Article 26 After the shareholders have paid in full their subscribed capital contributions a legally authorized investment verification authority must verify the investment and issue certificate. Article 27 Upon verification by a legally authorized investment verification authority of all capital contributions of shareholders, a designated representative or jointly appointed agent of all the shareholders applies to the company registration authority to register the establishment of the company, submitting the company registration application, the company's article of association, investment verification certificate and other documents. If examination and approval from relevant departments is required in accordance with any law or administrative regulation, the approval documents shall be submitted when applying to register the establishment of the company. Where the conditions required by this Law are met, the company registration authority registers the company and issues a company business licence. Where the conditions of this Law are not met, the company is not registered. The date of issue of the business licence is the date of establishment of a limited liability company. Article 28 After the establishment of a limited liability company, if the actual values of the investment in kind, industrial property, non-patented technology or land use rights are obviously lower than the values set in the articles of association, the difference shall be made up by the shareholder(s) who contributed such investment, and other shareholders at the time of the establishment of the company shall be jointly liable for the difference. Article 29 If a branch or branches of a limited liability company is established at the same time a limited liability company is established, application for the registration of the branch(es) shall be made to the company registration authority to obtain the business licence(s). If a branch or branches of a limited liability company are established after the establishment of the company, application for registration shall be made by the legal representative of the company to the company registration authority to obtain the business licence(s). Article 30 An investment certificate shall be issued to each of the shareholders upon the establishment of a limited liability company. An investment certificate shall set out the following: (1) the company's name; (2) the company's date of registration; (3) the company's registered capital; (4) the shareholder's name and the amount and date of payment of capital contribution; and (5) the number and date of issue of the investment certificate. An investment certificate is sealed with the company's seal. Article 31 A limited liability company shall establish a register of shareholders setting out the following: (1) the shareholders' names and domiciles; (2) the shareholders' amounts of capital contributions; and (3) the numbers of the investment certificates. Article 32 Shareholders have the right to examine the minutes of shareholders' meetings and the company's financial and accounting reports. Article 33 Shareholders are entitled to receive dividends in accordance with the proportions of their capital contributions. Shareholders have a preemptive right to subscribe capital when a company increases its capital. Article 34 Shareholders shall not withdraw their capital contributions after the registration of a company. Article 35 Shareholders may transfer among themselves all or part of their capital contributions. Where a shareholder transfers its capital contribution to a person other than a shareholder, the consent of more than half of all shareholders shall be required. A shareholder objecting to such transfer shall purchase the capital contribution to be transferred and such shareholder is deemed to have agreed to the transfer if he does not purchase the capital contribution. For a transfer of capital contribution which is transferred with the consent of the shareholders, other shareholders have a pre-emptive right to purchase it on the same conditions. Article 36 After a shareholder transfers its capital contribution in accordance with the law, the company records in the register of shareholders the name of the transferee, its domicile and the amount of the capital contribution transferred. Section 2 Organizational Structure Article 37 The shareholder's meetings of a limited liability company are made up of all shareholders. The shareholders' meeting is the company's authoritative organization, exercising its powers in accordance with this Law. Article 38 The shareholders' meeting exercises the following powers: (1) to decide on the company's operational policies and investment plans; (2) to elect and replace directors and decide on matters relating to the remuneration of directors; (3) to elect and replace the supervisors who are representatives of the shareholders, and decide on matters relating to the remuneration of supervisors; (4) to examine and approve reports of the board of directors; (5) to examine and approve reports of the board of supervisors or any supervisor(s); (6) to examine and approve the company's proposed annual financial budget and final accounts; (7) to examine and approve the company's plans for profit distribution and recovery of losses; (8) to decide on increases in or reductions of the company's registered capital; (9) to decide on the issue of bonds by the company; (10) to decide on transfers of capital contribution by shareholders to a person other than a shareholder; (11) to decide on issue such as merger, division, change in corporate form or dissolution and liquidation of the company; and (12) to amend the company's articles of association. Article 39 Except as otherwise provided in this Law, methods of discussion and voting procedures for shareholders' meetings are specified in the company's articles of association. A resolution for an increase in or reduction of registered capital, division, merger, dissolution or change in corporate form of the company shall be passed by shareholders representing two-thirds or more of the voting rights. Article 40 A company may amend its articles of association. A resolution to amend the company's articles of association shall be passed by shareholders representing two-thirds or more of the voting rights. Article 41 Shareholders shall exercise voting rights at shareholders' meetings in accordance with the proportions of their capital contribution. Article 42 The first shareholders' meeting is convened and presided over by the shareholder whose capital contribution is the largest. Such shareholder exercises its rights in accordance with this Law. Article 43 Shareholders' meetings are divided into regular meetings and interim meetings. Regular meeting shall be convened on time in accordance with the provisions of the articles of association. Shareholders representing one-fourth or more of the voting rights or one-third or more of the directors or supervisors may request that an interim meeting be convened. Where a limited liability company has a board of directors, shareholders' meetings are convened by the board of directors and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable to perform his duties for a particular reason, the vice-chairman or another director designated by the chairman presides over the meeting. Article 44 When