· Document Number：No. 12 [2012] of the All-China Federation of Trade Unions

· Level of Authority： Group Provisions

· Date issued：02-13-2012

· Effective Date：02-13-2012

· Status： Effective

· Issuing Authority： CPC Central Commission for Discipline Inspection Organization Department of the Central Committee of the Communist Party of China (Organization Department, CCCPC) State-owned Asset Supervision & Administration Commission of the State Council Ministry of Supervision All-China Federation of Trade Unions All-China Federation of Industry & Commerce

Provisions on the Democratic Management of Enterprises
(No. 12 [2012] of the All-China Federation of Trade Unions, issued by the Central Commission for Discipline Inspection of the CPC, the Organization Department of the CPC Central Committee, the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Supervision, the All-China Federation of Trade Unions and the All-China Federation of Industry and Commerce on February 13, 2012)
Chapter I General Provisions
Article 1 These Provisions are formulated in accordance with the Constitution and the relevant laws in order to improve the system for the democratic management of enterprises with the employees' congress as the basic form, promote the opening of enterprise affairs, support employees' participation in enterprise management, protect employees' legitimate rights and interests, build harmonious labor relations, promote sustainable and healthy development of enterprises, and strengthen the building of grassroots democracy.
Article 2 Enterprises shall adhere to the leadership of the Party, follow the guidance of the Deng Xiaoping Theory and the important thought of the “Three Represents,” thoroughly carry out the Scientific Outlook on Development, and unswervingly implement the Party's basic guideline of relying on the working class whole-heartedly in their democratic management.
The enterprises' party organizations shall strengthen their leadership and support for democratic management.
Article 3 Employees' congress (or employees' assembly, same below) shall be the body through which employees exercise their rights to democratic management and the basic form of enterprises' democratic management.
Enterprises shall, under the principles of legality, orderliness, openness and impartiality, establish a democratic management system with the employees' congress as the basic form, open enterprise affairs and promote democratic management. Corporate enterprises (hereinafter referred to as “companies”) shall establish a system of employees' directors and employees' supervisors pursuant to law.
Enterprises shall guarantee and respect employees' rights to information, participation, expression and supervision and other democratic rights in accordance with the law, and support employees' participation in enterprise management.
Article 4 Employees of an enterprise shall respect and support the enterprise's exercise of management authority in accordance with the law, and shall actively participate in the enterprise's management.
Article 5 The trade union of an enterprise shall organize employees to conduct democratic management in accordance with the law, and protect the employees' legitimate rights and interests.
The trade union at a higher level shall direct and help the enterprises' trade unions and employees in conducting democratic management in accordance with the law, and supervise the enterprises' democratic management.
Article 6 The organizations of enterprises' representatives shall promote the democratic management of enterprises, and promote the healthy development of enterprises.
Article 7 The disciplinary inspection departments and organization departments of Party committees at all levels and the state-owned assets supervision and administration institutions, supervision authorities and other relevant departments of people's governments at all levels shall, in accordance with their respective functions and duties, guide, inspect and supervise the democratic management of enterprises.
Chapter II Employees' Congress System
Section 1 Organization System and Powers of Employees' Congresses
Article 8 Enterprises may determine to convene the employees' congress or the employees' assembly based on the number of employees.
Where an enterprise convenes the employees' congress, the number of employees' representatives shall be determined on the basis of not less than 5% of the number of all employees and shall not be less than 30. Where the number of employees' representatives is more than 100, the excess may be determined by the enterprise through consultation with the trade union.
Article 9 Representatives of the employees' congress shall consist of workers, technicians, managers, and leaders of the enterprise and other employees. The number of managers at or above the middle level and leaders of an enterprise shall generally not exceed 20% of the total number of employees' representatives. Enterprises with female employees and employees dispatched for labor shall have an appropriate proportion of representatives of the female employees and employees dispatched for labor.
Article 10 The employees' congress is elected for a term of three to five years. The specific term of office shall be determined by the employees' congress in accordance with the actual circumstances of the enterprise.
Where the employees' congressional election for the next term is held in advance or is postponed for any particular reason, the relevant decision shall be made by the employees' congress or the institution authorized by the employees' congress.
