In the event there are changes in the total amount of investment and the scale of the production of the Company the reduction of the registered capital is subject to the approval of the competent authority.
CHAPTER 4 THE SHAREHOLDER
The company shall not have a shareholder meeting. Shareholder of the company is highest authority. The shareholder shall adopt the decisions in writing and keep them in the company after them being signed by the shareholder.
The functions and powers of the shareholder shall include the following:
(a) to decide on the business policy and investment plan of the company;
(b) to elect and recall director and supervisor whose posts are not taken by the representatives of the staff and workers, and to decide on matters concerning the remuneration of director and supervisor;
(c) to examine and approve reports of executive director;
(d) to examine and approve reports of the supervisor;
(e) to examine and approve the annual financial budget plan and final accounts plan of the company;
(f) to examine and approve plans for profit distribution of the company and plans for making up losses;
(g) to adopt resolutions on the increase or reduction of the registered capital of the company;
(h) to adopt resolutions on matters such as the merger, division, transformation, dissolution and liquidation of the company;
(i) to amend the articles of association of the company;
Chapter 5 Executive Director
The company shall set up an executive director instead of a board of directors, who shall be appointed by shareholder. The term of office of the executive director shall be three (3) years, and he may serve consecutive terms when he is re-appointed by the shareholder.
The executive director shall exercise the following functions and powers:
(1) to be responsible to shareholder and to report its work to the shareholder;;
(2) to implement the resolutions of the shareholder;
(3) to decide on the business plans and investment plan of the company;
(4) to formulate the annual financial budget plan and final accounts plan of the company;
(5) to formulate plans for profit distribution and plans for making up losses of the company;
(6) to formulate plans for the increase or reduction of the registered capital and issuance of company bond of the company;
(7) to formulate plans for the merger, division, transformation and dissolution of the company;
(8) to decide on the establishment of the company's internal management organs;
(9) to decide on appointment and dismiss the company's manager and the matter on the manager's remuneration, and, upon recommendation of the manager, to decide on appointment and dismiss the company's deputy manager(s) and persons in charge of the financial affairs of the company and the matters concerning their remuneration;
(10) to formulate the basic management system of the company.
CHAPTER 6 SUPERVISOR
The company shall set up one supervisor.
The supervisor shall be appointed by the shareholder. Each term of the supervisor shall be 3 years. The supervisor may, after the expiry of their term of office, hold a consecutive term upon re-election.
The supervisor of the Company may exercise the following powers:
(a) to check the financial affairs of the company;
(b) to supervise the duty-related acts of executive director and senior managers, to put forward proposals on the removal of executive director or senior manager who violates any law, administrative regulation, the articles of association or any resolution of the shareholder;
(c) to demand executive director or senior manager to make corrections if his act has injured the interests of the company;
(d) to put forward proposals to the shareholder;
(e) to initiate actions against executive director or senior managers in accordance with Article 152 of this Law.
The supervisor may raise questions or suggestions about the matters to be decided by executive director.
If the supervisor of the company finds that the company is running abnormally, he may make investigations. Where necessary, he may hire an accounting firm to help him with the relevant expenses being born by the company.
The expenses necessary for the supervisor of the company to perform its duties shall be borne by the company.
CHAPTER 7 MANAGEMENT OFFICE
The company will have one general manager, who will be recruited and dismissed by executive director. The term of the office will be 3 year. The general manager will be the legal representative of the company.
The manager is responsible to executive director and exercises the following functions and power:
(a) To be in charge of the production, operation and management of the company, and to organize the implementation of the resolutions of executive director;
(b) To organize the implementation of the annual business plans and investment plans of the company;
(c) To draw up plans on the establishment of the internal management organs of the company;
(d) To draw up the basic management system of the company;
(e) To formulate specific rules and regulations of the company;
(f) To recommend the appointment or dismissal of the deputy manager(s) and of persons in charge of the financial affairs of the company;
(g) To appoint or dismiss management personnel other than those to be appointed or dismissed by executive director; and
(h) Other functions and powers granted by executive director.
CHAPTER 8 TAXATION，FINANCIAL ACCOUNTING AND DISTRIBUTION OF THE PROFIT
The company shall pay the taxes and apply the tax deduction according to the Chinese tax law and the relevant regulations.
The employees of the company shall pay the individual income tax according to the Individual Income Tax Law of the People’s Republic of China.
The company shall establish the financial and accounting system according to the laws, administrative regulations and provisions of the treasury department of the State Council and register with the competent authority.
The company shall set up account books in China, conduct independent accounting, submit the fiscal reports and statements as required and accept supervision by the financial and tax authorities.
The fiscal year of the company shall begin from January 1 to December 31 of the same calendar year.
Any and all accounting papers such as receipts，slips，statements，books etc. shall be written in Chinese; if they are written in a foreign language, notes in the Chinese language are required.
