Company Law of the People's Republic of China (9)(10)

Company Law of the People's Republic of China (9)

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  CHAPTER NINE BRANCHES OF FOREIGN COMPANIES



  Article 199  Foreign companies may set up their branches to engage



in



   production  and  business operations inside China according



to provisions of this law.



  The  term  "foreign  companies" used by this  law  refers



to  companies  incorporated  outside  the  territory  of  China



according to foreign laws.



  Article 200  In establishing a branch, a foreign company  shall



file



  an  application  with  the  Chinese department in charge and



submit its  articles  of  association,  registration  certificate



issued   by  the  country  of  register  and  other  related



documents.  After  the approval  is given,  the  branch  of the



company shall go through the registration procedures according to law



and obtain business license.



   The   procedures  for  the examination and  approval  of



branches of foreign  companies  shall  be formulated separately



by  the State Council.



  Article  201  In  establishing  a  branch in China, a foreign



company shall  appoint  a representative or agent in charge of the



branch in China  and appropriate  the necessary funds compatible



with the operations of the branch.



  When  it  is necessary to set a minimum for the operation fund



for a  branch   of   a   foreign   company,  it  shall  be



provided for separately by the State Council.



  Article 202  A branch of a foreign company shall mark in its name



the



 original country and form of its liability.



  A   branch   of   a  foreign company shall deposit  a  copy



of the articles of association of the parent company in the branch.



  Article 203  Though a foreign company is a legal person of  the



said



  foreign  country, its branch in China shall not enjoy the status



of a legal person in China.



  A   foreign   company  shall  bear the civil responsibility



for the operational activities of its branch in China.



  Article  204  In carrying out operational activities in China,



a branch  of  a foreign company shall abide by the laws of China



and shall  not harm  the public interests. The legitimate rights



and interests of the branch shall be protected by law in China.



  Article  205  Before  closing  its  branch in China, a foreign



company shall  clear  the  debts of the branch according to law



and conduct liquidation  according  to the liquidation procedures



provided for by this law. It is not allowed to more the assets of



the branch out of China before the debts are fully paid.



 CHAPTER TEN LEGAL RESPONSIBILITIES



  Article 206  If  a company is found to have reported false



capital



  amount,  provided  false certificates, or concealed important



facts by  means  of  deception during registration in violation



of  the provisions  of   this  law,  it shall be  ordered to



correct  and imposed   a   fine  5  to 10 percent of  the



capital  amount over-reported  in case  of  a false  report of



registered capital amount  and a fine of more than RMB10,000 and



less  than  RMB100, 000   in  case  provision  of  false



certificates  or concealed important facts by means of deception.



If  a case is very serious, its registration shall  be revoked. If



a case  is serious enough  to constitute   a  crime,  criminal



responsibilities  shall be affixed according to law.



  Article 207  If  a company is found to have  issued  shares



or



  corporate  bonds  by  falsifying  prospectus  or application



forms using  improper  procedures  in  issuing shares, it shall be



ordered to stop  the  issue, return the payment of shares with



interest, and imposed  with  a fine  one  to  five  percent of



the  amount  of share  capital raised illegally. If a case is



serious   enough   to  constitute    a   crime,  criminal



responsibilities shall be affixed according to law.



  Article 208  If a promoter or shareholder is found to have



deceived



  creditors  or  the public by denying to pay in cash or kind



or failing to transfer property rights or making false constribution



for his  (her)  shares  subscribed, he (she) shall be ordered to



correct and  imposed  a fine  5 to 10 percent of the falsified



amount  of  payment.  If  the  case  becomes  so  serious as



constituting  a  crime, criminal  responsibility shall be affixed



according to law.



  Article 209  If a promoter or shareholder is found to have  drawn



his



  (her)  share of capital away after the  establishment of a



company, he  (she)  shall  be  ordered to correct and imposed a



fine 5 to 10 percent  of  the  capital drawn away. If the case is



serious enough  to constitute  a  crime, criminal responsibility



shall  be affixed according to law.



  Article 210  If  a company is found to have issued stocks or



bonds



  without  the  approval of the department in charge as provided



for by this  law,  it shall be ordered to stop the issue and return



the share  capital  raised  together  with  interests and shall be



imposed a fine  one to  five percent of the share capital raised.



If the  case is  serious enough  to constitute a crime, criminal



responsibility shall be affixed according to law.



  Article 211  If  a  company is found  to  have  set  up



separate



  accounting  books  apart from those set up according to law,



it shall  be  ordered  to correct and imposed a fine ranging from



RMB10, 000  to RMB100,000.  If the case  is serious enough to



constitute  a crime, criminal responsibility  shall  be  affixed



according to law.



  If   a   personal  bank account is deposited with the  assets



of a  company,  the  illegal proceeds shall be confiscated, together



with a fine more  than one time and less than five times the amount



of the illegal proceeds. If the case is serious enough to constitute a



crime, criminal responsibility shall be affixed according to law.



  Article  212  If  a company is found to have provided false



financial  and  accounting  statements  or  concealed  important



facts  in  the reports  to  shareholders  or  the public, the



responsible  person(s) directly   in  charge  and  other persons



directly responsible shall be imposed  of a fine of RMB10,000 to



RMB100,000. If the case is serious enough to  constitute a crime,



criminal responsibility shall be affixed according to law.



  Article 213  If  a company is found to have converted State



owned



  property   into   shares   or sold the property  at  low



prices or  distributed  the property to individuals in violation of



this  law, the responsible persons in charge and persons directly



responsible shall  be  given  administrative  punishments. If the



case  is  serious enough   to  constitute  a  crime,  criminal



responsibility shall be affixed according to law.



  Article 214  If a director, supervisor or manager is found  to



have



  abused  he  (her) powers to accept bribes or other illegal



proceeds or  peculate  property of his(her) company, the illegal



proceeds shall be  confiscated and the property be ordered to return



and the  person in  question shall  be punished by the company



concerned. If the case is  serious  enough to constitute a crime,



criminal responsibility shall be affixed according to law.



  If  a  director  or a manager of a company is found to have



used the  company's  funds  for personal purpose or as loan to



others, he(she)  shall  be  ordered  to  return  the  funds and



punished by the company,  with the illegal proceeds returning to the



company.  If the case  is  serious enough  to constitute a crime,



criminal responsibility shall be affixed according to law.



  If  a  director or a manager is found to have violated this law



by using  the  property  of the company to provide collateral for



the debts  of shareholders  or other individuals, he (she) shall



be ordered  to cancel the collacteral and be liable to compensation



and the  proceeds arising from illegal provision of the collateral



shall belong  to   the company. If the case is very serious,



punishments shall be meted out by the company.



  Article 215  If a director or a manager is found to have violated



this



   law  by  conducting,  in  person  or  in  cooperation  with



others, businesses  similar  to  the  company's, he (she) shall be



punished by the   company concerned  and  the  proceeds  arising



from  the businesses concerned shall belong to the company.



  Article 216  If  a company is found to have failed to draw from



its



  profits  statutory  common  reserve  or public welfare funds



as provided for  by  this law, it shall be ordered to make good the



due amount and imposed a fine ranging from RMB10,000 to RMB100,000.



  Article 217  If a company fails to notify creditors or make a



public



   announcement   about  its  merger  or division or reduction



of registered  capital or liquidation as provided for by this law, it



shall be  ordered to correct and imposed a fine ranging from RMB10,



000 to



RMB100,000.



  If   a   company   is found in the process of  liquidation



to have  concealed  its  property, made false reports about its



balance sheet or  list  of assets or distributed its  property



before clearing  debts,  it shall be ordered to correct and imposed a



fine from one   to  five  percent  of the amount of property



concealed  or distributed  before clearing  debts.  The person(s)



in charge  and other   people   directly  responsible shall be



fined  for  a  sum RMB10,000  to  RMB100,000.  If the case  is



serious   enough   to  constitute   a   crime,   criminal



responsibility shall be affixed according to law.



 



Company Law of the People's Republic of China (10)

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  Article 218  If  a  liquidation  group  fails  to  submit



its



   liquidation   report   to   the  company   registration



department  as  provided   for  by  this  law  or concealed



important  facts  or missed important items, it shall be ordered to



correct.



  If  a  member  of a liquidation group is found to have abused



his (her) power  to  seek personal gains by resorting to deception,



or peculated  the  company's  property,  he (her) shall be ordered



to return   the  property  to  the  company,  have the illegal



proceeds confiscated   and  be  imposed a fine one time to five



times  the amount  of  the  illegal proceeds.  If  the case is



serious enough  to constitute  a  crime, criminal responsibility



shall be affixed according to law.



  Article  219   If  an organization  undertaking  assets  or



investment



   appraisal    or   inspection   is  found   to   have



provided  false  certificates,  the  illegal  proceeds shall be



confiscated and a fine  one time  to  five  times  the illegal



proceeds  shall be imposed  and the organization shall be ordered by



department  in  charge  to   stop  operation.  Qualification



certificate(s)  to the person(s) directly  in  charge shall  be



revoked. If the case is serious enough  to  constitute  a crime,



criminal responsibility shall be affixed according to law.



