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Individuals are likely to be allowed to run one-person limited liability companies very soon, says a legal expert who is participating in the ongoing amendment of the Corporate Law.
"It (allowing the establishment of one-person company) is very likely to be written into the new law," said Zhao Xudong, a member of the experts panel for the amendment of the Corporate Law.
"There is not much debate over this point," he told China Daily at a seminar on the revision of the law, which was held over the weekend in Xiamen of east China's Fujian Province.
He also said that the revised draft of the law would be submitted to the National People's Congress for approval by the end of the year. The draft is still being aired for advice.
Under the current Corporate Law, a limited liability company should consist of no less than two natural or legal persons as shareholders. Anyone who wants to set up a one-person company is bound to infinite liability.
Individual businesspeople hailed the change, saying it will help eliminate their worries over the infinite liability they face under the current system.
"I will register to set up a one-person limited liability company as soon as the law permits," said Jia Lin, a drugstore owner in Shenzhen of Guangdong Province.
"Under the current law, I may have to use my personal property to pay debts if the assets of my drugstore cannot deal with them," he said, adding that this was the first thing he feels uncomfortable about.
"But if I set up a limited liability company, the assets of my company will be the bottom line for the payment of debts," Jia said.
The deregulation will also cater for the current economic development in China.
In fact, many limited liability companies have already operated in a one-person mode.
"Two of my friends and I established the Yuanguang Ornament Co Ltd," said Wu Huali, the general manager of the company. "It is my one-person company. My friends only act as shareholders for the name."
Wu said he knows there are many companies like his.
Analysts say the deregulation, offering more flexibility for individuals to kick off a business, will give a boost to already-booming private business.
"Small retailers and go-between agents might be interested in the one-person mode," said Wang Jiang, a legal expert at Wuhan University of central China's Hubei Province.
"A number of these businesspeople will consider transferring their current enterprises into one-person limited liability companies," he said.
The policy might also trigger a spree of company registrations, adding to the workload to regulators.
At the same seminar, officials, experts and industrial associations also gave advice on the revision of the Corporate Law.
Li Maochang, an attorney at Jun He Law Office, called for lowering a limited liability firm's registered capital, which currently stands at 100,000 yuan (US$12,000), a move that will make it easier to start a business.
(China Daily September 14, 2004)
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