2006 China Company Law:

Article 4 The shareholders of a company shall be entitled to enjoy the capital proceeds, participate in making important decisions, choose managers and enjoy other rights.

 2004 China Company Law:

Article 4 Shareholders of a company, as capital contributor, shall have the right to enjoy capital gains, take major policy decisions and choose managers in proportion to share of the investment they make in the company. 

A company shall enjoy all legal person property rights formed by the investment by shareholders, enjoy civil rights, and bear the civil responsibilities according to law.

Ownership of the State-owned property rights in a company belongs to the State.

Explanation: This article is about the shareholder's right specified.

The shareholder is a company's investors. The shareholder invests his property in the company, namely enjoying shareholder's rights by his investment.

The shareholder enjoys the shareholder's rights, mainly the right of assets income and the participation in significant decision-making and management selecting in a company. The right of assets income refers to the right the shareholder obtains the dividend in sharing the profits according to his investment share from the company. Obtaining dividend is the main goal of the shareholders; So long as the shareholder has as scheduled fulfilled the investment duty according to the regulation or the stipulations in the shareholder's agreement, he or she has the right to request for assigning dividend. Generally speaking, the limited liability company's shareholder shall obtain dividends in proportion to its investment, and the shareholders of joint stock limited partnership shall obtain the dividend according to his or her stock proportion.

This revision of the company law, according to the need in practices, expanded the shareholder's freedom in the dividend assignment stipulated in shareholder's agreement and the regulations in the company. Regulations are as follows; the shareholder obtains dividends in proportion to his or her share, with an exception when the shareholder agrees or the article regulates not to assign dividends according to the principals above. The right of participation in decision-making refers to; the shareholder makes resolution to company's significant movements in shareholder's meeting or the general meeting of shareholders through votes. Company's significant movement may include: capital changes in company, namely increase or reduction in registered capital; financing, such as issuing company bonds; foreign investment, guarantee for other person, the purchase or the transfer of main property, variation in company's main business; movements as merger, splitting, variation of types of organization, dismissal, liquidation.

The shareholder's meeting or the general meeting of shareholders may authorize the board of directors to exercise the rights above, if not violate the legal compulsory regulation. The right of selecting management refers to: the right of the shareholders in making the resolution through the shareholder meeting or the general meeting of shareholders to elect company's trustees, supervisors. It also includes the right of deciding management's salary. The separation of company's property rights and the operating right, in other words, investors do not need to participate in the management, is the trend towards modern corporate system. Especially for the limited liability company, the shareholders as investors, exercising their power through board of shareholders in management-selecting and decision-making，does not have the decision-making power him/herself. In order to enhance the management efficiency in a company, there should be a certain limit on the rights of the board of shareholders. The shareholder and the shareholder's meeting should not intervene in general management decision-making.

Company shareholder's legitimate rights and interests shall be guaranteed. Protecting shareholder's legitimate rights and interests from violation is the main purpose of legislation. In dealing with the existing problems in practice, this law pays attention to the protection of medium and small shareholder's legitimate rights and interests and the balance of shareholder's benefit under the premises of majority capital decision. Therefore, certain concrete systems are increased, such stipulations are: The company shareholders may not abuse the shareholder's right to harm company or other shareholders' benefits. If such abuse is committed, the shareholder should assume liability for compensation;

The limited liability company's shareholders may consult the account book. The shareholders in Limited Liability Company may request the company to purchase its share and withdraw from the company if certain dividend is not assigned. Once the shareholder has the objection in merger, splitting, transfer of main property, he may request withdrawal from the company. At the same time, this law provides, in many aspects, higher degree of freedom in company regulations;

This enables medium and small shareholders to safeguard their rights in formulating company regulations through consultation with mutual equality at the start of company establishment. These systems will concretely play a positive role in protecting the shareholder rights and interests and maintaining fairness and equality.

Authored by: Zhong Yi,  Ling Jie