公司治理法律与实践（2024版）之中国篇 CHAMBERS GLOBAL PRACTICE GUIDES Corporate Governance 2024

CHAMBERSGLOBALPRACTICEGUIDES

Corporate

Governance2024

Definitivegloballawguidesofferingcomparativeanalysisfromtop-rankedlawyers

China:Law&Practice

KevinWang

GlobalLawOffice

CHINA

LawandPractice

Contributedby:

KevinWang

GlobalLawOffice

Contents

1.Introductoryp.5

1.1FormsofCorporate/BusinessOrganisationsp.5

1.2SourcesofCorporateGovernanceRequirementsp.5

1.3CorporateGovernanceRequirementsforCompaniesWithPubliclyTradedSharesp.5

2.CorporateGovernanceContextp.6

2.1HotTopicsinCorporateGovernancep.6

2.2Environmental,SocialandGovernance(ESG)Considerationsp.6

3.ManagementoftheCompanyp.7

3.1BodiesorFunctionsInvolvedinGovernanceandManagementp.7

3.2DecisionsMadebyParticularBodiesp.7

3.3Decision-MakingProcessesp.10

4.DirectorsandOfficersp.10

4.1BoardStructurep.10

4.2RolesofBoardMembersp.11

4.3BoardCompositionRequirements/Recommendationsp.11

4.4AppointmentandRemovalofDirectors/Officersp.12

4.5Rules/RequirementsConcerningIndependenceofDirectorsp.12

4.6LegalDutiesofDirectors/Officersp.13

4.7Responsibility/AccountabilityofDirectorsp.13

4.8ConsequencesandEnforcementofBreachofDirectors’Dutiesp.14

4.9OtherBasesforClaims/EnforcementAgainstDirectors/Officersp.15

4.10ApprovalsandRestrictionsConcerningPaymentstoDirectors/Officersp.16

4.11DisclosureofPaymentstoDirectors/Officersp.17

5.Shareholdersp.17

5.1RelationshipBetweenCompaniesandShareholdersp.17

5.2RoleofShareholdersinCompanyManagementp.18

5.3ShareholderMeetingsp.18

5.4ShareholderClaimsp.19

5.5DisclosurebyShareholdersinPubliclyTradedCompaniesp.19

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6.CorporateReportingandOtherDisclosuresp.20

6.1FinancialReportingp.20

6.2DisclosureofCorporateGovernanceArrangementsp.20

6.3CompaniesRegistryFilingsp.21

7.Audit,RiskandInternalControlsp.22

7.1AppointmentofExternalAuditorsp.22

7.2RequirementsforDirectorsConcerningManagementRiskandInternalControlsp.22

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Contributedby:KevinWang,GlobalLawOffice

GlobalLawOffice(GLO)wasoneofthefirstleadinglawfirmsinthePRCtotakeaninter-nationalperspectiveonitsbusiness,fullyem-bracingtheoutsideworld.Withmorethan600lawyerspractisingintheBeijing,Shanghai,ShenzhenandChengduoffices,thefirmcon-tinuestosetthepaceasoneofthemostinno-vativeandprogressivelegalpracticesinChina.Overthelast40years,GLOhashelpedsettheagendaforchangethroughprecedents,includ-

Author

KevinWangisapartnerof

GlobalLawOffice,Shanghai.

HehasaPhDinCriminalJusticeandspecialisesinAMLand

economicsanctions,white-

collarcrimedefence,corporate

governanceandsecuritieslitigation.Kevin

servedasacomplianceandriskmanagerforaChinesesecuritiesfirmandthenasaseniorfinancialcrimecomplianceofficerforatop

ingworkingonthefirstforeigngeneraloffertar-getingChinesecompaniesontheHongKongStockExchange,thefirststate-ownedredchipcompanylistedinHongKongacquiringthecontrollinginterestinanA-sharecompanylist-edinChinabymeansofareversetakeover,andthefirstreversemergercaseinwhicharedchipHongKong-listedpubliccompanyspanoffpartofitsChinabusinesstolistonasharemarket.