Article 11 The employees' congress may, as required, establish several special committees (teams) to be responsible for handling matters assigned by the employees' congress. The members of the special committees (teams) must be deliberated and adopted at the employees' congress.
Article 12 Employees' representatives shall form representative groups (teams) based on the basic electoral units, and elect the group leader (team leader) thereof. The joint meeting of the group leaders (team leaders) of the employees' congress and the persons in charge of special committees (teams) may be set up to be responsible for handling the important matters to be resolved temporarily during the period when the employees' congress is not in session upon the authorization of the employees' congress. The joint meeting shall request the next employees' congress for confirmation of the resolutions made during this period.
The enterprise's trade union shall be responsible for convening the joint meeting, and the enterprise's leaders or other relevant persons may be invited to observe the joint meeting in light of the meeting content.
Article 13 The employees' congress shall perform the following functions:
1. listen to reports made by the main person in charge of the enterprise regarding the enterprise's development plans, annual production and business operation and management, enterprise reform and the formulation of important bylaws, the conclusion and fulfillment of the enterprise's labor use contracts, labor contracts and collective contracts, the enterprise's work safety conditions, as well as the enterprise's payment of social insurance premiums and housing provident fund, and put forward opinions and suggestions; deliberate the bylaws or plans on important matters formulated, amended or decided by the enterprise regarding labor remuneration, work hours, rest and vacation, labor safety and health, insurance welfare, training for employees, labor discipline, labor quota management and those directly involving the vital interests of laborers, and put forward opinions and suggestions;
2. deliberate and adopt collective contract drafts, plans for the use of employee welfare funds collected in accordance with the relevant provisions of the state, plans for adjusting the payment proportion and time for the housing provident fund and social insurance premiums, recommended model workers and other major matters;
3. elect or recall the employees' directors or employees' supervisors, elect the employees' representatives for creditors' meetings and creditors' committees of enterprises entering bankruptcy proceedings pursuant to law, and recommend or elect the enterprise's business managers upon authorization;
4. examine and supervise the enterprise's implementation of labor laws and regulations and labor bylaws, deliberate the enterprise's leaders in a democratic manner, and propose suggestions for awards and punishments; and
5. other functions as prescribed by laws and regulations.
Article 14 The employees' congress of a state-owned enterprise or a state-owned holding enterprise shall perform the following functions in addition to performing the functions as prescribed in Article 13:
1. listen to and deliberate reports made by the main person in charge of the business operation and management on the enterprise investment, major technical reconstruction, financial budgets and final accounts and the use of the enterprise's business entertainment expenses, as well as the plans for the evaluation of professional technical titles, the enterprise's use of accumulation fund and restructuring, and put forward opinions and suggestions;
2. deliberate and adopt plans for the layoff and resettlement of employees in the plans for the implementation of the enterprise's merger, split, restructuring, dissolution or bankruptcy; and
3. other functions as prescribed by laws, administrative regulations and administrative bylaws.
Article 15 Several small and medium-sized enterprises within a certain area at or below the county level or within industries of a similar nature, which do not satisfy the conditions for the establishment of employees' congress system, may jointly establish a regional (industry) employees' congress system through the election of representatives to conduct the democratic management of enterprises.
The trade union shall be responsible for establishing the regional (industry) employees' congress system. The regional (industry) trade union shall undertake the routine work as the working body of the regional (industry) employees' congress.
Article 16 The headquarters and all branch companies, factories, workshops and other branches of an enterprise group may elect the employees' representatives based on a certain proportion, and convene the employees' congress of the enterprise group to conduct the democratic management of the enterprise group.
The headquarters and all branch companies, factories, workshops and other branches of a group enterprise may establish the employees' congress system in accordance with these Provisions, and separately conduct democratic management within the scope of their respective functions and powers.
Section 2 Work System for Employees' Congresses
Article 17 The employees' congress shall be held at least once each year. The plenary session of the employees' congress must be attended by two-thirds or more of the employees' representatives.
Article 18 The topics and proposals of the employees' congress shall be determined by the enterprise's trade union through consultation with the enterprise after soliciting employees' opinions, and be served upon the employees' representatives in writing seven days before the convening of the meeting.
