Articles of association (“articles” for short) refer to an essential document prepared by a company to be established in accordance with laws, which specifies the company’s name, domicile, scope of business, business management system and other significant matters, and also a written document that prescribes the basic rules for governing the company's organization and activities. The articles of association are the common and unanimous manifesto of all the shareholders, with the basic guidelines laid out for the company’s organization and operating activities, and form the company's constitution.
Articles of association have the basic characteristics of legitimacy, authenticity, autonomy and publicity. As the basic guidelines for the company’s organization and activities, the articles of association are of great significance to the establishment and operations of a company, and are both the foundation for the establishment of the company and the soul on which the company relies for its existence.
The contents of the articles of association are the matters recorded in the articles of association. According to Article 81 of the Company Law of PRC, the articles of association of a shareholding company shall include up to 12 matters to be recorded, which reflects the strict control over the shareholding company. The 12 matters stipulated in the articles are included as follows:
- (1) Name and domicile of the company;
- (2) Scope of business;
- (3) Type of incorporation;
- (4) Total number of shares of the company, amount per share and the registered capital of the company;
- (5) Name(s) of the promoters (incorporators) and number of shares subscribed;
- (6) Rights and obligations of the shareholders;
- (7) Formation of the board of directors, and their functions and powers, term of office and rules for handling affairs;
- (8) Legal representative of the company;
- (9) Formation of the supervisory board, and their functions and powers, term of office and rules for handling affairs;
- (10) Profits distribution methods;
- (11) Reasons for dissolution and methods for liquidation of the company;
- (12) Methods of notification and announcement of the company;
- (13) Other matters deemed as necessary to be recorded by the general meeting of shareholders.