WallStreetinvestmentfirmbeforejoiningGlobalLawOffice.Possessingdeep

knowledgeoftheChinalocalmarket,andwithindustryexperienceinthefinancialsector,hisexpertiseincorporateliabilitiesdefence,

compliancetutoring,andresponseto

regulatoryinquiriesandinspectionshelps

multinationalcompaniesinhandlingcomplexinvestigationandlitigationmatters.

GlobalLawOffice

35&36thFloor,ShanghaiOneICCNo999MiddleHuaiHaiRoad

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China

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1.Introductory

1.1FormsofCorporate/BusinessOrganisations

Therearethreeprincipalformsofcorporate/businessorganisationinChina:

•companies;

•partnershipenterprises;and

•individualproprietorshipenterprises.

Onlycompanieshavethestatusoflegalper-sons,andshareholdersshallbearliabilitiesforacompanytotheextentoftheirrespectivesubscribedcapitalcontribution/shares.How-ever,ashareholderwhoabusestheindepend-entlegalpersonstatusofthecompanyortheshareholder’slimitedliabilitiestoevadedebts,therebyprejudicingtheinterestsofcreditorsofthecompany,shallbejointlyandseverallyliableforthedebtsofthecompany.

Companiesarecategorisedaslimitedliabilitycompaniesandjointstocklimitedcompanies.Jointstocklimitedcompanieswhosesharesarelistedandtradedonastockexchangearepub-liclytradedcompanies.

1.2SourcesofCorporateGovernanceRequirements

TheprincipalsourcesofcorporategovernancerequirementsforcompaniesaretheCompanyLawofthePeople’sRepublicofChina(the“CompanyLaw”)andfivejudicialinterpretationsoftheCompanyLaw.Inadditiontothelaws,judicialinterpretationsandregulations,theactiv-itiesofacompanyandallparticipants(includingshareholders,directors,supervisorsandoffic-ers)aregovernedbythearticlesofassociationofthecompany.

PubliclyTradedCompanies

Provisionsonthesupervisionandadministra-tionofpubliclytradedcompaniesarenumerousandcomplex.Aspubliclytradedcompaniesareatypeofjointstocklimitedcompany,theprovisionsofChapter5oftheCompanyLaw,regardingjointstocklimitedcompanies,applytothem,andparticularly,theyarealsosubjecttothespecialprovisionsofSection5ofChapter5regardingtheorganisationofpubliclytradedcompanies.TheorganisationandactivitiesofpubliclytradedcompaniesarealsoregulatedbytheSecuritiesLawofthePeople’sRepublicofChina,theregulatoryrulesoftheChinaSecu-ritiesRegulatoryCommission(CSRC)andtherelevantstockexchanges.

1.3CorporateGovernanceRequirements

forCompaniesWithPubliclyTradedShares

Corporategovernancerequirementsforcompa-nieswithpubliclytradedsharesmainlyincludethefollowing:

•thecompanyshallestablishandmaintain

effectivemechanismsofshareholdermeet-ings,boardsofdirectors,boardsofsupervi-sors,independentdirectors,boardsecretar-iesandspecialcommitteesinaccordance

withthelaw;

•thecompanyshallbeencouragedtoappointofficersinanopenandtransparentmanner;

•thecompanyshallestablishfairandtranspar-entstandardsandproceduresforevaluatingtheperformanceofdirectors,supervisorsandofficers;

•thecompanyshallestablishamechanism

linkingremunerationwiththecompany’sper-formanceandindividualperformance;

•thecompanyshallbestrictlyindependent

fromitscontrollingshareholderandactual

controlpersonsintermsofpersonnel,assets,

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financialaffairs,organisationalinstitutions,business,accountingandalsotheirrespec-tiveresponsibilitiesandrisks;

•decision-makingproceduresandinforma-

tiondisclosureobligationsshallbestrictly

performedinconnectionwithrelated-partytransactionsinaccordancewiththerelevantrules;

•thecompanyshallestablishandimplement

amanagementsystemofinformationdis-

closure–itshallmakepublicdisclosuresondocumentssuchasperiodicreports,interimreports,prospectuses,offeringprospectuses,listingannouncements,acquisitionreports,

etc;and

•internalcontrolandriskmanagementshallbeestablished.

Corporategovernancerequirementsforcom-panieswithpubliclytradedsharesaremainlystipulatedintheCodeofCorporateGovern-anceofPubliclyTradedCompanies,whichwasissuedbyCSRCin2018.Somerequirementsaremandatory,whileothersarevoluntary.However,certainprovisionsseemtobevoluntary,butinfacthavebecomequasi-mandatory,becausecompaniesmaybeconfrontedwithunnecessarycomplicationsiftheyhavenotstrictlycompliedwiththemintheIPOprocedure.

2.CorporateGovernanceContext

2.1HotTopicsinCorporateGovernance

TheCompanyLawwasrevisedon29December2023,andthenewrulescameintoeffecton1July2024,withthefollowinghottopicsincor-porategovernancearising:

•thereformofregisteredcapitalsystem;

•theresponsibilityofthecontrollingsharehold-erandactualcontrolperson;

•theimprovementofthelegalrepresentativesystem;

•thecorporategovernancestructureaboutdualclassequity;

•thecompetitionbetweenthecentralismoftheshareholders’meetingandthecentralismof

theboard;

•theenrichmentofshareholderderivativelawsuits;

•theprotectionofshareholders’rights;and

•thecompanyautonomyandshareholder

discretionindesigningthecompany’sarticlesofassociation.

Thenewrevisionsstrengthentheprotectionofshareholders’rightsandcreditor’seconomicinterest,improvetheshareholderinvestmentmechanisms,enhancecomplianceresponsibil-ityofcorporatecontrolpersonsandexecutives,andallowcertainsimplificationsofcompanygovernancestructure.

ThenewCompanyLawspecificallyfocusesontheissuesarisingfromcorporatecontrolrightcompetition,shareholderlitigationanddirectorresponsibility.Inaddition,itdefinesthecon-tentscopeofarticlesofassociationthatcanbeagreeduponbyshareholders.Itstillleavesgapsopenonmanypracticalissuesandincreasestheneedforprofessionaladviceandevenlegalbat-tlesforallrelevantparties.

2.2Environmental,Socialand

Governance(ESG)Considerations

AccordingtoChinaregulatoryrules,publiclytradedcompaniesshalldiscloseenvironmentalinformationandfulfilsocialresponsibilitiessuchaspovertyalleviation.ESGinformationdisclo-sureisoneoftheobligationsthatpubliclytradedcompaniesmustfulfil,whichrequiresthemtoincorporate“environment”,“society”and“gov-

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ernance”intotheconceptofenterprisedevel-opment.

In2024,China’sstockexchangesissuedmorespecificrequirementsonthesustainabledevel-opmentreportforpubliclytradedcompanies.Acombinationofmandatorydisclosureandvol-untarydisclosureshouldbeadoptedforESGreports,andviolationsmaycauseregulatoryordisciplinaryactions.

3.ManagementoftheCompany

3.1BodiesorFunctionsInvolvedin

GovernanceandManagement

InChina,theprincipalbodiesinvolvedinthegov-ernanceandmanagementofacompanyincludetheshareholdermeeting,theboardofdirectors,theboardofsupervisorsandthemanager.

•Theshareholdermeetingisthekeyorganofauthority,responsibleformakingdecisions

onfundamentalissuesandelectingthemainmembersoftheboardofdirectorsandthe

boardofsupervisors.