Article 19 The employees' congress may set up a presidium to preside over the meeting. The list of candidates for the members of the presidium shall be proposed by the enterprise's trade union through consultation with all groups (teams) of the employees' congress, and be passed through voting at the preparatory meeting of the employees' congress. Workers, technicians and managers shall not be less than 50%.
Article 20 Relevant matters on the election and voting at the employees' congress shall be passed by a majority of all employees' representatives in accordance with the majority principle. Important matters shall be voted under separate items in the form of a secret ballot.
Article 21 Resolutions and matters deliberated and adopted by the employees' congress within the scope of its functions and powers pursuant to the law shall have binding force, and shall not be amended or revoked without the approval of the employees' congress.
Matters which the employees' congress shall be requested by the enterprise to deliberate, adopt or decide on shall be invalid unless it is deliberated, adopted or decided upon in accordance with statutory procedures.
Article 22 The enterprise's trade union committee shall be the working body of the employees' congress, and is responsible for the routine work of the employees' congress, and perform the following functions:
1. propose plans for the election of representatives of the employees' congress, and organize employees to elect the employees' representatives and leaders of representative groups (teams);
2. collect the proposals of employees' representatives and put forward suggestions on the topics of the employees' congress;
3. be responsible for the preparation and organization of the meetings of the employees' congress, and put forward suggestions regarding the agenda of the employees' congress;
4. propose plans for the composition of the presidium of the employees' congress and the suggested list of members; and propose plans for the establishment of special committees (teams) and suggested list of members;
5. report to the employees' congress on the implementation of resolutions of the employees' congress, the handling of proposals of the employees' congress, and the opening of enterprise affairs;
6. be responsible for the organization of special committees (teams) and employees' representatives to conduct patrol inspection, examination, inquiries and other supervision activities on the implementation of resolutions of the employees' congress of the enterprise and the handling of proposals of the employees' congress as well as the opening of enterprise affairs when the employees' congress is not in session;
7. accept appeals and suggestions from the employees' representatives and protect the legitimate rights and interests of the employees' representatives;
8. provide the employees with publicity and education programs on democratic management, organize employees to participate in study and training programs, and enhance the qualities of employees' representatives; and
9. establish and manage work files for the employees' congress.
Section 3 Election of Employees' Representatives and Their Rights and Obligations
Article 23 Employees who have signed labor contracts, established labor relations and have actual labor relationships with an enterprise shall have the right to elect and be elected as the representatives of the enterprises' congress.
Employees' representatives whose labor relations have been terminated or revoked pursuant to law shall be automatically disqualified as the employees' representative.
Article 24 Employees' representatives shall be directly elected based on the basic electoral unit such as team, workshop section, workshop and division. The employees' representatives of a large-scale enterprise with many management levels may be elected from the representatives of the people's congress at the next lower level.
Article 25 In order to elect or recall an employees' representative, a staff meeting of the relevant electoral unit shall be convened and attended by two-thirds or more of the employees. A decision on the election or recall of an employees' representative shall be invalid unless it is passed by a majority of all employees.
Article 26 Employees' representatives shall be permanent, and their term of office shall be the same as the employees' congress session, and they may be reelected to serve for another term.
Where there is any vacancy in the employees' representatives, the original electoral unit shall conduct a by-election in accordance with the prescribed conditions and procedures.
Article 27 Employees' representatives shall be responsible to the employees of the electoral unit and for reporting their work, and accept the supervision of the employees of the electoral unit.
Article 28 Employees' representatives shall enjoy the following rights:
1. the right to elect, the right to be elected and voting rights;
2. to participate in the democratic management organized by the employees' congress and its work bodies;
3. to appraise and raise inquiries to the enterprise's leaders; and
4. to supervise and inspect the enterprise's implementation of resolutions of the employees' congress when the employees' congress is not in session.
