深圳经济特区股份合作公司条例（二）

Article 42 The shareholders' representative assembly shall be classified into executive meeting and temporary meeting.

The executive meeting shall be held at least once a year. The interval between two executive meetings shall not exceed 15 months.

The temporal meeting may be convened according to the articles of association of the company.

Article 43 The shareholders' representative assembly shall exercise the following functions and powers：

（1） Deliberating and approving the reports of the board of directors， the board of supervisors or the supervisors；

（2） Deliberating and approving the annual budget programs and settlement programs of the company；

（3） Deliberating and approving the programs on the distribution of surplus or on the remedial of loss of the company；

（4） Deliberating and approving the adjustment programs for the stock right on the cooperative shares；

（5） Deciding the increase or decrease of the registered capital of the company；

（6） Making resolutions on the merger， separation， modification of organizational forms， disbandment and liquidation of the company；

（7） Electing or recalling the members of the board of directors， the board of supervisors or the supervisors and deciding the remuneration and measures of payment；

（8） Revising the articles of association of the company；

（9） Deliberating the joint motions filed by not less than 20% the representatives of shareholders； and

（10） Other functions and powers stipulated in the articles of association of the company.

The items for resolution set forth in Item （4） to Item （8） in the preceding paragraph shall be passed in the form of special resolution.

Article 44 The shareholders' representative assembly shall be convened by the board of directors and presided over by the chairman of the board of directors， except otherwise stipulated herein or in the articles of association of the company.

When holding a general meeting of shareholders' representatives， the board of directors shall notify the shareholders' representatives of the issues for deliberation prior to 10 days before convening the meeting. The temporal meetings of the shareholders' representatives shall not make resolutions on the issues not stated in the notice.

Article 45 The resolutions of the shareholders' representative assembly shall be classified as common resolution and special resolution.

To adopt a common resolution in the shareholders' representative assembly， there must at least half of the shareholders' representatives present in the meeting and at least half of the present shareholders' representatives passing the resolution.

To adopt a special resolution in the shareholders' representative assembly， there must at least half of the shareholders' representatives present in the meeting and at least two third of the present shareholders' representatives passing the resolution.

Article 46 Where a representative is unable to be present at the shareholders' representative assembly for some reasons， the shareholders that have elected the said representative shall elect a temporal representative of shareholders separately to be present at the meeting， or the representative of shareholders shall entrust a proxy to be present at the meeting and exercise the voting right. The proxy shall present the letter of authorization issued by the representative of shareholders， which indicates the scope of authorization clearly， to the board of directors.

Article 47 When the representatives of shareholders that attend a shareholders' representative assembly do not reach half of the total representatives of shareholders， the meeting shall be postponed for ten days and the absent representatives of shareholders shall be re-notified.

If the representatives of shareholders present at the postponed shareholders' representative assembly still cannot reach half of the total， it shall be deemed that the number of attendants has reached the prescribed number. When the ratio of votes calculated as per the actually present representatives of shareholders has reached that stipulated in Article 45 herein， the resolutions adopted at the representative assembly shall be deemed as valid.

Article 48 The shareholders' representative assembly shall put down the issues for deliberation into minutes. The minutes shall contain the deliberated issues and the conclusion and be signed by the directors present at the meeting. The minutes shall be preserved along with the signing register of the representatives of shareholders and letter of authorization presented by proxies of representatives.

Article 49 Upon conclusion of the shareholders' representative assembly， the representatives of shareholders shall report the contents of meetings to other shareholders represented by them timely.

Chapter V Business Management Institution

Article 50 The company shall have a board of directors. The board of directors shall be executive organization for decision-making and execution of the operation of the company； it shall be responsible for the shareholders' representative assembly.

The composition of the board of directors shall be stipulated in the articles of association of the company.

Article 51 The directors shall be elected by the shareholders' representative assembly.

The responsibility and powers and the term of office of the directors shall be stipulated in the articles of association of the company.

Article 52 The board of directors shall exercise the following functions and powers：

（1） Deciding the holding of the shareholders' representative assembly and reporting the work at the shareholders' representative assembly；

（2） Implementing the resolutions of the shareholders' representative assembly；

（3） Deciding the major issues in the operation of the company；

（4） Deciding the setup of the operation and management organizations；

（5） Appointing and removing the senior management personnel as manager， vice manager， financial supervisor etc. and deciding their remuneration and the measures of payment；

（6） Working out the revision programs of the articles of association of the company；

（7） Filing the application for approval of bankruptcy of the company； and

（8） Other functions and powers stipulated in the articles of association of the company.

Article 53 The board of directors shall have one chairman and may have one or two vice-chairmen. The chairman and vice-chairmen of the board of directors shall be elected by the affirmative votes of more than half of all the directors.

The chairman of the board shall be the legal representative of the cooperative stock company.

The functions and powers of the chairman of the board shall be stipulated in the articles of association of the company.

Article 54 The board of directors shall hold a meeting at least half a year. Upon motion by the chairman of the board or more than one third of directors， the board of directors shall hold a meeting.

Article 55 The resolutions of the board of directors shall only be adopted by affirmative votes of a half of the directors. When the votes of the disputing parties are equal， the chairman of the board shall have the right to make a decision.

Article 56 The board of directors shall preserve the articles of association of the company， the roster of the shareholders， the minutes of the meetings of the representative assembly and the board of directors for previous years， the balance sheets and the statements of profit and loss in the company. The shareholders and the creditors shall have right to consult and reproduce upon producing the relevant certification documents.

Article 57 Managers of the company shall be employed by the board of directors.

The company may have some managers. The vice managers shall be nominated by the managers and appointed upon approval by the board of directors.

Article 58 Managers of the company may exercise the following functions and powers：

（1） Being responsible for management of daily operation of the company according to the articles of association of the company and the authorization of the board of directors；

（2） Implementing the resolutions of the shareholders' general meetings and the meetings of the board of directors；

（3） Drafting out the development plans and annual production operation plans of the company；

（4） Nominating the senior management personnel as the vice general managers and financial supervisor etc.； appointing and removing other management personnel of the company；

（5） Deciding the recruitment， dismissal， reward and punishment of the employees；

（6） Attending the meetings of the board of directors； and

（7） Other functions and powers entitled by the articles of association or the board of directors.

Article 59 The directors and managers shall not be an unlimited liability shareholder of any other economic organization or a partner of a partnership； shall not operate for themselves， or operate for others， the competitive business in the same category as the cooperative stock company they are serving， shall not engage， for themselves or on behalf of others， in purchase and sale， lending and borrowing and other activities which damage the interests of the cooperative stock company

The shareholders' representative assembly shall have right to confiscate the illegal gains acquired by any director or manager from activities set forth in the preceding paragraph as owned by the company. Any director or manager who violates the provision of the preceding paragraph and accordingly causes damage to the company shall bear the liability for compensation； if the offense constitutes a crime， he shall be prosecuted for his criminal liability.

Chapter VI Board of Supervisors

Article 60 The company shall have a board of supervisors. The board of supervisors shall be the supervisory organization of the operation and financial affairs of the company， its rules of procedure shall be stipulated in the articles of association of the company.

Article 61 The board of supervisors shall be composed of no less than three members， among which the representatives of the staff members shall not be less than one third of the total number and shall be elected and recalled by the staff members of the company； other representatives shall be elected from the shareholders and shall be elected and recalled at the shareholders' representative assembly.

Each term of office of the members of the board of supervisors shall be stipulated in the articles of association of the company.

Any senior management personnel as the director， manager and financial supervisor of the company shall not serve as a member of the board of supervisors concurrently.

Article 62 The board of supervisors shall exercise the following functions and powers：

（1） Attending the meetings of the board of directors；

（2） Examining the operation and the financial status of the company；

（3） Examining， approval and consulting the financial accounting statements and other financial accounting data of the company；

（4） Supervising the work of the directors and the managers；

（5） Proposing the convening of temporal shareholders' representative assembly； and

（6） Acting on behalf of the company to negotiate with the directors and managers or to file a lawsuit against the directors and managers when the acts of the directors and managers damage the interests of the company；

（7） Other functions and powers provided for in the articles of association of the company.

Article 63 When failing to perform the supervisory responsibility against the acts of damaging the company and the interests of the shareholders， the board of supervisors and the actor shall have a joint and several liabilities.

Chapter VII Financing and Accounting

Article 64 The company shall establish the financial and accounting systems of the company according to the laws， rules and the relevant rules and regulations on the accounting system of the special zone.

Article 65 The meetings of the board of directors shall prepare the annual financial and accounting documents at the domicile of the company for record of the shareholders and creditors prior to 20 days before the convening of the shareholders' representative assembly.

Article 66 The profit after tax of the company shall be distributed according to the following order of priority：

（1） Making up for the loss；

（2） Retaining public accumulation fund；

（3） Retaining public welfare fund；

（4） Paying dividends for raised shares and collective shares； and

（5） Paying dividends for cooperative shares.

Distribution made by the company in violation of the provisions in the preceding paragraph shall be invalid. If any damage is caused to a creditor， the creditor shall have right to claim compensation for the loss.

Article 67 The public accumulation funds of the company may be classified into statutory surplus accumulation fund and the voluntary surplus accumulation fund.

The amount of the statutory surplus accumulation fund shall be not less than 10% of the profit after annual tax.

The voluntary surplus accumulation fund shall be retained and used according to the provisions of the articles of association of the company or the shareholders' representative assembly.

Article 68 The statutory surplus accumulation fund shall be used for following purposes：

（1） Making up for the loss；

（2） Increasing the capital； and

（3） Other purposes stipulated by laws， rules， and regulations.

Article 69 The public welfare fund shall be retained according to the articles of association of the company：

The public welfare fund shall be used for welfare of the staff members of the company.

Article 70 Any company that does not follow the provisions of these regulations to retain and use the statutory public accumulation fund and public welfare fund shall be ordered to make corrections by the authorized organ of the district government and punished on basis of the seriousness of the circumstance.

Article 71 If there is no surplus in the very year， no stock dividend shall be distributed. However， if the statutory public accumulation fund has exceeded 50% of the amount of the registered capital， upon special resolution of the shareholders' representative assembly， the stock dividend may be distributed as per the proportion of the rate of interest of banking deposit for a term not exceeding a year.

Article 72 The dividends of the collective shares shall be covered into the welfare fund for shareholders of the cooperative shares.

When the scale of the welfare fund for shareholders of the cooperative shares has reached the minimum limitation （threshold） stipulated in the articles of association of the company， the dividends of the collective shares may be distributed directly among the shareholders of the collective shares according to the provisions of the articles of association of the company.

The measures on management of the welfare fund for shareholders of the cooperative shares shall be formulated by the shareholders of the cooperative shares of the company separately.

Chapter VIII Modification， Dissolution and Liquidation

Article 73 To revise the articles of association of the company， the board of directors shall work out the revision program of the articles of association of the company， which shall be adopted at the shareholders' representative assembly as a special resolution.

Upon revising the articles of association of the company， the board of directors shall submit it to the registration organ for going through modification registration formalities and proclaim it publicly.

Article 74 Where the articles of association needs to be revised due to reduction of the registered capital， the measures on reducing the registered capital shall be stipulated in the resolution on revising the articles of association.

Article 75 When intending to reduce the registered capital， the company shall notify the creditors within 10 days upon the shareholders' representative assembly adopting the resolution and proclaim it for at least three times within one month. The creditors receiving the notice and the creditors not receiving the notice may raise objection within 30 days from receipt of the notice and within 90 days from the first public proclamation respectively.

Article 76 The company may merge or separate according to the provisions of these regulations.

Article 77 For merger or separation of the company， the board of directors shall propose the program， prepare the balance sheets and inventory of the assets. The merger or separation of the company shall only be carried out after being passed as a special resolution of the shareholders' representative assembly.

When the company is merged with other ones， the merging parties shall enter into an agreement on merger； when the company is separated， the board of directors shall make a resolution on bearing the liabilities of the company.

The merger or separation of the company shall not damage the interests of the creditors.

Any company that， in violation of the first paragraph herein， withdraws the capital， hides up the assets and evades liabilities willfully and maliciously shall be ordered to recover the assets within a time limit by the registration organ； the persons directly liable in the offense shall be imposed upon a fine not less than RMB 50，000 but not more than RMB 100，000； if the offense constitutes a crime， the persons directly liable shall be prosecuted for criminal liability according to law.

Article 78 The company shall notify the creditors in writing within 10 days upon the shareholders' representative assembly making the resolution on merger or separation and proclaim publicly at least 3 times within one month.

Any company that fails to carry out notification or proclamation according to the preceding paragraph shall be ordered make corrections within a time limit by the registration organ； the legal representative of the company and the persons directly liable in the offense shall be imposed upon a fine not more than RMB 10，000 respectively as well.

The creditors of the company receiving the notice and the creditors of the company not receiving the notice may raise objection within 30 days from receipt of the notice and within 90 days from the first public proclamation respectively.

The company shall pay off the liabilities or provide commensurate guarantee according to law in favor of the creditors who has raised objection. Where a creditor does not raise any objection， in the case of merger of the companies by means of absorption， the liabilities of the absorbed party shall be borne by the absorbing party； while in the case of merger by means of new establishment， the liabilities of all parties shall be borne by the newly merged company.

Article 79 All parties to the merger or separation of companies or a company shall reach agreement on the handling of the creditors' rights and liabilities of the original companies or company before the merger or separation.

The agreement mentioned in the preceding paragraph shall be consented by the creditors and shall not prejudice the interests of the creditors.

Article 80 Where companies fail to be merged， the liabilities incurred in the course of merger for preparation shall be borne by all parties preparing for merger.

Article 81 When a company is merged or separated， the company shall go through the modification and cancellation registration formalities or establishment registration formalities with the registration organ according to these regulations and other laws and regulations.

Article 82 Where a company is revoked， announced bankrupt or disbanded for other reasons according to law， the company shall form a liquidation organization according to the relevant laws， rules and regulations to conduct liquidation to conduct liquidation.

Article 83 The liquidation organization shall exercise the following functions and powers during the period of liquidation：

（1） Conducting a through check of the assets of the company， preparing balance sheet， the inventory of assets and the list of creditors' rights and liabilities；

（2） Handling the unsettled business / operations of the company；

（3） Requiring the debtors of the company to perform the liabilities；

（4） Paying off the liabilities of the company according to the debt repayment procedure stipulated by law；

（5） Disposing of the remaining assets of the company； and

（6） Participating in the litigation or arbitration activities on behalf of the company.

Article 84 After deduction of the cost for liquidation of the company assets in priority， first payment shall be made in order of priority as follows：

（1） The salary and social insurance fee of staff members；

（2） The tax due； and

（3） The liabilities of the company.

After the company pays off the debts， the liquidation organization shall distribute the remaining assets to the shareholders according to the articles of association of the company.

Article 85 On completion of the liquidation， the liquidation organization shall submit a liquidation report and meanwhile prepare the statements of income and expense and all kinds of financial account books in respect of accounts during the period of liquidation to the shareholders' representative assembly for confirmation.

Article 86 When finding the assets of the company is not enough to pay off the liabilities after straightening out the assets of the company and preparing balance sheets and inventories of assets， the liquidation organization shall apply to a people's court for declaration of bankruptcy immediately.

If a company is declared bankrupt according to law， the liquidation shall be carried out according to the relevant laws， rules and regulations.

Chapter IX Supplementary Provisions

Article 87 Upon special resolution of the shareholders' representative assembly， the company may be restructured into a limited liability company or a joint-stock limited company according to the relevant laws， rules and regulations.

Article 88 The issues required for public proclamation as stipulated in these regulations shall be published in the eye-catching space on Shenzhen Special Economic Zone Daily， the Shenzhen Commercial Daily or other newspapers expressly designated by the Municipal People's Government.

Article 89 The Municipal People's Government may formulate the implementing rules according to these regulations.

Article 90 These regulations shall take effect as of July 1， 1994.

Where there are contradictions between the provisions of these regulations and other relevant rules that enacted in the Special Zone before， these regulations shall prevail.