hereby promulgated and shall go

into effect as of January 1, 2006.

Hu Jintao

President of the People’s Republic of China

October 27, 2005

Companies Law of the People’s Republic of China

(Adopted at the 5th Meeting of the Standing Committee of the Eighth National People’s Congress

on December 29, 1993; amended for the first time in accordance with the Decision on Revision of

the Company Law of the People’s Republic of China made at the 13th Meeting of the Standing

Committee of the Ninth National People’s Congress on December 25, 1999; amended for the

second time in accordance with the Decision on Revision of the Company Law of the People’s

Republic of China made at the 11th Meeting of the Standing Committee of the Tenth National

People’s Congress on August 28, 2004; and revised at the 18th Meeting of the Standing

Committee of the Tenth National People’s Congress on October 27, 2005)

Contents

Chapter I General Provisions

Chapter II Incorporation and Organizational Structure of a Company with Limited Liability

Section 1 Incorporation

Section 2 Organizational Structure

Section 3 Special Provisions on One-person Companies with Limited Liability

Section 4 Special Provisions on Wholly Stated-owned Companies

Chapter III Equity Transfer of Companies with Limited Liability

Chapter IV Incorporation and Organizational Structure of a Company Limited by Shares

Section 1 Incorporation

Section 2 Shareholders General Assembly

Section 3 Board of Directors, and the Manager

Section 4 Board of Supervisors

Section 5 Special Provisions on Organizational Structure of Listed Companies

Chapter V Issue and Transfer of Shares of Companies Limited by Shares

Section 1 Issue of Shares

Section 2 Transfer of Shares

Chapter VI Qualifications and Obligations of Directors, Supervisors and Senior Managers of

Companies

Chapter VII Corporate Bonds

Chapter VIII Financial Affairs and Accounting of Companies

Chapter IX Merger and Division of Companies, Increase and Reduction of Capital

Chapter X Dissolution and Liquidation of Companies

Chapter XI Branches of Foreign Companies

Chapter XII Legal Responsibility

Chapter XIII Supplementary Provisions

Chapter I General Provisions

Article 1 This Law is enacted in order to standardize the organization and behavior of companies,

to protect the legitimate rights and interests of companies, shareholders and creditors, to maintain

the socio-economic order and to promote the development of the socialist market economy.

Article 2 For the purposes of this Law, the term company refers to a company with limited liability or

a company limited by shares incorporated within the territory of the People’s Republic of China in

accordance with this Law.

Article 3 A company is an enterprise legal person, which has independent property of a legal

person and enjoys the property rights of a legal person. The company shall be liable for its debts to

the extent of its entire property.

Shareholders of a company with limited liability shall assume liability towards the company to the

extent of the capital contributions subscribed respectively by them; and the shareholders of a

company limited by shares shall assume liability towards the company to the extent of the shares

subscribed respectively by them.

Article 4 The shareholders of a company shall, in accordance with law, enjoy such rights as

benefiting from the assets of the company, participation in making major decisions and selection of

managerial personnel.

Article 5 In its operational activities, a company shall abide by laws and administrative regulations,

observe social morals and commercial ethics, persist in honesty and good faith, accept supervision

by the government and the public, and assume social responsibility.

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

Article 6 Where an entity intends to incorporate a company, it shall, in accordance with law, apply

to a company registration authority for registration of such incorporation. Where the conditions for

incorporation provided for by this Law are met, the company registration authority shall have the

company registered as a company with limited liability or a company limited by shares; and where

the said conditions are not met, the company shall not be registered as one with limited liability or

as one limited by shares.

Where laws or administrative regulations provide that approval is required for incorporation of a

company, the procedures of approval shall be completed according to law prior to registration of

the company.

The public may apply to the company registration authority for inquiry about the items registered by

a company, and the authority shall provide services for such inquiry.

Article 7 The company registration authority shall issue a business license to a company

incorporated according to law. The date on which the business license is issued shall be the date

on which a company is incorporated.

In the business license of a company shall clearly be stated such items as the name, domicile,

registered capital, actually received capital, scope of business and name of the legal

representative of the company.

Where the items stated in the business license of a company are altered, the company shall have

the alterations registered according to law, and the company registration authority shall renew its

business license.

Article 8 A company with limited liability incorporated according to this Law shall have the words

“company with limited liability” or “limited company” indicated in its name.

A company limited by shares incorporated according to this Law shall have the words “company

limited by shares” or “company by shares” indicated in its name.

Article 9 Where a company with limited liability is to be changed into a company limited by shares,

it shall meet the conditions of a company limited by shares provided for by this Law. Where a

company limited by shares is to be changed into a company with limited liability, it shall meet the

conditions of a company with limited liability provided for by this Law.

Where a company with limited liability is changed into a company limited by shares, or a company

limited by shares is changed into a company with limited liability, the rights of credit and the debts

of the company prior to the change shall be inherited by the company after the change.

Article 10 The domicile of a company shall be the place where its main administrative organization

is located.

Article 11 Articles of association shall be formulated according to law when a company is

incorporated. The articles of association of a company shall have binding force on the company, its

shareholders, directors, supervisors and senior managers.

