China's top legislature adopted the Draft of the Amendment of the Corporate Law Thursday, with an eye-catching lifting of ban on the setting-up of one-person limited companies.

The Standing Committee of the 10th National People's Congress held its 18th session on October 22-27.

According to the newly-adopted amended law, one person, either a natural person or a legal person, is allowed to apply for opening a limited company with a minimum capital of 100,000 yuan (about 12,345 US dollars).

The amended law also prescribes that the owner of the single-person company should pay the investment capital at one time. It is prohibited to open a second one of the kind by the same person.

It should be made clear whether the one-person company is opened by a natural person or a legal person during the process of registration and in its charter, the new amendment says.

The one-person limited company should submit its audit report at the end of a year to an accounting firm. The owner who fails to prove his/her assets is independent from the assets of the company should take responsibility for the company's losses, the amendment says.

The proposal to allow the setting-up of a one-person company was opposed by a number of lawmakers during discussions. A study co-conducted by several legislative and government bodies shows there had already existed in the country companies with features of one-person limited companies.

These companies, according to the research, either have their assets mostly owned by one of the shareholders, or owned by one actual shareholder and a number of others who only hold stocks nominally.

Some lawmakers feared that the owner of a one-person limited company might take advantage of the company's assets for his/her own use.

Nevertheless, the study says the fact that the new amendment includes articles on auditing, which are even stricter than corporate laws in other countries, may eventually prevent this from happening.

Source: Xinhua