101
[ESTABLISHING A BUSINESS ENTITY IN CHINA]
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◼ Pursuant
to
the
PRC
Number of shareholders The maximum number of shareholders that an LLC may accept is fifty. Governance ◼ Since the Foreign Investment Law took effect on January 1, 2020, a newly formed foreign-invested LLC shall have its shareholders’ meeting as the highest organ of authority 14 . Except as otherwise provided by law, the proceedings and voting procedures of the shareholders’ meeting shall be stipulated in the articles of association of the LLC. ◼ An LLC shall have a board of directors that runs the business and operation of the LLC. Alternatively, the LLC may also choose to have only one single director. In addition, any LLC with more than 300 employees shall have employee representatives on the board unless the existing board of supervisors already has employee representatives. ◼ An LLC shall have a board of supervisors, which is responsible for monitoring the operational and financial affairs of the LLC as carried
Company (2023 Revision) 13 , the shareholders do not have to contribute their subscribed registered capital in full at the time of the subscription but Law generally shall contribute in full within 5 years of the establishment except as otherwise required by law for some special cases. ◼ In addition to the registered capital, a foreign-invested LLC shall also have a “total investment amount” that represents the estimated total amount of funds needed for the operation of the company, including capital injection by the shareholders and funds generated through other channels. The maximum total investment amount of a foreign-invested LLC allowed is based on the amount of its registered capital, as the law requires that the two amounts shall be kept in a certain proportion. Foreign- invested LLC may borrow loans to make up the difference between its registered capital and total investment amount, including foreign debts.
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14 Prior to the enactment of the Foreign Investment Law, there are other types of foreign-invested entities, some of which was required to have the board of directors as their highest organs of authority.
13 Published on December 29, 2023, and effective on July 1, 2024.
ILN Corporate Group – Establishing a Business Entity Series
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