Article 12 The business scope of a company shall be defined in the company’s articles of

association, and shall be registered according to law. A company may revise its articles of

association and alter its scope of business, but shall have such revision and alteration registered.

The items within the scope of business of a company that are subject to approval as provided for

by laws and administrative regulations shall be submitted for approval according to law.

Article 13 The chairman of the board of directors, the executive director or the manager shall, in

accordance with the provisions of a company’s articles of association, serve as the legal

representative of the company, which shall be registered according to law. Where the legal

representative of a company is replaced, the company shall have such replacement registered.

Article 14 A company may establish branches. Where a company intends to establish a branch, it

shall apply for registration to the company registration authority, in order to obtain a business

license for the branch. However, such a branch shall not possess the status of a legal person, and

its civil liabilities shall be borne by the company.

A company may establish subsidiaries, which shall possess the status of legal persons, and shall

independently bear civil liabilities according to law.

Article 15 A company may invest in other enterprises; however, it shall not become the investor

that assumes joint and several liability for the debts of the enterprises in which it invests, except

where otherwise provided for by law.

Article 16 Where a company intends to invest in another enterprise or provide guarantee for

another entity, the matter shall, in accordance with the provisions of the company’s articles of

association, be subject to a resolution adopted by the board of directors or the shareholders

assembly or the shareholders general assembly; and where norms for the gross amount of

investments or guarantees and for the amount of a single investment or guarantee are specified in

the company’s articles of association, such norms shall not be exceeded.

Where a company intends to provide a guarantee for its shareholder or its actual controller, the

matter shall be subject to a resolution adopted by its shareholders assembly or shareholders

general assembly.

The shareholder specified in the preceding paragraph or the shareholder dominated by the actual

controller specified in the preceding paragraph shall not participate in the vote on the matter

specified in the preceding paragraph. The resolution on such matter shall be adopted if it is voted

for by other shareholders present at the meeting who hold more than half of the voting rights.

Article 17 Companies shall protect the lawful rights and interests of their staff and workers, sign

labor contracts with them according to law, participate in social insurance, and improve

occupational protection so as to achieve safety in production.

Companies shall, in various forms, improve vocational education and on-the-job training among

their staff and workers so as to enhance their quality.

Article 18 The staff and workers of a company shall, in accordance with the Trade Union Law of the

People’s Republic of China, organize a trade union to carry out trade union activities and protect

the lawful rights and interests of the staff and workers. The company shall provide the trade union

of the company with the conditions necessary for carrying out its activities. The trade union of a

company shall represent the staff and workers to sign with the company collective contracts on

such items as the payment for work done, working hours, welfare and insurance benefits as well as

occupational safety and health of the staff and workers according to law.

Companies shall, through the conference of the representatives of the staff and workers or other

forms, carry out democratic management in accordance with the provisions of the Constitution and

relevant laws.

When a company discusses to make decisions on structural reform or on major issues in business

operation, or formulate important rules and regulations, it shall listen to the opinions of the trade

union, and shall listen to the opinions and proposals of the staff and workers through the

conference of the representatives of staff and workers or other forms.

Article 19 In companies, Communist Party organizations shall, in accordance with the provisions of

the Constitution of the Communist Party of China, be set up to carry out activities of the Party.

Companies shall provide the necessary conditions for the Party organizations to carry out their

activities.

Article 20 The shareholder of a company shall observe laws, administrative regulations and the

company’s articles of association, exercise the rights of a shareholder according to law, and shall

not abuse his rights to damage the interests of the company or other shareholders; and he shall not

abuse the independent status of the company as a legal person or the limited liability of

shareholders to damage the interests of the creditors of the company.

Where the shareholder of a company abuses the rights of shareholders and thus causes losses to

the company or other shareholders, he shall be liable for compensation according to law.

Where the shareholder of a company abuses the independent status of the company as a legal

person or the limited liability of shareholders, evades debts and thus seriously damages the

interests of the creditors of the company, he shall assume joint and several liability for the debts of

the company.

Article 21 Proprietary shareholders, the actual controllers, directors, supervisors and senior

managers of a company shall not take advantage of their affiliated relations to damage the

interests of the company.

A person who, in violation of the provisions of the preceding paragraph, causes losses to a

company shall be liable for compensation.

Article 22 The resolution adopted by the shareholders assembly or the shareholders general

assembly or the board of directors of a company, which in content violates laws or administrative

regulations, shall be invalid.

Where the procedures for convening the meeting of the shareholders assembly or the

shareholders general assembly, or the board of directors, or the voting formulas are against laws,

administrative regulations or the articles of association of a company, or the content of the

resolution adopted is against the company’s articles of association, the shareholders may, within

60 days from the date the resolution is adopted, request the people’s court to rescind the

resolution.

Where shareholders take legal proceedings in accordance with the provisions of the preceding

paragraph, the people’s court may, upon request of the company, demand the shareholders to

provide appropriate guarantee.

Where a company has registered for alteration in accordance with the resolution adopted by the

shareholders assembly, the shareholders general assembly or the board of directors, and the

people’s court declares the resolution invalid or rescinds it, the company shall apply for

cancellation of the registration for such alteration.

Chapter II Incorporation and Organizational Structure of a Company with Limited Liability