At the end of each fiscal year, the company shall prepare the financial and accounting report according to the laws, administrative regulations and provisions of the treasury department of the State Council, which shall be audited by an accounting firm registered in China. The audit report shall submit to the finance and taxation authority and the examination and approval authority.
In distribution of its current year after-tax profit, a company shall allocate 10 percent to its statutory reserve fund.Allocation to the company's statutory reserve fund may be waived once the cumulative amount of funds therein exceeds 50 percent of the company's registered capital.
The company can not distribute profit to the shareholders before covering company losses and making allocation to company statutory reserve fund.
The company shall provide the statistic information and submit the statistic statement according to the Statistic Law of the People’s Republic of China and the Statistic System for Foreign Capital Utilization.
All issues concerning the foreign exchange of the company shall be handled in accordance with the Provisional Regulations for Exchange Control of the People's Republic of China and the relevant regulations.
The company shall open the RMB account and foreign currency account in the Chinese banks or other banks designated by the State Administration for Foreign Exchange. All the sales revenue and other foreign exchange revenues shall be deposit to the opening bank. All foreign exchange expenses shall be paid through foreign exchange account and be supervised by the foreign exchange administration and the opening bank.
The company guarantees to keep balance between revenues and expenditure in foreign exchange by itself.
The legal profits coming from the company, other legal income and the fund after the liquidation can be transferred abroad. The salary and other legitimate income of the foreign employees of the company can be transferred abroad after the payment of the individual income tax.
Chapter 9 LABOR MANAGEMENT
Executive director shall formulate plans and make all decisions in relation to the recruitment, hiring or dismissal of employees, remuneration, insurance, labour protection, labour discipline and so on in accordance with the relevant labour laws and regulations of China which shall be stipulated in the Individual Labour Agreements.
The employees the company needs may be recommended by the local labour department or hired through public channel on the basis of equality. The recruitment documents shall be delivered to the labour department for records.
In accordance with Chinese laws and regulations, the company shall have the right to take disciplinary action against staff and workers of the Company who break labour discipline by giving warnings, recording demerits or reducing salaries or wages. Staff and workers who commit serious offenses may be dismissed and their names shall be delivered to the labour department for records.
The salary of the ordinary personnel who is recruited by the Company within China shall be decided by executive director in accordance with relevant laws and regulations of China in the light of actual conditions of the company and shall be covered in the Labor Agreement in detail.
With the development of production, the enhancement of professional ability of employees and technical level the salary increases of the ordinary personnel based on such personnel’s abilities and skills may be approved by the company.
The labour protection and labor insurance and other related issues shall be provided in the rules and regulations of the company to make sure that all employees with safe and clean working conditions in accordance with Chinese Law. The company shall extract the reward of employees, welfare fund appropriately from the after-tax profits in the purpose of well-being of the staff. The extraction ratio shall be decided by theexecutive director.
To the extent required by Trade Union Law of the People’s Republic of China, the Company shall establish a trade union, and provide necessary conditions for the activities for the trade union, and pay the enough funds according to the applicable laws into the Company's trade union
CHAPTER 10 INSURANCE
All the insurance concerning the company or its employee shall be covered by the Chinese insurance company, the coverage、insurance amount and insurance period will subject to the rules of the Chinese company and be decided by the company shareholder.
CHAPTER 11 TERM, TERMINATION AND LIQUIDATION
The operating period of the Company is years and shall start from the date on which the business license of the Company is issued.
Should the company decides to extend the operating period, it shall be adopted by the shareholder and submit a written application to the original examination and approval authority at lease 6 months prior to the expiry date of the operating period. The duration can be extended upon the approval of the examination and approval authority.
Should the company decide to terminate the company in advance, it shall be decided by the shareholder and apply to approval authority.
The company can decide to terminate the Company ahead of time due to the following reasons:
1. Unable to go on business due to heavy losses caused by force majeure;
2. Unable to go on business due to continuous losses
3. The shareholder did not make the contribution within the time stipulated herein.
While the company is dissolved when expire or terminate ahead of time, the shareholder shall organize a liquidation committee to carry out the liquidation
After the liquidation is over, the Company shall go through the formalities of registration cancellation with the original registration authority, hand in the business license for cancellation and announce the liquidation to the public. After the dissolution, all the account books shall kept by the shareholder.
CHAPTER 12 MISCELLANEOUS
The conclusion, effect, interpretation, performance and the settlement of the disputes of these articles of association shall be governed by Chinese law.
These articles of association are written both in Chinese and English.
These articles of association shall be valid only upon the approval of the examination and approval authority.
These articles of association are signed at Beijing China in ________________.
The Chinese laws, regulations, administrative regulations and rules will take the prior when any provision of these articles of association violates any of the aforementioned laws, regulations and rules.
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