Legal Basis of a Chinese Stock Company
Typical Joint Capital Business owned by multiple members of the shareholder.
A stock company (corporation) is established in accordance with Corporate Laws of the Peoples Republic of China, all shareholders responsible for corporate legal responsibilities depend on their subscribed shares (stocks). Stock company as a legal entity of enterprise, also responsible for debts with its total corporate assets.
What main legally features are:
- Independent economic and legal personality.
- May issue the stocks publicly to the society.
- Shares can be transferred legitimately.
- Voting power for each share (stock).
- Disclosure system of auditing Reports.
- Corporation with limited liabilities.
Keywords of a Joint Stock Company in China:
Here, let’s have an in-depth understanding of rules and regulations of China’s joint-stock companies and its unique corporate structure.
- 5 million registered capital at least
- Members of shareholders 2 to 200
- Approved by securities regulators
- Announcement of prospects
- Issue certificates of stock
- Underwriting by securities corporations
- Publishing price for each stock
- Registered bonds, bearer bonds
- Priority of compensation of bondholders
Viewpoints of Forming Joint Stock Company
View 1 Requirements of Stock Corporations
Initiators must be more than 2 ( at least ), and less than 200 members, each contributor needs to bear limited liabilities on the basis of their subscribed shares ( stocks ). The minimum registered capital is 5 million RMB for forming a stock company ( corporation, enterprise ). Anyone can be the shareholder once paid payment of shares.
View 2 Qualification Certificates of the Shareholders
1. The shareholder is an existed corporation, needs to provide issued by superior market and supervision bureau.
2. The shareholder is a public institution, needs to provide issued by superior competent authority.
3. The shareholder is a social organization, needs to provide legal issued by non-Party and government organizations.
4. Shareholder is a labor union, needs to provide issued by superior union(s).
5. The shareholder is an individual, needs to provide legal identification.
View 3 Institutional Framework, Organizational Structure
As a local Chinese stock company, has 3 popular organizational structures have to be set up once submitting registration procedure.
1. Decision-making organization (consists of a board of directors or appointed by members), responsible for the board of shareholders and makes decisions or opinions on behalf of the company, to organize implements relevant decisions besides of matters decided by the general meeting of shareholders.
2. Executing institution, includes general managers and senior assistants, responsible for daily running, managing, operations of a stock corporation.
3. Supervisory organization, a standing superintendence institution voted by the board of shareholders, known as the board of supervisors and can not be the directors or general managers, authorities of supervisors include sitting in on board meetings and supervise directors’ activities. Anytime can investigate corporate daily operations and financial situations.
View 4 Documents of Forming a Stock Company
1. Prepare all required documents and certificates of the shareholders.
2. Register an available corporate name and list business activities.
3. To sign articles of association of the stock corporation.
4. Certificates of capital verification of the board of shareholders.
5. Appointment documents of directors, supervisors, senior managers.
6. Resolutions of general meeting of shareholders.
7. Approved documents of the securities regulatory under the state council.
8. Legal certificates or documents of the registered address of the company.
View 5 Submitting Application of Registration
Business license issued by a local market and supervision administration bureau, a stock corporation ( limited company) will obtain approval:
1. Certificate of name approval.
2. 5-in-1 Business license ( original and copy ).
3. Chops ( stamps, seals ) of stock company.
Whole timeline needs 20 working days processed through SMEsChina teams. If your Chinese stock company needs to register import and export permits, corporation bank account, also needs additional procedure with another 10 workdays by our assistance.
View 6 Listing Conditions as a Public Company
1. Stocks have been issued to the public and approved by the securities regulatory department under the state council.
2. Corporate total share capital more than 50 million RMB.
3. Registered time more than 3 years, profitable for latest three consecutive years.
4. The company has no major illegal ACTS in the recent 3 years, and there no any false records in the financial accounting report.
FAQs of Establishing Stock Companies