Article 164
A company shall establish its financial and accounting system in accordance with the relevant national statutes, administrative regulations and the stipulations of the finance authority under the State Council.
Article 165
A company shall prepare its financial and accounting reports at the end of each fiscal year, which shall be audited by an accounting firm in accordance with the law. The financial and accounting reports shall be complied pursuant to relevant laws, administrative regulations and relevant regulations set forth by the finance authority under the State Council.
Article 166
A limited liability company shall deliver its financial and accounting reports to each shareholder within the time limit prescribed by the articles of association.
The financial and accounting reports of a joint stock limited company shall be available at the company's premises for shareholders' inspection as from the twentieth day prior to the annual general meeting of shareholders.
A joint stock limited company established through public share offer shall make public its financial and accounting reports.
Article 167
In distributing its current year after-tax profit, a company shall allocate ten percent (10%) of the profit to its statutory reserve fund. Allocation to the company's statutory reserve fund may be waived once the cumulative amount of funds therein exceeds fifty percent (50%) of the company's registered capital.
Where the statutory reserve fund is not sufficient to cover the company's loss from the previous year, the current year profit shall be used to cover such loss before allocation is made to the statutory reserve fund pursuant to the preceding paragraph.
After allocation to the statutory reserve fund has been made from the after-tax profit of the company, and upon adoption of a resolution by the shareholders meeting or the general meeting of shareholders, allocation may be made to the discretionary reserve fund.
After the company has covered its losses, and made allocation to the reserve funds, the remainder of the profit shall be distributed to the shareholders in accordance with the provisions of Article 35 in the case of a limited liability company, and in proportion to their share holdings in the case of a joint stock limited company unless otherwise stipulated in its articles of association.
If the shareholders meeting, the general meeting of shareholders or the board of directors, in violation of the preceding paragraph, distributes profit to the shareholders before covering company losses and making allocation to company statutory reserve fund, the profit so distributed must be returned to the company. The shares of the company held by the company itself shall not be granted profit distribution.
Article 168
The premium received by a joint stock limited company through issuance of shares at prices above par value, as well as other incomes to be allocated to the capital reserve fund as stipulated by the finance authority under the State Council, shall be allocated to the capital reserve fund.
Article 169
The reserve funds of the company shall be used to cover company losses, expand its production and operation, or be converted to the company's increased capital. The capital reserve fund must not be used to cover company losses.
Upon conversion of statutory reserve fund into capital, the amount remaining in the statutory reserve fund may not fall below twenty-five percent (25%) of the registered capital.
Article 170
Engagement or dismissal of an accounting firm to be responsible for the audit of the financial and accounting reports of a company shall be determined by the shareholders meeting, the general meeting of shareholders or the board of directors in accordance with the articles of association.
When the shareholders meeting, the general meeting of shareholders or the board of directors votes on the matter of dismissal of an accounting firm, the said firm shall be given the chance to state its opinions.
Article 171
The company shall provide the accounting firm with true and complete accounting certificates, books, financial and accounting reports and other accounting materials and must not refuse to provide or conceal such documents, or report deceitfully.
Article 172 The company shall not establish any separate accounting book besides the accounting books prescribed by law. The company's assets shall not be deposited into any account established under an individual's name.
