One-person limited liability company as stipulated in the Company Law of the PRC refers to a limited liability company with only one natural person shareholder or legal person shareholder. Since there is only one shareholder in a one-person limited liability company, it is easy for the shareholder to abuse the independent status of corporate legal person and shareholder’s limited liability to evade debts. The Company Law of the PRC sets forth special rules in a separate section to regulate one-person limited liability company accordingly. The details are as follows:
Investment Restriction for Natural Person
One natural person is only allowed to establish a one-person limited liability company, which shall not establish any more one-person limited liability company.
No Shareholders Meeting
Since there is only one shareholder in a one-person limited liability company, it has no shareholders meeting. The shareholder can directly exercise its shareholder functions and powers by signing a written form decision. The convening procedures of shareholders' meeting, shareholders' voting procedures and other relating provisions as stipulated in the Company Law of the PRC shall not be applied under this circumstance.
Statutory Audit
A one-person limited liability company shall make a financial report by the end of every fiscal year and have the report audited by an accounting firm.
Joint and Several liability of the Shareholder
If the shareholder of a one-person limited liability company is unable to prove that the property of the one-person limited liability company is independent from its own property, it shall bear joint liabilities for the debts of the company.
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.
As China continues to deepen its international integration, an increasing number of foreign talents are choosing to work and develop their careers in China over the long term. For foreign employees approaching retirement age (typically 60 years old), understanding China's work visa policies and identifying legal pathways to work after reaching 60 is crucial.
For foreign nationals changing jobs in China for the first time, extra caution must be exercised when going through the formalities related to job changes. In the process of employment transfer, it is essential to understand and comply with the relevant procedures and precautions in advance. The Foreigner's Work Permit is a mandatory document for foreigners to work legally in China.
The Ministry of Finance, the State Taxation Administration and the Ministry of Commerce jointly issued the "Announcement on the Tax Credit Policy for Direct Investment by Foreign Investors with Distributed Profits" on 30 June 2025. From 1 January 2025 to 31 December 2028, foreign investors who use the profits distributed by resident enterprises in China for direct reinvestment within China may enjoy tax credits if they meet the conditions.
The profits obtained by the foreign investors within the territory of the PRC can be freely remitted out according to the Foreign Investment Law of the PRC. However, foreign invested enterprises (FIE, foreign invested limited liability companies) must meet certain conditions and complete specific procedures when applying to remit out the distributed profits (dividends) to overseas shareholders.
