The organization structure of a limited liability company (LLC) includes shareholders’ meeting, board of directors, board of supervisors and manger. The new Company Law of the PRC which came into force on 1 July 2024 has made significant adjustments to the organization structure of LLC. The details are as follows:
Shareholders’ Meeting
The shareholders’ meeting is the highest authority of an LLC, which is composed of all the shareholders. For an LLC that only has one shareholder, the shareholders’ meeting is not required. The shareholder can make decisions in writing and have the decisions signed and sealed by the shareholder.
Board of Directors
The board of directors is the governing body of an LLC, which is composed of at least three members. There is no cap on the number of board members. An LLC with more than 300 employees is required to have employee representative(s) among the board members unless the existing board of supervisors already has employee representative(s).
An LLC with a small scale or fewer shareholders may appoint one director in lieu of a board of directors to exercise the duties and powers of board of directors.
Board of Supervisors
The board of supervisors is the supervisory body of an LLC. An LLC shall set up a board of supervisors, which is composed of at least three members except for the following circumstances:
(1) An LLC with a small scale or fewer shareholders may appoint one supervisor in lieu of a board of supervisors. With unanimous consent of all shareholders, the company may have no supervisor.
(2) An LLC may set up an audit committee composed of directors in lieu of the board of supervisors or supervisor to exercise the duties and powers of board of supervisors.
Manager
A manager (general manager) is not a compulsory requirement for an LLC. The company may choose to appoint a manager or not. The hiring or dismissal of a manager shall be decided by the board of directors. The manager shall be responsible to the board of directors and exercise the duties and powers in accordance with the articles of association or the authorization of the board of directors.
To sum up, small-scale LLCs may simplify their organization structure, i.e. an LLC can be incorporated with only one shareholder and one director.
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Disclaimer
All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.
According to Article 47 and Article of 52 of the revised Company Law, the registered capital subscribed by all the shareholders of a limited liability company shall be fully contributed within 5 years upon incorporation of the company. If the shareholders fail to pay their subscribed registered capital within the prescribed time and grace period, they may lose the equity of the unpaid registered capital.
The organization structure of a limited liability company (LLC) includes shareholders’ meeting, board of directors, board of supervisors and manger. The new Company Law of the PRC which came into force on 1 July 2024 has made significant adjustments to the organization structure of LLC.
Recently, the Company Law of the PRC has been revised and adopted at the 7th Session of the Standing Committee of the Fourteenth National People's Congress of the PRC. The revised Company Law of the PRC will come into force on 1 July 2024. The key points of the revision include:
