1. Responsibilities and Powers of Director/Board of Directors
The board of directors established by a limited liability company shall comprise 3 up to 13 members unless for the company with relatively less shareholders or a relatively small company, it may have an acting director and no board of directors.
The board of directors shall be responsible for the shareholders’ meeting and exercise the following authorities:
(1) convening shareholders’ meetings and reporting the status on work thereto;
(2) carrying out the resolutions made at the shareholders’ meetings;
(3) determining the operation plans and investment plans;
(4) working out the company’s annual financial budget plans and final account plans;
(5) working out the company’s profit distribution plans and loss recovery plans;
(6) working out the company’s plans on the increase or decrease of registered capital, as well as on the issuance of corporate bonds;
(7) working out the company’s plans on merger, split-up, change of the company form, dissolution, and etc.;
(8) making decisions on the establishment of the company’s internal management departments;
(9) making decisions on hiring or dismissing the company’s manager and his remuneration, and, according to the nomination of the manager, deciding on the hiring or dismissing of vice manager(s) and the person in charge of finance as well as their remuneration;
(10) working out the company’s basic management system; and
(11) other functions as prescribed in the articles of association.
In the voting on a resolution of the board of directors, one person shall have one vote.
2. Appointment and Change of Directors
Directors and chairman of the board of the director are appointed by the investor. A letter of appointment shall be signed by the investor and submitted to the administration bureau for industry and commerce. For any change of directors, a resolution of the shareholders or board of directors is required and an application form for registration of changes shall be filled and submitted to the administration bureau for industry and commerce together with the original resolution, letter of appointment for the new director, photocopy of the identity certificate of the new director, original true copy and duplicate of the business license of the company.
The chairman of the board of directors is the legal representative of the company. A registration form shall be filled and registered with the administration bureau for industry and commerce. For the change of legal representative, an application form for registration of changes shall be filled and submitted to the administration bureau for industry and commerce together with the photocopy of the Articles of Association, original letter of appointment for the new legal representative, original resolution of the shareholders or board of directors, photocopy of the identity certificate of the new legal representative, original true copy and duplicate of the business license of the company.
3. Qualifications Requirement for Directors (and other Senior Officers)
Article 147 of the Company Law of the PRC provides that anyone who is under any of the following circumstances shall not take the post of a director, supervisor or senior manager of a company:
(1) Being without or with limited capacity of civil conduct;
(2) has been sentenced to any criminal penalty due to an offence of corruption, bribery, encroachment of property, misappropriation of property or disrupting the economic order of the socialist market economy and 5 years have not passed since the completion date of the execution of the penalty; or has ever been deprived of his political rights due to any crime and 3 years have not passed since the completion date of the execution of the penalty
(3) Where he was a former director, factory director or manager of a company or enterprise which was bankrupt and liquidated, and was personally liable for the bankruptcy of such company or enterprise, three years have not passed since the date of completion of the bankruptcy and liquidation of the company or enterprise;
(4) Where he was the legal representative of a company or enterprise, and the business license of this company or enterprise was revoked and this company or enterprise was ordered to close due to violation of the law, and he is personally liable for the revocation, three years have not passed since the date of the revocation of the business license thereof;
(5) Has a relatively large amount of debt which is due but un-cleared.
In case a company elects or appoints any director or supervisor or hires any senior manager by violating the provisions in the preceding paragraph, the election, appointment or hiring shall be invalidated. In case any director, supervisor or senior manager, during his term of office, is under any of the circumstances as mentioned in the preceding paragraph, the company shall dismiss him from his post.