•Theboardofdirectorsistheexecutivefunc-

tionincorporategovernance.Themanagersareappointedbytheboardofdirectorsand

manager’sfunctionsaredefinedinthearticlesofassociation.Dependingontheirrelevant

authoritiesinthisexecutivefunction,directorsormanagersmayholdthecentralpositioninthecompany’sday-to-daydecisionmaking

process.

•Theboardofsupervisorsisthesupervisory

organ,responsibleforsupervisingtheexecu-tionofbusinessandthecompany’sfinancialstatus.Withouttheboardofsupervisors,thecompanymayalsosetupanauditcommit-teeintheboardofdirectorstoexercisethe

samefunctionsandpowers,inwhichcase

theboardofdirectorsactuallyhasthesuper-visoryresponsibilities.

Ingeneral,thenewcompanylawallowstheremovalofsupervisorsfromthecorporategov-ernancestructure.Itmayalso,however,raisetheconcernofself-supervisionbytheboardofdirectorsitself,leavinganopenquestiononhowtobalancetheboard’spowerinsuchstructure.

3.2DecisionsMadebyParticularBodies

DecisionsoftheBoardofDirectors

Theboardofdirectorsshalldecideonthefol-lowingmatters:

•determiningthecompany’sbusinessplansandinvestmentprogrammes;

•determiningtheestablishmentofthecom-pany’sinternalmanagementdepartments;

•formulatingthecompany’sbasicmanage-mentsystem;and

•decidingonthehiringordismissalofthemanagersandtheirremuneration.

ThenewCompanyLawdeletestheboard’sfunctionofformulatingplansinrespectofthecompany’sannualbudgetandfinalaccounts,whichgivesthecompanyadiscretiontotransferthisfunctionfromtheboardofdirectorstotheseniormanagersbyanelaborationinitsarticlesofassociation.

Inaddition,theboardofdirectorsshallexerciseotherpowersprescribedbythearticlesofasso-ciationandempoweredbytheshareholders’meeting.

PowersThattheShareholders’MeetingcanGivetotheBoardofDirectors

Basedontheempowermentbythesharehold-ers’meeting,theboardofdirectorscandecideonthefollowingmatters.

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Thebelowresolutionsshallbeadoptedbyamajorityofallthedirectors:

•adoptingresolutionsontheissuanceofcor-poratebonds;

•decidingonthecompany’spurchasingits

ownsharestousesharesforemployeestockownershipplanorequityincentives;

•decidingonthecompany’spurchasingitsownsharestousesharesforconverting

convertiblecorporatebondsissuedbythecompany;and

•decidingonthecompany’spurchasingits

ownsharesbecauseitisnecessaryfora

listedcompanytoprotectthecorporatevalueandtherightsandinterestsofshareholders.

Thefollowingresolutionsshallbeadoptedbymorethantwo-thirdsofallthedirectors:

•decidingontheissuanceofnewsharesby

notexceeding50%oftheissuedshareswith-inthreeyears;butifnon-monetarypropertyiscontributedascapitalatanassessedvalue,

suchissuanceshallbesubjecttotheresolu-tionoftheshareholders’meeting;and

•decidingonthecompany’sprovidingfinan-cialassistanceforanotherpersontoacquiresharesofthecompanyoritsparentcom-

pany;however,thecumulativetotaloffinan-cialassistanceshallnotexceed10%oftheissuedcapitalstock.

Iftheboardofdirectorsgoesbeyondthefunc-tionstipulatedinthelaworthearticlesofasso-ciation,andactswithoutanyproperapprovalsbytheshareholders’meeting,itwillconstituteaviolationwithpotentialdamagetotheinterestsofthecompanyinjudicialpractice.

DecisionsoftheShareholderMeeting

Ingeneral,thenewrevisiontoCompanyLawnarrowsthescopeoffunctionsoftheshare-holders’meeting,andcreatesmoreroomsfortheboardofdirectors,whichwasappraisedbymanycommentatorsasasignofencouragingprofessionalismincorporategovernance.

