Chinese Company Law

Abstract

INTRODUCTION What is a company? In the modern economic context, this question is almost equal with the question “what is a person”. A company is legally endowed with a special structure, a full legal ability. According to the Company Law of the People's Republic of China (2004), a company specifically means “a limited liability company or a joint stock company which is established within the territory of the People's Republic of China”. That is to say, when a foreign businessman wants to invest in China, there are two direct paths. The first is to establish a company (or subsidiary company). The second is to set up a branch office (or company representative office) in China. However, these two choices lead to different applicable laws, namely the Foreign Investment Law or the Foreign- Capital Enterprises Law and other related laws. But when comes to structure and management, any type of foreign company (including foreign-joint venture or wholly foreign-owned enterprises) may make reference to the provisions of the Company Law. Th us when a foreigner wants to perform business in the Chinese market, whether to establish a company or simply to become a shareholder in a Chinese company, he/she should have some knowledge of Chinese company law. This chapter will first provide an overview of the sources of company law in China, and then analyze the general principles of Chinese company law. In the Section 4, we will explain the types of companies in China. Finally, we will concentrate on Chinese company law for foreigners. SOURCES OF COMPANY LAW IN CHINA THE INTERFERING CONSTITUTIONAL PROVISIONS AND WARRANTIES ON CHINESE COMPANY LAW The constitution, as the “Mother Law” in the Chinese legal system, provides the substantive rules and power sources to the other normative rules on basic social economic and political systems, including company law. Generally speaking, in what position does a company (in the broad sense) find itself in the internal economics of China? China's internal economics can be roughly divided into two parts, public sector and non-public sector.