Article 29 Employees' representatives shall fulfill the following obligations:
1. abide by the laws, regulations and the enterprise's bylaws, enhance their qualities, and actively participate in the enterprise's democratic management;
2. fulfill the responsibilities of employees' representatives pursuant to the law, listen to the employees' opinions and suggestions regarding the enterprise's production and business operation and management as well as opinions and requirements involving the employees' vital interests, and report such opinions and requirements to the enterprise in an objective and truthful manner;
3. participate in all activities organized by the employees' congress of the enterprise, implement resolutions adopted by the employees' congress, and complete the work assigned by the employees' congress;
4. report to the electoral unit's employees their participation in the employees' congress activities and performance of functions, and accept the evaluation and supervision by employees; and
5. keep the enterprise's trade secrets and confidential matters regarding intellectual property rights.
Article 30 The performance of functions by the employees' representatives shall be protected by law, and no organization or individual shall obstruct or retaliate against the employees' representatives.
Employees' representatives shall, pursuant to the law, participate in the employees' congress and all activities organized by the congress within the statutory work hours, and the enterprise shall pay regular labor remuneration to the representatives, and shall not reduce their wages or any other welfare benefits.
Chapter III System of Opening Enterprise Affairs
Article 31 An enterprise shall establish and implement the system of opening of enterprise affairs, and through the employees' congress and other forms, open to the employees the significant matters regarding the enterprise's production, business operation and management, the bylaws involving the employees' vital interests, the professional integrity of business managers and other relevant information under certain procedures, solicit the employees' opinions, and accept the employees' supervision.
Article 32 The main person in charge of an enterprise shall be responsible for the opening of enterprise affairs. An enterprise shall establish a corresponding institution or designate special persons to be responsible for the opening of enterprise affairs.
Article 33 An enterprise shall open enterprise affairs under the principles of legality, timeliness, truthfulness and promoting the protection of employees' rights and interests and the development of enterprises.
An enterprise shall, when opening enterprise affairs, keep its trade secrets and confidential matters regarding intellectual property rights.
Article 34 An enterprise shall open the following matters to employees:
1. basic information on business operation and management;
2. the recruitment of employees and the conclusion of labor contracts;
3. the content of collective contracts and labor bylaws;
4. awards and punishments for employees, unilateral rescission of labor contracts, layoff plans and results, the conditions, quota and results of appraising model workers and excellent employees;
5. labor safety and health standards, occurrence of safety accidents and handling results;
6. the purchase of social insurance and the payment of enterprise annuity;
7. the drawing and use of employee education funds, the employee training plan and the implementation thereof;
8. labor disputes and handling results; and
9. other matters prescribed by laws and regulations.
Article 35 A state-owned enterprise, collective enterprise or its holding enterprise shall open the following matters in addition to the relevant matters as prescribed in Articles 13, 14 and 34:
1. significant matters such as major decision-making plans for investment, production and business operation and management, and the enterprise's middle and long term development planning;
2. the annual production and business objectives and the completion thereof, enterprise guarantee, use of large-sum funds, disposal of large-sum assets, bidding and tendering for project construction projects, the purchase and supply of bulk commodities, product sales, profits and losses and the fulfillment of contracting and leasing contracts, the implementation of the internal economic responsibility system, the formulation of important bylaws and other significant matters;
3. the promotion and salary increase of employees, distribution of wages and allowances, and the evaluation of professional technical titles;
4. the selection and appointment of leaders at the middle level, persons for important posts, the remuneration, duty consumption and part-time jobs of the enterprise's leaders, expenses for going abroad and implementation of other provisions on integrity and self-discipline, and the democratic evaluation results of the enterprise's leaders at the employees' congress; and
5. other matters that shall be made public in accordance with the relevant provisions of the state.
Chapter IV System of Employees' Directors and Employees' Supervisors
Article 36 A company shall establish a system of employees' directors and employees' supervisors pursuant to the law, and support participation in the company's decision-making, management and supervision by the employees' representatives who are elected by voting at the employees' congress as the members of board of directors or board of supervisors. They shall represent and maintain the employees' legitimate rights and interests so as to promote the healthy development of enterprises.
Article 37 A company shall, pursuant to the law, specify the proportion and number of employees' directors and employees' supervisors in the company's bylaws.
Article 38 The candidates for the employees' directors or employees' supervisors shall be nominated by the company's trade union in light of self-recommendation and recommendation and on the basis of fully soliciting the opinions of the employees, be passed through voting by a majority of all representatives of the employees' congress, and be reported to the trade union at the next higher level for filing.
