1、In terms of the shareholder of a limited liability company (LLC) in China, Which statement of the followings is correct?( )
A.At least two shareholders are required to establish a LLC.
B.A natural person cannot establish a LLC.
C.Only one investor cannot establish a LLC, except that the investor is a state-owned enterprise.
D.One LLC can have 50 shareholders at the most.
2、 Which statement of the followings, in terms of the registered capital of a LLC, is correct?( )
A.The registered capital of a LLC is the total amount of actual paid-off capital by all shareholders.
B.The statutory minimum registered capital for a LLC is 30,000 RMB.
C.The statutory minimum registered capital for a LLC is 30,000 RMB, except for One-person Company.
D.The registered capital of a LLC shall be the total amount of the capital contributions subscribed by all the shareholders.
3、Two investors A and B are preparing for the establishment of a LLC. Which statement of the followings is INVALID pursuant to the Chinese Company Law? ( )
A.The registered capital of the LLC subscribed by the two investors amounts to 60,000 RMB.
B.Investor A and B respectively subscribe 30,000 RMB to the LLC, and each of them contributes 9,000 RMB as the initial capital contribution.
C.Investor A and B respectively subscribe 30,000 RMB to the LLC, and A’s initial capital contribution is 30,000RMB, while B’s initial capital contribution is zero.
D.Investor A and B respectively subscribe 30,000 RMB to the LLC, and A’s initial capital contribution is 20,000RMB, while B’s initial capital contribution is 15,000 RMB.
4、 Mike is a natural person with a domicile in China. He intends to establish a One-person Company in Shanghai, and then consults with you the following proposals. Please help him picking up the INVALID one pursuant to the Chinese Company Law.( )
A.Mike would use 120, 000 RMB as the capital contribution to the One-person Company.
B.Mike would make one-off contribution of 120, 000 RMB to the One-person Company.
C.Mike does not intend to establish a board of director in the One-person company.
D.Mike intends to establish a further One-person Company with the previous One-person Company as the only shareholder.
5、 Investors A and B subscribe 30,000RMB respectively to establish a LLC. A’s initial capital contribution is 30,000RMB, and B’s is 10,000RMB. In the first year, the LLC is managed well and has gained the profits of 1,000 RMB. In terms of profits distribution, which statement of the followings is
valid pursuant to Chinese Company Law?( )
A.Investors A and B both are entitled to get 50% of the profits, i.e., they shall respectively get 500 RMB as investment return .
B.Investors A is entitled to get 750 RMB, and B are entitled to get the rest part.
C.If Investors A and B had ever reached an agreement on profits distribution, the agreement shall prevail.
D.If Investors A and B has an agreement specifying that investor B has no claim on profit in the first year, such agreement would be invalid.
6、 Please indicate the item shareholders are not entitled to inspect pursuant to the Chinese Company Law. ( )
A.The Articles of Association
B.Register of Shareholders (List of Shareholders)
C.Minutes of Meetings of the Board of Directors
D.Minutes of Meetings of the Shareholders
7、 One Chinese company’s actual registered capital was 1 million, which was unfaithfully verified by a certified public account (CPA) as 2 million. The company failed in the end and was in debt to creditors of 3 million. The creditors claimed that the CPA should be liable for 3 million jointly with the company in debt. Which of the following statements is correct pursuant to the Chinese Company Law? ( )
A. The CPA shall be liable for 1 million jointly with the company in debt.
B. The CPA shall not be held liable because it did not enter into any transaction with the aforesaid creditors.
C. The CPA shall be liable for 3 million jointly with the company in debt.
D. The CPA shall be liable for 2 million jointly with the company in debt.
8、 One LLC had 3 shareholders owning the equity as follows: A-51%,B- 23% and C-26%. Shareholder A proposed for a block sale of all his equity at 10 RMB per share. With the intention to get the controlling stake with relatively low costs, shareholder B claimed his preemptive purchase right to buy 28% and C argued to buy 25% from A. However, A argued that if B or C cannot satisfy his block sale condition, he would sell is equity to outside investor.Please indicate the correct answer pursuant to the Chinese Company Law. ( )
A.C’s claim shall be supported.
B.A’claim shall be supported.
C.B’claim shall be supported.
D.A and B shall claim their preemptive purchase right on the basis of shareholding perceptively.
9、Please indicate the item recognized by the Chinese Company Law as capital contribution.( )
C.Credit & Reputation of Company
10、In accordance with the Chinese Company Law, some person can be designated as the legal representative of a company except the following( )
A.Chairman of the board of directors
B.Chairman of the board of supervisors
During the infancy of stock market in China, with the intention to remain government control upon the listed companies, the shares in a listed company was categorized as non-tradable shares owned by the government and tradable shares owned by the public (see the histogram below). The non-tradable shares dominate the company and cannot be transferred on the stock market, which insures that the companies would not be “privatized”. In the meanwhile, however, the scarcity of transferable shares distorts share prices on first and secondary stock market.
（Histogram: The Shareholding of a Listed Company in China）
We can see the following as some case demonstrating the above situation and the events taking place in Chinese securities market in recent years. Suppose in 1999, one listed company was offering shares to the public. The par value of its share was 5 USD. However, the scarcity of the tradable shares made the demand much higher than the offering, which pushed the IPO price upward to 10 USD. And then afterwards, the trading price on the securities market jumped to 30 USD, or even skyrocketed to 50 USD. At that point, in June 2001, the government declared to sell the remaining non-tradable shares to the public at the market price.For the reason that the offering was dramatically and unexpectedly increased, the stock price dropped sharply.In the end, the negative reaction and response of the market, as well as the great complaints of the public investors caused the government to suspend selling non-tradable shares to the public.
Even though the practice was ceased, with the fear of the impending of the same scheme posed by the government, many investors sold off their shares at a price much lower than that they purchased before, e.g. they purchased the shares at 35 USD, while sold out for 20 USD, and then the share price remained stagnant or even fell below the IPO price, i.e. 10 USD.
In the end,as a compromise scheme, the government decided to deliver the non-tradable shares at the rationof 10:2 (i.e. the public investor holding 10 shares is entitled to gain 2 shares from non-tradable shareholders without paying anything)to public shareholders in exchange for the trading rights on the stock market. Under such a situation, many new public investors, including many foreign investors, e.g. Morgan and Merrill Lynch who purchased tradable shares at a much lower price from investors who chose to leave the stock market and sold off their shares gained profits a lot from the market. (See the diagram below)
Questions: Do you think the Chinese governmental policies on securities market are fair to all the
investors and then can be warranted? And why?
1、You are requiredto make some comments on the Chinese Company Law. You can focus on ONE TOPIC,
e.g. the regulations on the investors’ protection, or directors’ fiduciaryduties, etc.