CHAPTER I - GENERAL PROVISIONS
Article 1
In accordance with the Laws of the People's Republic of China ("China") on Wholly Foreign Owned Enterprises, the Rules for the Implementation of the Laws of China on Wholly Foreign Owned Enterprises, and other pertinent, officially published laws and regulations of China, XYZ Development Corporation sets up XYZ Management Consultancy (Shenzhen) Limited (the "Company", XYZ管理咨询顾问(深圳)有限公司), and these Articles of Association are hereby formulated.
Article 2
Name of Investor: XYZ Development Corporation, a company duly registered in USA.
The address of XYZ Development Corporation (the "Investor") is:
[registered address].
Telephone number: 112-222-3344 Fax number: 112-333-4455
Legal Representative: [name of president]
Position: Director
Nationality: USA
Article 3
The legal name of the Company shall be XYZ Management Consultancy (Shenzhen) Limited, and the name in Chinese shall be XYZ 管理咨询顾问(深圳)有限公司.
The legal address of the Company is (registered address).
Article 4
The Company is a Limited Liability Company, the Investor is liable to the debt of the Company within the limit of the capital subscribed by it.
Article 5
The Company is registered in Shenzhen with the approval by the Sehnzhen People’s Government. The Company shall be a legal person under Chinese laws and all activities of the Company shall be governed and protected by the laws, decrees and pertinent regulations of China.
CHAPTER II - PURPOSE AND BUSINESS SCOPE
Article 6
The purposes of the Company are to use the Investor's knowledge and expertise to provide services referred in Article 7 of these Articles to gain a niche in the market for such services, and to make a profit.
Article 7
The business scope of the Company includes assisting manufacturers in setting up operations, quality control procedures and office systems to enable the manufacturers to work effectively and reliably with the automotive manufacturers. In addition, it would inspect and approve manufactured parts made by these suppliers before these parts are shipped to the automotive assembly plants.
Article 8
If the Company’s operation requires the implementation of environment protection measures and fire prevent measures, approvals should be obtained from obtained from competent environment protection and fire prevention management departments as to the implementation of those measures.
Article 9
The Company will not engage in manufacturing.
Article 10
The Company has absolute powers as to decisions in respect to the acquisition of plants and equipments, raw materials, fuels, parts, transportation equipment and office equipments for the purpose of its operation. When acquisitions are carried out domestically, the Company enjoys the same status as those domestic companies.
CHAPTER III - INVESTMENT AND REGISTERED CAPITAL
Article 11
The total amount of investment in the Company is USD15,000.00. The registered capital is USD15,000.00, all of which is paid in cash.
All of the registered capital would be paid in US Dollars and will be paid within 6 months after the date of issuance of the Company’s business license.
Article 12
After the Investor makes its capital investment each time, the Company shall engage a Chinese registered accountant to verify the investment-related documents and provide a certificate of verification to the original approving authority and the Industrial and Commercial Bureau.
Article 13
The Company is not allowed to reduce its registered capital during the terms of its existence. If there is change in total investment and operation scale which give arise to a need of reduction in share capital, such reductions should be approved by approving authority.
Article 14
Any increases or transfers of the Company's registered capital, change of business scopes, opening of branch offices, merger and consolidation and other major issues shall be approved by the managing director and report to the original approving authority for approval, then register the change to the administration authority, tax authority, custom authority within the prescribed period.
CHAPTER IV - THE BOARD OF DIRECTORS
Article 15
The Company does not set up a board of directors. The Company appoints one managing director. The managing director shall be the highest administrative authority of the Company and shall decide all major issues concerning the Company and it should be accountable to its investors. The term of office for the managing director is three (3) years and is eligible for re-appointment.
Article16
The managing director is the legal representative and authorized signer of the Company. The managing director should handle the major issues of the Company in accordance with the Memorandum and Articles of Associations. The managing director can appoint other person as his agent in writing if he can not held office temporarily. However, if any duties which are statutorily required to be performed by the managing director, delegation is not allowed.
