CHINA Law and Practice Contributed by: Kevin Wang, Global Law Office
• basic information on and annual remuneration of directors, supervisors and officers; • meetings of the board of directors held during the reporting period and the performance of each director; • the membership of the special committees under the board of directors, and meetings of special committees held during the reporting period; • opinions of the board of supervisors on supervision matters during the reporting period; • employees of the company’s parent company and its main subsidiaries; • the construction and implementation of the internal control system during the reporting period; and • management of its subsidiaries during the reporting period. 6.3 Companies Registry Filings The new revision to the Company Law takes dual approaches to capital contribution for lim - ited liability companies and joint stock compa - nies, which means: • for limited liability companies, the subscribed capital shall be paid fully by its shareholders within five years from the date of the com - pany’s establishment; and • for joint stock companies, the paid-in capital system applies (promoters shall pay in full for their subscribed shares before the date of the company’s establishment). Joint stock companies established by public offering are required to submit a capital verifica - tion certificate from a capital verification institu - tion when applying for company registration. It should be noted that a company shall provide official registry with necessary information for
company registration and licence. The company shall also formally file registration or modification documents for its registration matters before it can leverage them against any bona fide coun - terparts. 7. Audit, Risk and Internal Controls 7.1 Appointment of External Auditors A company shall prepare a financial statement at the end of each fiscal year, which shall be audited by an accounting firm in accordance with relevant law. According to the articles of association of the company, the decision to hire or dismiss the accounting firm that under - takes the company’s auditing business shall be taken by the shareholder meeting or the board of directors. When the shareholder meeting or the board of directors votes on the dismissal of the accounting firm, the accounting firm shall be allowed to state its opinions. 7.2 Requirements for Directors Concerning Management Risk and The key requirements for directors in connec - tion with internal controls in small companies are based on Internal Control Norms for Small Com - panies issued by the Minister of Finance in 2017. • Compared with the principle of comprehen - siveness, importance and balance of internal control of large and medium-sized compa - nies, the special principles of internal control for small companies are risk oriented and focus on substantial risks. • Compared with the complex internal control measures of large and medium-sized compa - nies, key position separation, internal authori - sation and approval process, accounting and Internal Controls Small Companies
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