Theshareholdermeetingisresponsibleformak-ingdecisionsonfundamentalissues,includingbutnotlimitedto:

•electingandreplacingdirectorsandsupervi-sors,anddeterminingtheirremuneration;

•reviewingandapprovingplansforthecompa-ny’sdividenddistributionandlossrecovery;

•amendingthearticlesofassociationofthecompany;

•makingresolutionsonanyincreaseor

decreaseofthecompany’sregisteredcapital;and

•makingresolutionsonmerger,division,dis-solutionorliquidationofthecompany,or

changeofthecompanyform.

ProtectionofBonaFideCounterparts

Fortheprotectionoftheinterestsofbonafidecounterpartsandtransactionstability,theCom-panyLawstipulatesthefollowingspecialmeas-ures.

•Forlegalrepresentatives,anyrestrictionontheirfunctionsimposedbythecompany’s

by-lawsorshareholders’meetingcannotbeusedasanexcusetodenythevalidityofthecompanyactingagainstthebonafidecoun-terpart.

•Fordirectors,anyrestrictiononfunctionsoftheboardofdirectorsinthearticlesofasso-ciationcannotbeusedasanexcusetodenythevalidityofthecompanyactingagainstthebonafidecounterpart.

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•Ifapeople’scourtdeclaresinvalid,revokes,

orconfirmstheuntenabilityofaresolutionofashareholders’meetingorboardofdirectors,acivillegalrelationestablishedbetweenthecompanyandabonafidecounterpartbasedontheresolutionshallnotbeaffected.

•Thecompanycannotusethecompanyregis-trationmatterwithoutformalregistrationsormodificationsasanexcuseagainstthebonafidecounterpart.

Theaboveprovisionsmeanthat,ifthebonafidecounterparthasjustifiablereasonstobelievethatthecompanyisproperlyempoweredandactsbasedonsuchbelief,thecourtshallassumethattheactionsbetweenthecompanyandthebonafidecounterpartarevalid.

ProtectionofStakeholders’Interests

Fortheprotectionofstakeholders’interests,theCompanyLawstipulatesspecialproceduralrequirementsasapreconditionforthefollow-ingactivitiesofthecompany,whichessentiallyreflectsthemultiplelayersofcompetitionamongtheinterestsofshareholdersandexternalcredi-tors,andthoseofmajorityshareholdersandminorityones:

•ifacompanyinvestsinotherenterprisesor

providesguaranteesforotherexternalpar-

ties,thedecisionshallbemadebytheshare-holders’meetingorboardmeeting,perthe

articlesofassociationofthecompany;and

•ifacompanyprovidesaguaranteeforits

shareholdersoractualcontrolpersons,thedecisionshallbemadebytheshareholders’meeting;theaforesaidshareholdersorthe

shareholdersunderthecontroloftheafore-saidactualcontrolpersonsshallnotvoteontheaforesaidmatters;thedecisionshallbepassedbymorethanhalfofthevotingrights

heldbytheothershareholderspresentatthemeeting.

TheValidityofGuaranteesbytheCompanyWhenLegalRepresentativesViolateInternalProcedures

Article7oftheInterpretationoftheSupremePeople’sCourtoftheApplicationoftheRelevantGuaranteeSystemoftheCivilCodeofthePeo-ple’sRepublicofChinastipulatesthatifthelegalrepresentativeviolatesthelegalprocedureofthecompanyprovidingtheexternalguaranteeandexceedstheirempowermenttoconcludeaguar-anteecontractwiththecounterpartonbehalfofthecompany,thevalidityoftheguaranteecon-tractshallbedeterminedinaccordancewiththefollowingcriteria:

•ifthecounterpartisingoodfaith,theguar-anteecontractshallbeeffectiveforthe

company;externally,thecompanyshallbearguaranteeliability;internally,thecompany

mayclaimindemnificationagainstthelegalrepresentativeatfault;and

•ifthecounterpartisnotingoodfaith,theguaranteecontractisnoteffectiveforthecompany.

