What Is the Difference Between a Corporation and an LLC?

A limited liability company, referred to as a limited company. A limited liability company in China is a company registered in accordance with the Regulations of the People's Republic of China on the Administration of Company Registration. In order to limit the limited liability to the company, the company's legal person assumes full responsibility for the company's debts with all assets of the economic organization. Limited liability companies include wholly state-owned companies and other limited liability companies. ^[1]

Limited Liability Company

Limited liability company

A limited liability company shall establish the following organizations:

1. Shareholders' meeting

The shareholders 'meeting of a limited liability company consists of all shareholders. The shareholders' meeting is the company's authority and exercises its powers in accordance with the Company Law.

The shareholders meeting exercises the following powers:

(1) Decide on the company's operating policy and investment plan;

(2) Election and replacement of directors, and determination of matters concerning directors' remuneration;

(3) Election and replacement of supervisors appointed by shareholders' representatives, and determination of matters concerning the remuneration of supervisors;

(4) Review and approval

Limited liability company

Company Law of the People's Republic of China (2013 Revision)

Chapter II Establishment and Organization of a Limited Liability Company

Section 1 Establishment

Article 23 The establishment of a limited liability company shall meet the following requirements:

(One)

Differences between a limited liability company and a company limited by shares:

The difference between the two is mainly reflected in:

(1) Whether it is a joint venture or a joint venture.

The limited liability company was created on the basis of combining the advantages of both the unlimited company and the company limited by shares. It unites humanity and equity: on the one hand, its shareholders are limited to capital contributions, enjoy rights, assume responsibilities, have a cooperative nature and are different from unlimited companies; on the other hand, because of their private offering, The relationship between shareholders is relatively close, and it has a certain human nature, so it is different from a company limited by shares. A joint stock company is a complete joint venture. Its own composition and credit foundation is the company's capital, which has no connection with the personal personalities of the shareholders (reputation, status, reputation), and individual shareholders cannot invest in personal credit and labor services. Limited liability companies are all different.

(2) Whether the shares are equal.

All assets of a limited liability company do not need to be divided into equal shares. Shareholders only need to contribute capital in accordance with the investment proportion determined by the agreement, and enjoy rights and assume obligations in this proportion. Generally speaking, a company limited by shares must convert it into equal shares, unlike a limited liability company. This feature also guarantees the comprehensiveness, openness and equality of the company.

(3) The amount of shareholders.

A limited liability company should not have too many shareholders because it has certain human nature and is based on certain trust among shareholders. China's "Company Law" provides for 2-50 people. There are rules for the upper and lower limits of the number of shareholders in a limited liability company, but there is only a lower limit in a company limited by shares, that is, only a minimum amount of sponsors is required, and in fact only the minimum quorum of shareholders is specified, but the upper limit for shareholders is not specified. Of shareholders have the greatest breadth and considerable uncertainty.

(4) Whether the fundraising is open or closed.

A limited liability company can only raise funds within the scope of investors, and the company must not publicly raise funds to the society. The company's investment certificate issued by the company for the investor is also different from stocks and cannot be transferred in the market. The closed nature of the fund-raising has determined that the financial accounting of a limited liability company need not be made public. Unlike the closed nature of a limited liability company, the method of raising funds for a company limited by shares is open. Whether it is initiated or raised, it must openly raise capital to the public or to a certain extent. The public offering and the financial status are also public.

(5) Degree of freedom in share transfer.

The investment certificate of a limited liability company cannot be transferred. Shareholders' capital contributions can be transferred between shareholders, or to people other than shareholders; however, due to the nature of human union, the transfer must be strictly restricted. According to the "Company Law", the transfer must be approved by more than half of all shareholders; under the same conditions, other shareholders have the right of first refusal. The form of shares of a company limited by shares is stock. This kind of securities, which represents a certain value in the economy and legally embodies certain qualifications and rights and obligations, generally has no specific connection with the holder's body, and the law allows it to be freely transferred, which will inevitably strengthen the company limited by shares. It is bound to incur blindness and speculation at the same time.

(6) The leniency of the establishment is different.

Because of its economic status and the characteristics of its organization and activities, a company limited by shares must manage and supervise it through legal means. It establishes a series of statutory conditions that must be met and performs strict statutory procedures. In China, the establishment of a company limited by shares must be approved by the relevant authorities. Limited liability companies are mostly small and medium-sized enterprises, and because of their closedness and suitability, legal requirements are not as strict as those of a company limited by shares, and some can be simplified, and there are certain arbitrary options. (For more details, see the reference "Differences between a limited liability company and a company limited by shares")