Article 17
The responsibilities of managing director include making of decisions relating to the operation of the Company and supervising of the proper carrying out of those decisions. In particular, the managing director functions and powers include, among other things:
1. Creating and amending organizational structure and human resource planning;
2. Appointing and removal of general manager, vice general manager, chief engineer, chief accountant, auditor and other senior managers, and deciding their lines of responsibilities, rights and compensations;
3. Formulating strategy and plan for development, productions and infrastructure construction; Deciding and approving the General Manager's reports;
4. Amending the Articles of Association of the Company;
5. Approving annual financial statements, budget of receipts and expenditures; distribution plan of annual profits (including the balance sheet and income statements, etc);
6. Deciding on the transfer of profits to reserve funds, employee bonus and welfare funds;
7. Deciding on the distribution plan of annual profits, and on the method where loss could be made good, should such a situation arises;
8. Approving the employment contracts and other important rules and regulations of the Company;
9. Deciding on the increase of registered capital, transfer, opening of branch offices, merger and consolidation, extension, cessation, termination and liquidation;
10. Handling matters arising form the termination and expiration of the Company; and
11. Deciding on other important issues that shall be decided by the managing director.
Article 18
The following actions must be approved by the managing director:
1. Amendment of the Articles of Association of the Company;
2. Extension, termination or dissolution of the Company;
3. Increases or transfer of the Company’s registered capital;
4. Any merger or registration of branch office of the Company with another entity.
CHAPTER V - BUSINESS MANAGEMENT ORGANIZATION
Article 19
The Company shall establish an operation and management organization as may be approved by the managing director and executed by the General Manager. The company is divided into different departments such as operation, finance and administration department.
Article 20
The Company shall have one General Manager.
Article 21
The General Manager shall report to the managing director. The primary responsibilities of the General Manager should include:
1. executing the decisions made by the managing director;
2. organizing and conduct the day-to-day management of the Company;
3. handling the day to day planning and productions and employ and remove his/her subordinate according to the powers granted by the managing director;
4. executing other authorities granted by the managing director.
Article 22
The term of office for the General Manager shall be three (3) years, and if re-appointed by the managing director, could continue to remain in office.
Article 23
Upon the approval of the investor, the managing director may also act as General Manager or other senior position of the Company.
Article 24
The General Manager of the Company shall not hold posts in other economic organizations in commercial competition with the Company.
Article 25
The managing director could, in accordance with regulations of the Company, pass necessary resolution for the dismissal of management, should the management engages in illegal activities, activities result in damages to the Company or no carrying out their duties with due care and diligence;
Article 26
If the General Manager, chief engineer, chief accountant, auditor and other senior managers wish to resign, she/he shall give no less than 30 days written notice to the managing director and get the approval of the managing director before he/she resigns.
CHAPTER VII - FINANCE AND ACCOUNTING
Article 27
The finance and accounting of the Company shall be handled in accordance with the "People’s Republic of China’s Accounting Laws" and other related regulations formulated by the Chinese Ministry of Finance and should report to Shenzhen finance and tax authority.
Article 28
The Company must keep and maintain its books of accounts, books of flows of inventories at its registered office. Such books should be audited by the registered CPA in China and report to government authority periodically. The Company shall submit information for statistics and submit the statistics report in accordance with the regulations set out at <Statistics Law of China> and rules set by Shenzhen local government.
Article 29
The fiscal year of the Company shall be January 1 through December 31 of each year. Approval should be obtained in advance should the Company decides to change the fiscal year arising from extraordinary circumstances.
Article 30
All vouchers, books of account, statistical statements and reports of the Company shall be written in Chinese. If they are prepared in other language, they should be translated into Chinese.
Article 31
The Company shall adopt the internationally accepted accrual basis and debit and credit accounting systems.
Article 32
Within the first three (3) months of each fiscal year, the Finance and Accounting Department shall present the previous year's audited balance sheet, profit and loss statement to the managing director for approval. By the end of the third month of each fiscal year, the previous year’s audited balance sheet, profit and loss statement shall be submitted to the original examination and approval authority and the administration of industry and commence after approved by the managing director.