Thecounterparthastheobligationtoreasonablyexaminethevalidityofthecompany’sresolu-tions.Ifthecounterparthasevidenceofitsrea-sonableexamination,thepeople’scourtshalldeterminethatitactsingoodfaith,unlessthecompanyhasevidenceshowingthattheoppo-sitepartyknowsorshouldknowthattheresolu-tionisforgedoraltered.

Thecriterionforjudgingthegoodfaithofthecounterpart,foracaseinvolvingapubliclytrad-edcompany,iswhetherthecounterpartentersintotheguaranteecontractbasedontheinfor-mationpubliclydisclosedbythelistedcompany.

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3.3Decision-MakingProcesses

Normally,meetingsoftheboardofdirectorsshallbeconvenedandpresidedoverbythechairoftheboard.Whentheboardofdirectorsvotesonaresolution,eachdirectorshallhaveonevote.

ProceduralRequirementsforBoardMeetings

Foralimitedliabilitycompany,thediscussionmethodsandvotingproceduresoftheboardofdirectorsshallbespecifiedbythearticlesofassociationorbylaws,unlessitisotherwisepro-videdforbytheCompanyLaw.

Injointstockcompanies,theconveningofboardmeetingshallfollowspecialproceduralrequire-ments.

•Theboardofdirectorsshallconveneatleasttwomeetingsayear,whichmustbenotifiedtoalldirectorsandsupervisorstendaysin

advance.

•Shareholdersrepresentingmorethanatenthofvotingrights,ormorethanathirdofthe

boardofdirectorsortheboardofsupervisors,mayproposetoconveneaninterimmeeting

oftheboardofdirectors.

Forlimitedliabilitiescompaniesandjointstockcompanies,theirboardmeetingshallfollowsomeproceduralrequirements.

•Nomeetingoftheboardofdirectorscanbe

heldunlessmorethanhalfofthedirectorsarepresent.

•Whentheboardofdirectorsmakesaresolu-tion,itshallbeadoptedbymorethanhalfofallthedirectors.

Related-PartyTransactions

Forthemanagementofrelated-partytransac-tions,itisclarifiedthataffiliateddirectorsshallrecusethemselvesfromvoting;ifthenumber

ofnon-affiliateddirectorspresentattheboardmeetingislessthanthree,therelated-partytransactionshallbesubmittedtothesharehold-ers’meetingforreviewandapproval.

VotingDeadlockSolution

Inpractice,ifthereisadeadlocksituationindecision-making,solutionsshouldbeclearlystipulatedinthearticlesofassociationorinter-nalcorporategovernancerules.Forexample,thechairoftheboardcanhaveanadditionalsecondvotingright,orsomekeydirectorscanhaveavetoright.

Withrespecttotheshareholdermeeting,pleasesee5.3ShareholderMeetingsregardingdeci-sion-makingprocesses.

4.DirectorsandOfficers

4.1BoardStructure

Theboardofdirectorsinalimitedliabilitycom-panyshallhaveatleastthreemembers,whilethereisnoupperorlowerlimitforthenumberofboardmembersofajointstocklimitedcompany.

•Smallcompanies,acompanywithasmallerscaleorwithfewershareholdersmayonly

haveonesingledirector,butwithouttheboardofdirectors.

•Formedium-to-largecompanies,iftheboardofdirectorshasthreeormoremembers,

itmayincludeanemployees’representa-

tive.Theboardofalimitedliabilitycompanywhichhas300ormoreemployeesanddoesnotestablishtheboardofsupervisorsshallincludeanemployees’representative.