convening a shareholders' meeting, notice shall be given to all shareholders fifteen days before the meeting is convened. Shareholders' meetings shall keep minutes of the decisions made on matters discussed. The minutes shall be signed by the shareholders present at the meeting. Article 45 A limited liability company has a board of directors with three to thirteen members. For a limited liability company established with the investment of two or more state-owned enterprises or two or more state-owned investment entities, members of its board of directors shall include representatives of the staff and workers of the company. Representatives of staff and workers on the board of directors are chosen by the company's staff and workers by democratic election. The board of directors has one chairman and may have one or two vice-chairmen. The method of election of the chairman and vice-chairmen is specified in the articles of association. The chairman of the board of directors is the legal representative of the company. Article 46 The board of directors is responsible to the shareholders' meetings and exercises the following powers: (1) to be responsible for convening shareholders' meetings and accountable to the shareholders' meeting; (2) to implement the resolutions of the shareholders' meeting; (3) to decide on the operational plans and investment plan of the company; (4) to formulate the company's proposed annual financial budget and final accounts; (5) to formulate plans for profit distribution and recovery of losses; (6) to formulate plans for increases in or reductions of the company's registered capital; (7) to prepare plans for merger, division, change in corporate form and dissolution of the company; (8) to decide on the set up of the company's internal management structure; (9) to appoint or dismiss the company's manager (general manager) (the "manager") and pursuant to the manager's nominations to appoint or dismiss the deputy manager and the financial officers of the company and decide upon their remuneration; and (10) to formulate the company's basic management system. Article 47 The term of office of the directors is as provided in the company's articles of association, provided that each term shall not be longer than three years. At the end of a director's term, the director may serve another term if re-elected. The shareholders' meeting shall not without reason remove a director from office before the expire of that director's term. Article 48 Meetings of the board of directors are convened and presided over by the chairman. When the chairman is unable to perform his duties for a particular reason, the vice-chairman or another director designated by the chairman convenes and presides over the meetings. One-third or more of the directors may request that an interim meeting be convened. Article 49 Except as otherwise provided in this Law, methods of discussion and voting procedures for the board of directors are provided for in the company's articles of association. When convening a meeting of the board of directors, notice of the meeting shall be given to all directors ten days before the meeting is convened. The board of directors shall keep minutes of the decisions made on matters discussed. Such minutes shall be signed by the directors present at the meeting. Article 50 A limited liability company has a manager who is appointed or dismissed by the board of directors. The manager is responsible to the board of directors and exercises the following powers: (1) to be in charge of the company's production, operations and management and organize the implementation of the resolutions of the board of directors; (2) to organize the implementation of the company's annual business plan and investment plan; (3) to propose plans for the putting in place of the company's internal management structure; (4) to propose the company's basic management system; (5) to formulate specific rules and regulations for the company; (6) to propose the appointment or dismissal of the company's deputy manager(s) and financial officers; (7) to appoint or dismiss management officers other than those required to be appointed or dismissed by the board of directors; and (8) other powers conferred by the company's articles of association and the board of directors. The manager is present at meetings of the board of directors. Article 51 A limited liability company with a relatively small number of shareholders and of a relatively small scale may have one executive director and no board of directors. The executive director may also be the company's manager. The powers of the executive director shall be specified in the company's articles of association with reference to the provisions of Article 46 of this Law. Where a limited liability company has no board of directors, the executive director is the legal representative of the company. Article 52 A limited liability company with a relatively large scale of operations shall have a board of supervisors with not less than three members. The board of supervisors elects a convener from among its members. The board of supervisors is made up of representatives of shareholders and a reasonable proportion of representatives from the company's staff and workers, the specific proportion to be provided in the company's articles of association. Representatives of the staff and workers on the board of supervisors are chosen by the company's staff and workers by democratic election. A limited liability company with a relatively small number of shareholders and of a small scale may have one to two supervisors. The directors, manager and financial officers of the company shall not act concurrently as supervisors. Article 53 The term of office of the supervisors is three years. At the end of a supervisor's term, the supervisor may serve another term, if reelected. Article 54 The board of supervisors as supervisor (s) exercises the following powers: (1) to inspect the company's financial situation; (2) to exercise supervision over the acts of the directors and manager carried out while performing their corporate functions which violate laws, regulations or the company's articles of association; (3) to demand remedies from a director or manager when the acts of such director or manager are harmful to the company's interests; (4) to propose the convening of an interim shareholders' meeting; and (5) other powers specified in the company's articles of association. The supervisors are present at meetings of the board of directors. Article 55 When considering and deciding on the wages, welfare and production safety of the staff and workers and labour protection, labour insurance and other issues involving the personal interests of the staff and workers, the company shall first solicit and consider the opinions of the company's trade union and staff and workers, and shall invite representatives from the trade union and the staff and workers to attend the relevant meetings. Article 56 When considering and deciding on major issues relating to the company's production and operations and formulating important rules and regulations, the company shall solicit and consider the opinions and proposals of the company's trade union and staff and workers. Article 57 Any of the following persons shall not serve as a director, supervisor or manager of a company: (1) persons without