   If   an   organization  undertaking assets  or  investment



appraisal or  inspection  is  found  to have provided reports with



major omissions due  to negligence, it shall be ordered to correct



and if the case  is fairly  serious, a fine one time to three



times the income shall be imposed  and the organization shall be



ordered  to stop operation by department  in  charge  according



to  law.  The  qualification certificate(s)  of  the person(s)



directly in charge shall be revoked.



  Article 220  If  the department in charge authorized by the



State



   Council   is   found   to have granted the  approval  to



applications for  establishing  a company which fails to meet the



requirements as  provided  for  by this law or granted approval to



applications for issuing stocks  falling short of the requirements,



administrative punishments  shall   be  meted  out to people in



charge  and  other persons  directly  responsible if the case is



serious. If the case is serious  enough  to constitute a crime,



criminal responsibility shall be affixed according to law.



  Article 221  If the securities administration department of the



State



  Council  is  found to have granted approval  to application



for public  offers  of shares, a stock listing or issue of bonds



which does  not conform to the prescribed conditions, people in



charge and  other  persons   directly  responsible  shall  be



subject  to administrative  punishments  if  the case is serious.



If the case is serious  enough  to constitute a crime, criminal



responsibility shall be affixed according to law.



  Article  222  If a company registration department is found



to  approve  registration    that   does   not  meet   the



prescribed requirements,  people  in  charge  and  other  persons



directly  responsible  shall   be  subject  to  administrative



punishments if the case  is  serious.  If  the case is serious



enough to  constitute  a crime, criminal  responsibility shall be



affixed according to law.



  Article 223  If a higher-level department is found to have forced



the



  company   registration  department  to approve a registration



that does  not  conform  to  the requirements or cover up the



illegal registration,  people  in  charge  and  other  persons



directly  responsible  shall   be  subject  to  administrative



punishments if the case  is  serious.  If  the case is serious



enough to constitute  a crime, criminal  responsibility shall be



affixed according to law.



  Article  224  If a company without a legal registration is found



to have  used  the name of a limited liability company or a joint



stock company  limited,  it shall be ordered to correct and may



also  be fined   from RMB10,000  to RMB100,000.  If  the  case



is  serious  enough   to  constitute  a  crime,   criminal



responsibility shall be affixed according to law.



  Article 225  If a company fails to open business after six months



or



   more  of  its  establishment  without justifiable reasons or



has suspended  its  operations  for  more  than  six  months in



succession after  starting operation, its business license shall be



revoked.



   If    a    company    fails   to    go   through



alteration registration  procedures  as provided for by this law when



changes  have taken  place, it shall be ordered to register within a



prescribed  time limit.  If  it  fails to register within the



time limit,  a  fine ranging from RMB10,000 to RMB100,000 shall be



imposed.



  Article 226  If a foreign company has violated the provisions of



this



  law  and  set  up branches inside China without approval, it



shall be  ordered   to  correct or close down the branch and be



imposed a fine ranging from RMB10,000 to RMB100,000.



  Article  227  If  a department in  charge  for examination



and approval  according   to  this  law  refuses  to grant an



approval to   the establishment or a company registration department



refuses to grant  the approval  to the registration of a company



which  has  meet  prescribed  requirement  for establishment or



registration, a review may be applied or an administration suit may be



filed for the case.



  Article 228  If a company has violated the provisions of this law,



it



  shall  bear  the  civil responsibility of compensation and pay



fines and  pecuniary  penalty  and if the amount of property is not



enough  to  pay  for  the  three,  it  should  firstly  make



compensation for civil



responsibility.



 CHAPTER ELEVEN SUPPLEMENT PROVISIONS



  Article 229  If a company is registered before the implementation



of



  this  law  in accordance with a provious law, administrative



decrees  or  local   regulations  and  the  provisions  of



"Convention  on Limited Liability  Company"  and  "Convention  on



Joint   Stock Company" formulated  by the department of the State



Council in charge, it  may  continue  its  operation and those



company  which  cannot meet  the  requirements as provided for by



this law should create  the conditions  so  as  to  meet the



necessary   requirements.   Specific  procedures   for   the



implementation  of  this  law shall be separated formulated by the



State Council.



 Article 230 This law shall come into effect as of July 1, 1994.