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​Establishment of a Joint Stock Limited Company in China

Establishment of a Joint Stock Limited Company in China

1.       Requirements for Incorporation

According the Company Law of the PRC, the following conditions shall be satisfied for setting up a joint stock limited company:

(1)
The number of promoters meets the quorum requirement;

To establish a joint stock limited company, there shall not be less than 2 but not more than 200 promoters, of whom half or more shall have a domicile within the territory of the PRC.

(2)
The capital stock subscribed for by all its promoters or the paid-in capital stock raised is in compliance with the articles of association of the company ;

(3)
The issuance of shares and the preparatory work conform to the provisions of laws;

(4)
The articles of association is formulated by the promoters, and is adopted at the establishment meeting if the company is to be launched by stock floatation;

(5)
The company has a name and its organization structure complies with that of a joint stock limited company;

The organization structure of a joint stock limited company consists of the shareholders?Assembly, board of directors, board of supervisors and manger.

The shareholders?assembly shall be composed of all the shareholders. The board of directors shall be composed of 5-19 persons, who shall be elected by the shareholders?assembly. The board of supervisors shall be composed of at least 3 persons, which shall include representatives of shareholders and an appropriate percentage (shall account for no less than 1/3 of all the supervisors) of representatives of employees. The manager shall be hired by the board of directors.

(6)
The company has a domicile.


2.       Way of Establishment

According the Company Law of the PRC, a joint stock limited company may be established by the way of promotion or stock floatation.

Establishment by promotion means that the promoters establish a company by subscribing for all of the shares that should be issued by the company. Where a joint stock limited company is established by promotion, the promoters shall, in writing, fully subscribe for their respective shares as stated in the articles of association of the company, and pay for their subscriptions in accordance with the articles of association of the company.

Establishment by stock floatation means that the promoters establish a company by subscribing for some of the shares that should be issued by the company and offering the remaining shares to the general public or to a group of specified people for subscription. Where a joint stock limited company is established by stock flotation, the shares subscribed by the promoters shall not be less than 35 % of the total shares. However, if it is otherwise provided for by any law or administrative regulation, such law or administrative regulation shall prevail.

3.       Registered Capital

There is no minimum registered capital requirement for the establishment of a joint stock limited company. However, if any law or administrative regulation or any decision of the State Council provides otherwise for the requirement of paid-in registered capital or the minimum amount of registered capital of a joint stock limited company, such provisions shall prevail.

According the Company Law of the PRC, where a joint stock limited company is established by promotion, the registered capital shall be the total amount of share capital subscribed by all the promoters as registered with the company registration authority. The company shall not offer shares to other investors before all its promoters have fully paid up their subscriptions

Where a joint stock limited company is established by stock floatation, the registered capital shall be the total actually paid share capital registered with the company registration authority.

KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.


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