CHINA Law and Practice Contributed by: Nancy Zhang, Xiaoying Tian, Qian Gu and Liangqian Ying, JunHe
• a board of directors consisting of three or more directors (or one director in lieu of a board of directors if there is a limited number of shareholders or the company is small), which reports to the shareholders’ assembly (or shareholder); and • a board of supervisors of no less than three supervisors (or one supervisor in lieu of a board of supervisors, or zero supervisor upon unanimous consent by all the shareholders, if there is a limited number of shareholders or the company is small), or an audit committee composed of board directors to serve as the board of supervisors or the supervisor above. Board directors are appointed by the share - holders’ assembly (or shareholder). A limited liability company may have a general manager, who reports to the board, to be appointed or dismissed by decision of the board. A Limited Company by Shares A limited company by shares is incorporated by one to 200 sponsors, with at least half of them having residence in the PRC, and has: • a shareholders’ assembly consisting of all shareholders, which is the highest authority of the company; • a board of directors consisting of three or more directors (or one director in lieu of a board of directors if there is a limited number of shareholders or the company is small), which reports to the shareholders’ assembly (or shareholder); • a board of supervisors of no less than three supervisors (or one supervisor in lieu of a board of supervisors if there is a limited num - ber of shareholders or the company is small), or an audit committee composed of board directors to serve as the board of supervisors or the supervisor above; and
• a general manager. As in the limited liability company, board direc - tors are appointed by the shareholders’ assem - bly (or shareholder), and the general manager is appointed or dismissed by decision of the board of directors. 5.6 Annual Entity Maintenance and Accounting Compliance A company must submit the annual report for the preceding year to the administration for market regulation through the corporate credit informa - tion disclosure system between 1 January and 30 June each year. No fees are required for the submission of such report. Companies are also required to prepare financial accounting reports at the end of each fiscal year, which are audited by an accounting firm. In addi - tion to such accounting expenses, additional fees may be incurred for other financial matters as agreed in a company’s articles of association. Such fees vary depending on the location of the accounting firm and the company’s assets and financial condition. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Leasing is the most common method to obtain the right to occupy and use any or all of a build - ing for a limited period of time. In addition, the habitation right, if duly registered, is another method to occupy and use another person’s dwellings, generally free of charge unless oth - erwise agreed. The habitation right is a newly created right under the Civil Code.
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