CHINA Law and Practice Contributed by: Kevin Wang, Global Law Office
committee is evaluating the performance of a director or is discussing their compensation, the director shall not participate in such evalua - tion or discussion. The remuneration distribution plan for officers shall be approved by the board of directors, explained at shareholder meetings and fully disclosed. Incentive Payment and Deferred Payment Financial institutions such as banking and insur - ance institutions have deferred remuneration requirements for directors, officers and key posi - tions. In general companies, this kind of mecha - nism can also be stipulated through the articles of association to limit such incentive payment. 4.11 Disclosure of Payments to Directors/Officers According to the Company Law, a joint stock limited company shall regularly disclose to its shareholders the remuneration, fees or benefits payable to directors and officers. A publicly trad - ed company shall disclose the appointments, changes of shareholding and annual remuner - ation of its directors and officers in its annual report. 5. Shareholders 5.1 Relationship Between Companies and Shareholders Shareholders mainly have the following rights with regard to the company. • The right to income: (a) dividend claims; (b) residual claims; (c) pre-emptive rights for new shares; (d) dissenting shareholders’ right to request repurchase of shares; and (e) pre-emptive rights for shares sold by
other shareholders in limited liability com - panies.
• Voting rights and related rights: (a) voting rights;
(b) rights to attend shareholder meetings; (c) rights to propose to convene interim shareholder meetings and meetings of the board of directors; and (d) rights of proposal. • The right to know and other rights. Shareholders’ Obligation The shareholders’ principal obligation to the company is to invest capital in accordance with their committed payment schedule provided in the articles of association of the company. Shareholders’ Civil Liabilities Shareholders who fail to fulfil their investment obligations may bear civil liabilities, and direc - tors, officers and promoters may also be jointly liable. • After the formation of a company, no share - holder can withdraw the capital investment. Directors and officers have the responsibilities of managing the capital. If losses are caused to the company by late payment or capital withdrawal, the directors and officers shall be held jointly and severally liable. • If a shareholder fails to complete its capital contribution on schedule, the company shall issue a written demand to the shareholder to demand payment of capital contribution. If the shareholder fails to perform the obligation after expiration of the grace period, the share - holder shall forfeit the rights to the unpaid equity or shares on the date of issuance of the notice. • Acceleration of contribution – if the company is unable to pay off its due debts, the com - pany or creditors of the due debts shall have
177 CHAMBERS.COM
Powered by FlippingBook