Benefits of a China Limited Liability Company
China Limited Liability Company Structure
Definition of China Limited Liability Company
(Stipulated by China Corporation Law)
Five Preconditions for Establishing a China Limited Liability Company
- First, the members of shareholders shall be less than fifty.
- Second, the amount of investment subscribed by all shareholders by the provisions of the articles of association;
- Third, shareholders jointly formulate the Articles of Association
- Fourth, has the company name and establishes the organization that meets the requirement of limited liability company
- Fifth, registered office address for the business operation
Types of China Limited Liability Company
- Sole-funded Company (For example, China WFOE or WOFE)
- A limited liability company with multiple investors (China Joint Venture)
For the most detailed and updated China WFOE register information, please check:
The Ultimate Guide for China WFOE Formation in 2018.
Setting up a limited company means you have the reassurance of ‘limited liability.’ Shareholders of the limited liability company bear limited liability means you will not be personally liable for any financial loss of your company. An LLC company protects your assets from the encroach on business losses.
Your limited liability company registered in China enables your company name and registered products & intellectual property under protection by China law. You will have legal right to take legal actions for any infringement.
China LLC has a Separate Legal Identity
A China limited liability company (LLC) is an entirely separate legal entity from its shareholders. In other words, from the company business operation to a financial position is wholly different from the owner’s interests.
Quick and Easy to Start
China limited liability company registration made easy and quick to start. Business owners are not required to come to China personally to start china company registration, and all procedures can finish online.
Easy to Transfer Ownership
A China limited liability company has limited members of shareholders. It is effortless to transfer ownership wholly or partially within China limited liability company.
Easy to Exit from the Business
Setting up a business as a limited company can aid the possibility of selling it in the future, which can be unreachable for other business structures. The original owner could be able to exit the business entirely without worries.
China Limited Liability Company’s Organ of Power - the Board of ShareholdersThe organ of power of an LLC is the board of shareholders, which is a non-permanent institution made up of all shareholders to express the company's operation plan, which is a necessary institution for every company.
The functions and powers of the shareholders' committee
China's company law stipulates that the functions of the shareholders of the limited liability company shall include:
(1) determine the company's operating principles and investment plans;
(2) elect and replace directors and decide on the remuneration of the directors;
(3) elect and replace the supervisors appointed by the shareholders' representatives to decide on the remuneration of the supervisors;
(4) consider and approve the report of the board of directors;
(5) examine and approve reports of supervisors or supervisors;
(6) consider and approve the company's annual financial budget plan and decision plan;
(7) consider and approve the company's profit distribution plan and make up the loss plan;
(8) make resolutions on increasing or reducing the registered capital of the company;
(9) making decisions on the issuance of corporate bonds;
(10) make declarations on the transfer of capital contribution to the shareholders other than the shareholders;
(11) make decisions on the merger, division, change of company form, dissolution and liquidation of the company;
(12) amend the articles of association.
China Limited Liability Company’s Executive Body - Board of Directors / Executive DirectorThe executive body of a limited liability company is the board of directors or the executive director. It is generated by the shareholder election to perform the internal implementation of the company business and act as the permanent institution.
Authority of the board of directors
China's company law stipulates that the functions and powers of the board of directors of limited liability companies include:
(1) convene the shareholders' meeting and report to the shareholders' committee;
(2) implement the resolution of the shareholders' meeting;
(3) determining the company's business plan and investment plan;
(4) formulate the company's annual financial budget plan and decision plan;
(5) formulate the company's profit distribution plan and the compensation and loss plan;
(6) formulate plans for companies to increase or reduce registered capital;
(7) formulate plans for a merger, division, change of company form and dissolution of contracts;
(8) determine the setting of internal management of the company;
(9) appoint or dismiss the manager of the company (general manager), appoint or dismiss the company's deputy manager and finance director according to the nomination of the manager, and decide on his remuneration;
(10) formulate the primary management system of the company.
China Limited Liability Company’s Supervisory Body - Supervisory Board or Supervisor.The functions and powers of the board of supervisors or supervisors
The functions and powers exercised by the board of supervisors or supervisors shall include:
(1) checking the company's finance;
(2) to supervise the actions of the directors and managers who violate laws, regulations or articles of association when they perform the duties of the company;
(3) when the behavior of the director and the manager damages the interests of the company, the directors and the manager shall be required to correct it.
(4) propose a temporary shareholder meeting;
(5) other functions and powers prescribed by the articles of association.