AuditCommitteeorBoardofSupervisors

Acompanymaysetupanauditcommitteeintheboardofdirectorstoexercisethesupervisory

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functionsandpowerstoreplacetheboardofsupervisorsorsupervisor.Theauditcommitteeofajointstockcompanyshallhaveatleastthreemembers.

4.2RolesofBoardMembers

Theboardofdirectorsshallbepresidedoverbyachair,andmayhaveoneormorevice-chairs.Thechairshallberesponsibleforpresidingovershareholdermeetings,conveningandpresid-ingovermeetingsoftheboardofdirectors,andinspectingtheimplementationofresolutionsoftheboard.Avice-chairassiststhechairintheirwork.Ifthechaircannotordoesnotcarryouttheirduties,suchdutiesshallbecarriedoutbythevice-chair;ifthevice-chaircannotordoesnotcarryoutitsduties,thedutiesshallbecar-riedoutbyadirectorjointlyelectedbymorethanhalfofthedirectors.

Apubliclytradedcompanyshallhaveindepend-entdirectorsandboardsecretaries.Independ-entdirectorsshallberesponsibleforsupervis-ingthedirectorsandofficers,andshallreporttheirworktotheshareholdermeetingannually.Theboardsecretaryshallberesponsibleforthepreparationofshareholdermeetingsandmeet-ingsoftheboardofdirectors,custodyofdocu-ments,managementofshareholders’materials,disclosureofinformation,investorrelationsandothermatters.

4.3BoardCompositionRequirements/Recommendations

QualificationsofDirectors

Personsmaynotserveasadirectorofacom-panyinanyofthefollowingcircumstances:

•theyarewithoutcivilcapacityorhavelimitedcivilcapacity;

•theyhavebeensentencedtocriminalpenal-tiesforcorruption,bribery,embezzlementor

misappropriationofpropertyorforsabotag-ingthesocialistmarketeconomyorder,and

lessthanfiveyearshaselapsedsincethe

expirationoftheperiodofexecution,andlessthantwoyearshaselapsedsincetheexpira-tionoftheprobationperiodofsuspended

sentence;

•theyhavebeendeprivedoftheirpolitical

rightsforcommittingacrime,andlessthanfiveyearshaselapsedsincetheexpirationoftheperiodofexecution;

•theyhaveservedasadirectorormanagerofanenterprisethathasbeendeclaredbank-ruptandtheybearpersonalresponsibility,

andlessthanthreeyearshaselapsedsincethedateofcompletionofthebankruptcy

liquidation;

•theyhaveservedasthelegalrepresentativeofanenterprisewhosebusinesslicencehasbeenrevokedorhasbeenorderedtoclose

itsbusinessoperationsduetoaviolationof

lawandbearpersonalresponsibility,andlessthanthreeyearshaselapsedsincethedateoftherevocationofbusinesslicenceorthe

dateoftheorderofclosingdown;and

•theyhavebeenlistedbythepeople’scourt

asthepersonssubjecttotheenforcementforbreachoftrustobligationsbecausetheyhavealargeamountofdebt,whichisduebuthasnotbeenrepaid.

SpecialRequirementsforChairmanandStaffinCertainIndustries

Therearespecialseniorpositionsegregationrequirementsinspecificindustries.Foranexam-ple,thechairmanofabankoraninsurancecom-panyshallnotconcurrentlyserveastheCEOorthegeneralmanagerfortheinstitution.Andmembersofcommercialbanksandstate-ownedcompaniesmaynottakepart-timejobsinothereconomicorganisations.

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4.4AppointmentandRemovalofDirectors/Officers

Thedirectorswhoarenotrepresentativesoftheemployeesshallbeappointedandremovedbytheshareholdermeeting.Theemployees’repre-sentativesshallbedemocraticallyelectedbytheemployeesthroughtheemployees’congress,throughtheemployees’meetingorinotherways.Themethodofappointingthechairandvice-chairoftheboardofdirectorsinalimitedliabilitycompanyshallbest