Chapter VII Corporate Bonds
Article 154 The term "corporate bonds" as mentioned in
this Law refers to the securities that are issued by a company according to the
statutory procedures with guaranteed payment of the principal plus interest by a
specified future date. To issue corporate bonds, a company shall meet the
issuance requirements of the Securities Law of the People's Republic of
China.
Article 155 After an application for issuing corporate
bonds is approved by the department authorized by the State Council, the company
shall publish its bond issuance plan, which shall mainly state the following
items:
(1) the name of the company;
(2) the purposes of use of the corporate bonds;
(3) the total amount of corporate bonds and par value
thereof;
(4) the method for determining the
interest rate of the bonds;
(5) the time limit and
method for paying the principal plus interest;
(6)
guarantee of the bonds;
(7) the issuing price of
the bonds, and beginning and ending dates of the issuance;
(8) the net assets of the company;
(9) the total amount of corporate bonds having been
issued but not yet due; and
(10) the underwriters
of the corporate bonds.
Article 156 The physical bonds issued by a company shall
state the name of company, par value, interest rate, time limit for repayment,
and etc., and shall bear the signature of the legal representative and the seal
of the company.
Article 157 The corporate bonds may be registered or
unregistered bonds.
Article 158 A company shall prepare and keep the
counterfoils of corporate bonds. If the company issues registered corporate
bonds, the counterfoils thereof shall state the following items:
(1) the names and domiciles of the bondholders;
(2) the dates on which the bondholders acquires the
bonds and the serial numbers of the bonds;
(3) the
total amount of the bonds, par value, interest rate, time limit and method for
repayment of principal plus interest; and
(4) the
date on which the bonds are issued.
If the company
issues unregistered corporate bonds, the counterfoils thereof shall state the
total amount of the bonds, interest rate, time limit and method for repayment,
issuance date and serial numbers of the bonds.
Article 159 The registration and settlement institutions
of registered corporate bonds shall establish bylaws on the registration,
preservation, interest payment and acceptance of bonds.
Article 160 The corporate bonds may be transferred. The
transfer price shall be negotiated by the transferor and transferee.
The transfer of any corporate bonds, which gets listed and
is traded in a stock exchange, shall comply with the dealing rules of the stock
exchange.
Article 161 The transfer of registered corporate bonds
shall be effected by the bondholder's endorsement or by other methods prescribed
by the relevant laws and administrative regulations. In the case of transfer of
registered bonds, the company shall record the name and domicile of the
transferee in the counterfoil of corporate bonds. The transfer of unregistered
corporate bonds takes effect as soon as the bondholder delivers the bonds to the
transferee.
Article 162 A listed company may, upon the resolution of
the shareholders' meeting, issue corporate bonds that may be converted into
stocks and shall work out concrete conversion measures in the corporate bond
issuance plan. To issue corporate bonds that may be converted into stocks, the
listed company shall file an application with the securities regulatory
institution for examination and approval. The corporate bonds that may be
converted into stocks shall be marked with the words "convertible corporate
bonds", and the number of convertible company bonds shall be specified in the
company's records of bondholders.
Article 163 Where any convertible company bonds is
issued, the company shall exchange its stocks for the bonds held by the
bondholders in the prescribed method of conversion, provided that the
bondholders have the option on whether or not to convert their bonds.
Chapter VIII Financial
Affairs and Accounting of a Company
Article 164 A company shall establish its own financial
and accounting bylaws according to laws, administrative regulations and
provisions of the treasury department of the State Council.
Article 165 A company shall, after the end of each
fiscal year, formulate a financial report, and shall have it checked by an
accounting firm. The financial report shall be work out according to laws,
administrative regulations and provisions of the treasury department of the
State Council.
Article 166 A limited liability company shall submit the
financial report to every shareholder within the time limit as prescribed in the
articles of association. The financial report of a joint stock limited company
shall be ready for the consultation of the shareholders at the company 20 days
before the annual meeting of the shareholders is held. A joint stock limited
company of public offer stocks shall make a public announcement of its financial
report.
Article 167 Where a company distributes its after-tax
profits of the current year, it shall draw 10 percent of the profits as the
company's statutory common reserve. The company may stop drawing if the
accumulative balance of the common reserve has already accounted for over 50
percent of the company's registered capital.
If the accumulative balance of the company's statutory
common reserve is not enough to make up for the losses of the company of the
previous year, the current year's profits shall first be used for making up the
losses before the statutory common reserve is drawn therefrom according to the
provisions of the preceding paragraph. After the company draws the statutory
common reserve from the after-tax profits, it may, upon a resolution made by the
shareholders' meeting, draw a discretionary common reserve from the after-tax
profits. After the losses have been made up and common reserves have been drawn,
a limited liability company shall distribute the remaining profits according to
Article 35 of this Law; a joint stock limited company shall distribute the
remaining profits in light of the proportions of shares held by shareholders,
unless it is not permitted in the articles of association to distribute profits
according to the proportions of shares held by shareholders.
If the shareholders' meeting, shareholders' assembly or
board of directors distributes the profits by violating the provisions of the
preceding paragraph before the losses are made up and the statutory common
reserves are drawn, the profits distributed must be refunded to the company. No
profit may be distributed for the company's shares held by this company.
Article 168 The premium of a joint stock limited company
from the issuance of stocks at a price above the par value of the stocks, and
other incomes listed in the capital accumulation fund according to provisions of
the treasury department of the State Council shall be listed as the capital
accumulation funds of the company.
Article 169 The capital accumulation funds of the
company shall be used for making up losses, expanding the production and
business scale or increasing the registered capital of the company. But the
capital accumulation funds shall not be used for making up the company's losses.
When the statutory common reserve is changed to
capital, the remainder of the common reserve shall not be less than 25 % of the
registered capital prior to the increase.
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