The chairman and vice-chairman of the trade union shall be the candidates for the employees' directors or employees' supervisors.
Article 39 No senior manager or supervisor of a company shall concurrently hold the post of employees' director; and no senior manager or director of a company shall concurrently hold the post of employees' supervisor.
Article 40 The term of office for employees' directors or employees' supervisors shall be the same as that of other directors or supervisors, and they may be reelected upon the expiration of said term of office.
Article 41 Where an employees' director or employees' supervisor fails to perform functions or has any serious fault, with the joint proposition of one-third or more of the employees' representatives, the said director or supervisor may be recalled if the proposition is passed through voting by a majority of all representatives of the employees' congress.
Where there is any vacancy in the employees' directors or employees' supervisors, the company's trade union shall nominate the alternative person in accordance with Article 37 of these Provisions, and request the employees' congress to elect the director or supervisor in a democratic manner.
Article 42 Employees' directors shall exercise the following rights pursuant to the law:
1. attend the meetings of the board of directors, and exercise the right to speak and the right to vote as directors;
2. propose the convening of meetings of the board of directors concerning the bylaws or major matters involving the employees' vital interests, report the employees' reasonable requirements, and protect the employees' legitimate rights and interests;
3. observe the administrative and executive meetings of the company relating to their functions and important meetings relating to production and business operation;
4. require the trade union or relevant departments and institutions of the company to make notifications regarding relevant information and provide relevant materials; and
5. other rights as prescribed by laws, regulations and the company's bylaws.
Article 43 Employees' supervisors shall exercise the following rights pursuant to the law:
1. attend the meetings of the board of supervisors, and exercise the right to speak and the right to vote as supervisors;
2. propose the convening of meetings of the board of supervisors concerning the bylaws or major matters involving the employees' vital interests;
3. supervise the company's financial conditions and the performance of functions by the company's directors and senior managers; supervise and inspect the company's implementation of laws and regulations involving the employees' vital interests and the company's bylaws; as well as the fulfillment of labor contracts and collective contracts;
4. observe the meetings of the board of directors, raise inquiries or provide suggestions regarding matters under deliberation by the board of directors; and observe the relevant administrative and executive meetings of the company relating to their functions and important meetings relating to production and business operation;
5. require the trade union or relevant departments and institutions of the company to make notifications regarding relevant information and provide relevant materials; and
6. other rights as prescribed by laws, regulations and the company's bylaws.
Article 44 Employees' directors and employees' supervisors shall fulfill the following obligations pursuant to law:
1. abide by laws and regulations, abide by the company's bylaws and all rules and regulations, keep the company's secrets, and conscientiously perform functions;
2. solicit the employees' opinions and suggestions on a regular basis, and report the employees' opinions and suggestions at the meetings of the board of directors and the board of supervisors in a truthful, accurate and comprehensive manner;
3. report their work and performance to the employees' congress on a regular basis, implement the relevant resolutions of the employees' congress, provide opinions regarding matters deliberated at the employees' congress, and exercise voting rights in accordance with the relevant resolutions of the employees' congress at the meetings of the board of directors or the board of supervisors; and
4. other obligations as prescribed by laws, regulations and the company's bylaws.
Article 45 A company shall guarantee that the employees' directors and employees' supervisors carry out work in accordance with laws, regulations and the company's bylaws and provide the necessary work conditions for the employees' directors and employees' supervisors to perform their functions.
Article 46 A company shall not rescind the labor contract with any employees' director or employees' supervisor during his or her term of office, unless it is otherwise prescribed by law.
Article 47 Employees' directors and employees' supervisors shall have equal rights as the company's other directors and supervisors, and assume the corresponding obligations.
Chapter V Supplementary Provisions
Article 48 All regions, all relevant departments and all enterprises shall formulate implementation measures in accordance with these Provisions to promote the democratic management of enterprises.
Article 49 Collective enterprises shall conduct democratic management in accordance with the Regulation on Urban Collective Enterprises and other relevant laws and regulations.
Article 50 These Provisions shall come into force on the date of issuance.