civil capacity or with restricted civil capacity; (2) persons who have committed the offences of corruption, bribery, infringement of property, misappropriation of property or sabotaging the socioeconomic order, and have been sentenced to criminal penalties, where less than five years have elapsed since the date of completion of the sentence; or persons who have been deprived of their political rights due to criminal offences, where less than five years have elapsed since the date of the completion of implementation of this deprivation; (3) persons who are former directors, factory directors or managers of a company or enterprise which has become bankrupt and been liquidated as a result of mismanagement and are personally liable for the bankruptcy of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise; (4) persons who were legal representatives of a company or enterprise which had its business licence revoked due to a violation of the law and who are personally liable, where less than three years have elapsed since the date of the revocation of the business licence; or (5) persons who have a relatively large amount of debts due and outstanding. Where a company elects, nominates or appoints any director or supervisor or employs a manager contrary to the provisions of the preceding clause, such election, appointment or employment is ineffective. Article 58 State civil servants shall not act concurrently as a company's director, supervisor or manager. Article 59 The directors, supervisors or managers shall abide by the company's articles of association, faithfully execute their official duties and protect the company's interests. They shall not exploit their position and power in the company to advance their own private interests. The directors, supervisors or managers of a company shall not exploit their position to accept bribes or other illegal income or wrongfully take over company property. Article 60 The directors or managers shall not misappropriate company funds or loan such funds to others. The directors or managers shall not open accounts in their own names or in the names of other individuals for the deposit of the company's assets. The directors or managers shall not provide a guarantee for debts of a shareholder of the company or other individual(s) with the company's assets. Article 61 The directors or managers shall not engage on their own behalf or on behalf of others in any business similar to the business of the company in which they hold office or in activities harmful to the company's interests. The proceeds from such business or activities shall belong to the company. Unless otherwise provided in the company's articles of association or with the consent of a shareholders' meeting, a director or manager shall not enter into any contracts or transactions with the company. Article 62 The directors, supervisors or managers shall not disclose the secrets of the company except in accordance with the provisions of the law or with the consent of a shareholders' meeting. Article 63 Where a director, supervisor or manager of a company violates the law, administrative regulations or the company's articles of association while performing his official corporate duties resulting in harm to the company, such director, supervisor or manager shall be liable for damages. Section 3 Wholly State-Owned Companies Article 64 "A wholly state-owned company" in this Law refers to a limited liability company in which a state-authorized investment institution or a state-authorized department is the sole investor and which is established solely by a state-authorized investment institution or by a state-authorized department. A company designated by the State Council for the production of special products or belonging to a specified trade shall be established in the form of a wholly state-owned company. Article 65 The articles of association of a wholly state-owned company are formulated in accordance with this Law by the state-authorized investment institution or the state-authorized department or formulated by the board of directors, and reported to the state-authorized investment institution or the state-authorized department for approval. Article 66 A wholly state-owned company does not have shareholders' meetings. The company's board of directors is authorized by the state-authorized investment institution or the state-authorized department to exercise part of the powers of the shareholders' meetings, decide on the major issues of the company, provided that decisions on merger, division, dissolution of the company, increase or decrease in capital and issue of corporate bonds shall be decided by the state-authorized investment institution or the state-authorized department. Article 67 The state-authorized investment institution or the state-authorized department shall exercise supervision and management over the state-owned assets of a wholly state-owned company in accordance with the provisions of law and administrative regulations. Article 68 A wholly state-owned company shall have a board of directors which carries out its duties in accordance with the provisions of Article 46 and Article 66 of this Law. The term of office of the board of directors is three years. The board of directors has three to nine members, appointed or replaced by the state-authorized investment institution or the state-authorized department in accordance with the board of directors' terms. Members of the board of directors shall include representatives of the staff and workers of the company. Representatives of the staff and workers on the board of directors are chosen by the company's staff and workers by democratic election. The board of directors has a chairman and may have one vice-chairman if necessary. The chairman and the vice-chairman are designated from among the directors by the state-authorized investment institution or the state-authorized department. The chairman of the board of directors is the legal representative of the company. Article 69 A wholly state-owned company shall have a manager who is appointed or dismissed by the board of directors. The manager exercises his powers in accordance with the provisions of Article 50 of this Law. With the consent of the state-authorized investment institution or the state-authorized department, members of the board of directors may act concurrently as manager. Article 70 The chairman and vice-chairman of the board of directors, directors and the manager of a wholly state-owned company shall not act concurrently as officers of other limited liability companies, companies limited by shares or other economic organizations without the consent of the state-authorized investment institution or the state-authorized department. Article 71 To transfer assets of a wholly state-owned company, in accordance with the provisions of law and administration regulations, examination and approval and procedures for transfer of property rights are handled by the state-authorized investment institution or the state-authorized department. Article 72 Large-scale wholly state-owned companies with a sound system of operation and management and whose operational situation is relatively good may be authorized by the State Council to exercise rights as the owner of the assets. Chapter 3 Establishment and Organizational Structure of A Company Li mited by Shares