103
[ESTABLISHING A BUSINESS ENTITY IN CHINA]
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 certain proportion. Foreign- invested LLC may borrow loans to make up the difference between its registered capital and total investment amount, including foreign debts.
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 which runs the business and operation of the LLC and is responsible to the shareholders’ meeting. Alternatively, the LLC may also choose to have only one executive director. ◼ An LLC shall have a board of supervisors, which reports to the shareholders’ meeting, and is responsible for monitoring the operational and financial affairs of the LLC as conducted by the board of directors 14 . At least one thirds of the members of the board of supervisors shall be employee representatives. Alternatively, the LLC may also choose to have only one or two supervisors. ◼ An LLC shall have a legal representative. The legal representative is deemed as the representative of the LLC in civil activities unless otherwise communicated to third parties. However, the law does not vest executive power in the legal representative. As such, the
- 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 13 . Except as otherwise provided by law,
13 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.
14 When referring to the board of directors, the executive director is also included, as the case may be.
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator