CHAPTER SIX FINANCIAL AFFAIRS AND ACCORDING OF A COMPANY
Article 174 A company shall establish its financial
and
accounting system according to law and administrative
decrees and provisions of the financial department in charge
under the State Council.
Article 175 A company shall produce a financial and
accounting report at the end of each fiscal year, which is
subject to examination and verification according to law.
A financial and accounting statement shall include
the following accounting statements and schedules:
1. Balance sheets;
2. Profit and loss statement;
3 .Statement of financial changes;
4. Statement of financial situation;and
5. Statement of profit distribution.
Article 176 A limited liability company shall, according to
the
provisions of the articles of association, submit the
financial and accounting statements to shareholders within the
prescribed time
limit.
A joint stock company limited shall deposit its
financial and accounting statements at the company for
inspection by shareholders at least 20 days prior to the
general meeting of shareholders.
A joint stock company limited established by public offers
must make public its financial and accounting statements.
Article 177 When distributing each year's after-tax profits,
a company shall set aside 10 percent of the profits for
the company's statutory reserve funds and 5 to 10 percent as
the company's statutory public welfare funds. It may not set
aside common reserve funds if the aggregate balance of the
funds has already accounted for over 50 percent of the
company's registered
capital.
If the aggregate balance of the company's common reserve funds
are not enough to make up for the losses sustained by the
company of the previous year, current year profits shall be used to
make up for the losses before allocations are set aside for the
statutory common reserve funds and public welfare funds according
to the provisions of the preceding paragraph.
Subject to a resolution of meeting of shareholders,
after the company has set aside funds from after-tax
profits for the statutory common reserve funds, the company may
set aside funds for a discretionary common reserve funds.
The remaining profits after the losses have been made up
for and statutory common reverve funds and public welfare funds have
been drawn shall be distributed to shareholders according to
the proportion of their capital constribution as in the case
of a limited liability company and according to the number of
shares held by shareholders as in the case of a joint stock company
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