Article 33
The Company shall adopt Renminbi as the standard currency for entries in the books of account. The accounting treatment of cashes, bank deposits, receivables, loans and payables, revenues and expenses should be recorded at the amounts received and paid. Conversion into Renminbi from U.S. Dollars and other currencies shall be on the first date of the month when the transaction is entered into the accounts of the Company, and shall be in accordance with the State Administration of Foreign Exchange Control of the People's Republic of China.
Article 34
The Company shall open Renminbi and foreign exchange accounts with banks in China.
Article 35
The following items shall be covered in the financial account books:
1. Cash in-flow and out-flow;
2. sales and purchases of assets and other materials;
3. Movements of registered capital and debt; and
4. The time of payment of registered capital and any increase or transfer thereof.
Article 36
The Company’s annual financial auditing shall be conducted by an auditor registered in China. When submitting the annual tax return, an audited financial statement prepared by China registered CPA should be attached.
Article 37
Allocations for reserve funds, expansion funds and bonus and welfare funds for workers and staff members shall be set aside in accordance with the "Law of the People's Republic of China on Sole Foreign Investment Enterprise" and its Implementation Rules. The annual amounts of such allocations shall be decided by the managing director on the basis of the economic condition of the Company. The allocations for reserve funds should not lest than 10% of the after-tax profit. The allocation to reserve funds is optional if the accumulated reserve funds reach 50% of the registered capital. The Company can determine the amount to transfer to bonus and welfare funds for workers and staff members freely.
Article 38
The profits after payment of company income tax and allocation of various funds shall be distributed annually.
Article 39
The Company shall not distribute profits unless the losses of the previous fiscal year or years have been made up. Remaining profits from the previous year can be distributed together with that of the current year.
Article 40
All matters concerning foreign exchange shall be handled in accordance with the "Regulations for Foreign Exchange Control of the People's Republic of China" and other pertinent regulations.
Article 41
The after tax income of foreign employees and employees from Taiwan, Hong Kong and Macau could be remitted to their home countries in accordance with prevailing foreign exchange control laws and regulations.
CHAPTER VII TAXES, FOREIGN EXCHANGES AND INSURANCE
Article 42
Taxes of any kinds shall be paid in accordance with the pertinent laws and regulations of the People’s Republic of China. The Company is entitled to whatever tax incentives as stipulated by prevailing laws and regulations.
Article 43
The staffs of this company shall be levied personal income tax in accordance with the Laws of Personal Income Tax of the People’s Republic of China
Article 44
The remittance of foreign exchanges shall be handled in line with the stipulations of SAFE (State Administration of Foreign Exchanges) of China.
Article 45
The Company shall obtain insurance policies for various kinds of risks from insurance companies in China.
CHAPTER VIII - LABOR AND TRADE UNION
Article 46
The Company shall have absolute rights as to the decisions in respect of the oganisational structure and personnel management in accordance with the needs arising from its operation and development.
Article 47
The employment, recruitment, dismissal and resignation of the staff and workers of the Company and their salary, welfare benefits, labor insurance, labor protection, labor disciplines and other matters shall be handled according to the "Labor Laws of the People’s Republic of China" and other pertinent regulations and local rules.
Article 48
The Company shall have the power to issue a disciplinary warning to, record a demerit for, reduce the salary of, or, in more serious cases, dismiss employees in breach of the rules and labor discipline systems of the Company. The dismissal of employee shall be filed to the local labor administrative department for records.
Article 49
Matters concerning the welfare funds, bonuses, labor protection and labor insurance shall be stipulated respectively in various rules by the Company, to ensure that the staff and workers are provided with normal working conditions in accordance with Chinese labor laws.
Article 50
The staff and workers of the Company have the right to establish a trade union organization and carry out activities only in accordance with the stipulations of the "Trade Union Law of the People's Republic of China."
