Archived（May 28, 2018）

(Adopted at the Thirty-second Meeting of Standing Committee of the Second Shenzhen Municipal People’s Congress on May 6, 1999.)

Chapter I General Provisions

Article 1 In order to standardize the organizations and activities of wholly state-owned limited companies, protect the lawful rights and interests of companies, shareholders and creditors, safeguard social and economic order and promote the economic development of Shenzhen Special Economic Zone (hereinafter referred to as “Special Zone” ), these regulations are hereby formulated in light of the specific conditions of the Special Zone and in accordance with the Company Law of the People's Republic of China(hereinafter referred to as the “Company Law”).

Article 2 A wholly state-owned company in these regulations refers to a limited liability company, which invested in and established solely by state-owned subscriber according to these regulations in the Special Zone.

Article 3 A wholly state-owned limited company is an enterprise legal person.

In the case of a wholly state-owned limited liability company, the subscriber is liable to the company to the extent of the amount of its capital. A wholly state-owned limited liability company is liable for the debts of the company with all its assets. A company and its shareholder are units independent to each other.

The domicile of a company is the place where its principal place of business is located.

Article 4 A limited liability company established in accordance with these regulations shall have the words “wholly state-owned limited company”in its name.

Chapter II Establishment of Wholly State-owned Limited Companies

Article 5 To establish a wholly state-owned company in accordance with these regulations shall be approved by a state-authorized department for administration of state-owned assets.

A wholly state-owned company shall be restricted to establish a new wholly state-owned company as an exclusive shareholder or the company as of the date these regulations take effect.

Article 6 A company, which engages in the production of special products or belongs to a specified trade, shall be established in the form of a wholly state-owned limited company.

A company, which does not engage in the production of special products or belong to a specified trade, shall be strictly restricted to be established in the form of a wholly state-owned limited company.

Article 7 To establish a wholly state-owned limited company shall meet the following requirements:

(1) The investment contributed by shareholders meets the minimum amount of capital required by these regulations;

(2) The company's articles of association shall be formulated by the state-authorized department for administration of state-owned assets, or be formulated by the directorate and submitted to the state-authorized department for administration of state-owned assets for approval;

(3) There is a company name, and an organizational structure complying with the requirements for establishing a limited liability company; and

(4) There is a fixed place and necessary conditions for productions and operations.

Article 8 A wholly state-owned limited company’s registered capital is the capital actually contributed by the shareholder and registered with the company registration authorities.

The registered capital of a wholly state-owned limited company, which engages in the production of special products or belongs to a specified trade, shall not be less than RMB 2,000,000.

The registered capital of a wholly state-owned limited company, which does not engage in the production of special products or belong to a specified trade, shall not be less than RMB 500,000.

Article 9 The subscription by a subscriber shall abide by relevant provisions of the Company Law.

Article 10 The establishment of a wholly state-owned limited company shall be applied by the legal representative of the shareholder or the person consigned by the shareholder in accordance with these regulations.

Chapter III Shareholders of Wholly State-owned Limited Companies

Article 11 The shareholder exercises the following powers:

(1) To decide on the company's operational policies and investment plans;

(2) To nominate or appoint any director or supervisor;

(3) To examine and approve reports of the board of directors;

(4) To examine and approve reports of the board of supervisors;

(5) To examine and approve the company's proposed annual financial budget and final accounts; and

(6) Other powers as prescribed by laws, regulations and company's articles of association.

Article 12 Shareholders shall not withdraw their capital contributions after the registration of the wholly state-owned limited company.

The shareholder, who illicitly withdraws its capital contribution, shall be jointly liable for the debts of the wholly state-owned limited company.

Article 13 The shareholder may transfer its capital contributions with the consent of the state-authorized department for administration of state-owned assets or state-owned assets operation institution.

Article 14 Any deal between a wholly state-owned limited company and its shareholder shall be recorded in the memorials of the company or in other written forms.

Any deal between a wholly state-owned limited company established by shareholder’ s representative and the shareholder itself shall be prohibited.

Article 15 A wholly state-owned limited company shall not loan any company fund to its shareholder.

A wholly state-owned limited company shall not provide a guarantee for debts of its shareholder with the company's assets.

Article 16 Where a shareholder of a wholly state-owned limited company enjoys creditor’s right against the company, it shall not enjoy the pre-emptive right against other creditors for claiming payment of the debts from the company.

Article 17 Where the institutions and finances of a shareholder and its wholly state-owned limited company are commingled continuously, the shareholder shall bear joint and several liabilities for debts of the company.

Article 18 The shareholder shall be deemed to excessively rig the company in case it falls into the following circumstances:

(1) There are unfair commerce clauses between the parent company and its subsidiary company, which lead to the transfer of the profits of the subsidiary company to the parent company or the loss of the parent company to the subsidiary company;

(2) The subsidiary company is part of its parent company all along other than an independent one;

(3) The subsidiary company has never established any independent institution; and

(4) The external deals of the parent company and its subsidiary company have never been clearly divided.

Where a shareholder excessively rigs a wholly state-owned limited company and causes the company loss its independence, it shall bear joint and several liabilities for debts of the company caused during the period it excessively rigged the company.

Chapter IV Institutions of Wholly State-owned Limited Companies

Article 19 A wholly state-owned company does not establish shareholder's meeting, the company's board of directors authorized by the shareholder is to exercise part of the powers of the shareholder’s meeting which stipulated by Article 38 of the Company Law. But the decisions on merger, division, dissolution of the company, increase or decrease in capital and issue of corporate bonds shall be made by the shareholder and approved by the state-authorized assets administrative department.

Article 20 A wholly state-owned company shall establish a board of directors to exercise powers stipulated by Article 46 and Article 49 of the Company Law and Article 19 or these regulations. The term of office of the board of directors is three years.

Article 21 The board of directors of a wholly state-owned limited company shall have three to nine members, in which shall include representatives of the staff and workers of the company.

Article 22 The board of directors shall have a chairman and may have one vice-chairman if necessary. The chairman and the vice-chairman are designated from among the directors.

The chairman of the board of directors is the legal representative of the company.

Article 23 A wholly state-owned company shall have a manager who is appointed or dismissed by the board of directors. With the consent of the state-authorized department for administration of state-owned assets or state-owned assets operation institution, the chairman of the board of directors may act concurrently as manager.

The manager shall exercise his powers in accordance with the provisions of Article 50 of the Company Law.

Article 24 The chairman and vice-chairman of the board of directors, directors and the manager of a wholly state-owned limited company shall not act concurrently as chief officers of other limited liability companies, companies limited by shares or other economic organizations without the consent of the state-authorized department for administration of state-owned assets or state-owned assets operation institution.

Article 25 A wholly state-owned company shall establish a board of supervisors, which shall include representatives of the staff and workers of the company. The term of office of the board of supervisors is three years.

The board of supervisors or the supervisions shall exercise their powers in accordance with Article 54 of the Company Law.

Article 26 Any person shall not serve as a director, supervisor or manager of a wholly state-owned limited company in case he falls into the following circumstances:

(1) Without civil capacity or with restricted civil capacity;

(2) Having a relatively large amount of debts due and outstanding;

(3) Having taken the post of board chairman or manager in other companies and having not been audited for outgoing post or having been audited and proved to have committed illegal economic acts;

(4) Causing gross loss to the company as a result of fault decision;

(5) Causing loss to the company in each of the two previous years as a result of mismanagement, and the loss keeps on increasing;

(6) Being the legal representatives of a company or enterprise which has its business license revoked due to a violation of the law and being personally liable;

(7) Having committed the offences of corruption, bribery, infringement of property, misappropriation of property or sabotaging the socioeconomic order, and having been sentenced to criminal penalties or subject to administrative sanctions; and

(8) Other circumstances as stipulated by laws and administrative regulations.

Chapter V Finance and Account of Wholly State-owned Limited Companies

Article 27 A wholly state-owned limited company shall establish its financial and accounting systems according to laws, administrative regulations and the regulations of the responsible finance department of the State Council.

Article 28 A wholly state-owned limited company shall prepare its financial and accounting report in accordance with Article 175 of the Company Law.

Article 29 The distribution of annual after-tax profits of a wholly state-owned limited company shall abide by Article 175 of the Company Law.

Article 30 A wholly state-owned limited company shall not provide a guarantee for debts of any individual or organization provide that it has not been approved by the state-authorized department for administration of state-owned assets or state-owned assets operation institution.

Chapter VI Transformation of Corporate Form

Article 31 Where a wholly state-owned limited company is to change its corporate form, it shall have the approval of the state-authorized department for administration of state-owned assets.

Article 32 In the case of change of shareholder, a wholly state-owned limited company shall notify its creditors within ten days of the date of the company's resolution to change and shall publish public notices in a newspaper at least three times within thirty days of the date of the company's resolution to change. A creditor has the right within thirty days of receiving such notice from the company (or, for creditors who do not receive the notice, within ninety days of the date of the first public notice) to demand that the company repay its debts to that creditor or provide a corresponding guarantee for such debt. A wholly state-owned limited company, which does not repay its debts or provide corresponding guarantees for such debts, shall not change its shareholder.

Article 33 In the case of adjustment of industrial structure or vacancy of shareholder, a limited liability company with two or more shareholders may transform to a wholly state-owned limited company according to approval procedures stipulated by these regulations.

Chapter VII Supplementary Provisions

Article 34 The Company Law and other relevant laws and regulations shall be applicable to the matters that are not specifically stipulated by these regulations.

Article 35 After the effective date of the Company Law, the state-owned companies including all internal union enterprises owned by the whole people, which have not been standardized in accordance with the Company Law, shall be standardized in two years from the date these regulations take effect in accordance with these regulations or the Company Law and be re-registered.

Article 36 These regulations shall take effect as of July 1, 1999.