Article 51
The basic tasks of the trade union in the Company are: to protect the democratic rights and material interests of the staff and workers pursuant to the law; to help the Company with the arrangement and rational use of welfare and bonus funds; to organize political and professional studies, carry out literary, artistic and sports activities; and to educate staff and workers to observe labor discipline and strive to fulfill the economic tasks of the Company.
Trade union representatives have the right to attend as non-voting members meetings of the Company held to discuss important issues of the interests of the staff and workers such as award and discipline of workers, the setting of wages and salaries, staff welfare and insurance.
Article 52
Trade union has the power to represent the staff and workers to sign individual or collective employment contracts with the Company and supervise the execution of these contracts.
Article 53
The Company should provide supports for the operation of trade union. The Company shall allot an amount of money totaling two percent of all the salaries of the Company's staff and workers as trade union's funds, which the trade union of the Company shall use according to the relevant managerial rules for trade union funds formulated by the All China Federation of Trade Unions.
CHAPTER XII - DURATION, TERMINATION AND LIQUIDATION
Article 54
The duration of the Company shall be thirty (30) years, beginning from the date when its business license is issued.
Article 55
In the event that the duration of operations of the Company is extended upon its expiration, an application for the extension of the Company shall be submitted to the original examining and approving authority for approval one hundred and eighty (180) days prior to the expiration of the term of the Company by the investor. Then register with other relevant departments such as the administration of industry and commerce, tax authority, custom.
Article 56
The Company may be terminated in advance in the event that one of the following situations occurs:
1. Expiration of the terms of operation;
2. the investor decides to dissolve the company due to heavy losses from inefficient operations;
3. Inability to continue the Company’s operations due to heavy losses for natural disaster and force majeure;
4. Bankruptcy;
5. De-registered by the competent authority because engaging the activities which are against the laws, regulations and public interests;
5. Certain other events specified in the Articles of Association.
Article 57
An application should be submitted to the original examination and approval authority for approval by the Company if it would like to terminate in advance.
Article 58
The terminating Company should make an announcement regarding its proposed liquidation to the public. The Company should establish procedures and principles for the liquidation, nominate candidates for the liquidation committee, and set up the liquidation committee for liquidating the Company’s asset in accordance with the laws and regulations of China. Before the completion of the liquidation, the investor is not allowed to remit and withdraw the funds of the company out of China and can not dispose the assets of the Company on his own.
Article 59
On completion of the liquidation, the liquidation committee should submit a liquidation report to the managing director for approval. After the approval, the Company shall submit a liquidation report to the original examination and approval authority, go through the formalities for nullifying its business license, and at the same time make an announcement to the public.
CHAPTER XIV - RULES AND REGULATIONS
Article 63
The following rules and regulations are set by the Company:
1. Management regulations, including the powers and procedures of each management department and its working rules and procedures;
2. Rules for the staff and workers;
3. System of labor and salary;
4. System of work attendance record, promotion and awards and penalties for the staff and workers;
5. Rules for staff and workers' welfare;
6. Accounting regulations;
7. Liquidation procedures upon the dissolution of the Company; and
8. Other necessary rules and regulations.
CHAPTER XV - SUPPLEMENTARY ARTICLES
Article 61
The Company is under the inspections and supervisions of relevant government bureau such as Custom, the administration of industry and commerce, labor department, environmental department, finance, tax and auditing department.
Article 62
The amendments to the Articles of Association shall be passed by a special resolution of the members and submitted to the original examination and approval authority for approval.
Article 63
This Articles of Association shall be written in Chinese.
Article 64
The laws and regulations of China should override the Articles of Associations if the Articles of Associations contradict with the laws and regulations of China.
Article 65
These Articles of Association and any amendments hereto shall come into effect upon the approval by the competent approval authority of Shenzhen Government.
Article 66
These Articles of Association are signed in Shenzhen, China by the authorized representative of the Investor on the 29th day of October, 2005.
Investor: (chop)
Legal Representative:
Date:
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