杨春宝 律师
Chambers Yang
Contents
• Basic laws and regulations
• The Foreign Investment Guidance
• Forms of foreign investment
• Establishment of foreign investment enterprises
• Mergers & Acquisitions
Basic laws and regulations
• Basic law: Corp. Law, Contract Law, etc.
• Guidance of foreign investment
• The law on Sino-foreign equity joint venture and its detailed rules and regulations
• The law on Sino-foreign cooperative enterprises and its detailed rules and regulations
• The law on enterprises operated wholly with foreign capitals and its detailed rules
• Income tax law for enterprises with foreign investment and foreign enterprises and its detailed rules and regulations
• Other related laws and regulations
Top ten nations/regions with investment in China (2005)
• Hong Kong (US$17.949b)
• Virgin Island (US$9.022b)
• Japan (US$6.53b)
• South Korea(US$5.168b)
• USA (US$3.061b)
• Singapore (US$2.204b)
• Taiwan Province (US$2.152b)
• Cayman Islands (US$1.948b)
• Germany (US$1.53b)
• West Samoa(US$1.352b)
The Foreign Investment Guidance Catalogue (2004)
• Encouraged
• Restricted
• Prohibited
• If not included, permitted
The Guidance Catalogue - Encouraged
• new agriculture technologies, agriculture comprehensive development, or energy, transportation and important raw material industries
• high and new technologies or advanced application technologies
• meeting the market needs and being able to improve the product level, develop new markets or increase the international competitive capacity of the products
• new technologies and new equipments that can save energy and raw material, comprehensively utilize resources and regenerate resources, and prevent environment pollutions
• capable of bring into the advantages of human power and resources of the mid-west region into full play and being in conformity to the industrial policies of the State
• other situations as provided for by laws and regulations.
The Guidance Catalogue - Restricted
• technology lagged behind
• being adverse to saving resources and improving environment
• engaged in the prospecting and exploitation of the specific type of mineral resources to which the State applies protective exploitation
• falling into the industries that the State opens step by step
• other situations
The Guidance Catalogue - Prohibited
• harming the State safety or impairing the public interests
• polluting the environment, damaging natural resources or harming human health
• occupying too much farmland and being adverse to the protection and development of land resources
• harming the safety and usage of military facilities
• using the particular techniques or technologies of China to produce products
• other situations
The Guidance Catalogue - Permitted
• permitted projects of which the products are all directly exported shall be regarded as the encouraged project
• The restricted projects but more than 70% products will be exported may be regarded as permitted projects upon the approval
Common Investment Vehicles
• Incorporation:
Joint Venture (JV)
Wholly Foreign Owned Enterprise (WFOE)
Holding company
R&D center
Representative office
Branch Office
• Mergers & Acquisitions (M&A)
Statistics of Foreign Investment in 2005
JV
• limited liability company
• Chinese nature person is not allowed
• popular for foreign investors less familiar with investment in China
• popular for investing in certain industries that require the participation of a Chinese partner
Equity Joint Venture (EJV)
• Limited liability company
• Legal person in China
• With both Chinese and foreign investors
• Foreign investor(s) hold(s) at least 25% shares
• Profit and losses shared according to investor’s relative share of the registered capital
Cooperative Joint Venture (CJV)
• Limited liability company or partnership without legal person status
• With both Chinese and foreign investors
• Contribute capital, distribute income or product and bear risks according to contractual arrangement
• Chinese investors generally get fixed benefit
• Can be managed by one party(usually foreigner)
Cooperative Joint Venture (CJV)
• Dissolution: the CJV’s net assets may be transferred to the Chinese party without compensation so long as the foreign party has been able to recoup its capital contribution during the term of the CJV.
upon approval of relevant finance and tax authorities in China, capital recoupment can be made before tax
Company Limited by Shares with Foreign Investment
• a blend between an EJV and a stock company
• minimum paid up capital:RMB30 million
• Can offer shares publicly, even overseas with approval
• can be listed on a recognized PRC stock exchange with approval
Establishment of Joint Venture
• Marketing survey, selection of Chinese partner
• Negotiations
• Feasibility study report, contract and articles of association
• Certificate of approval
• Business license
Wholly Foreign Owned Enterprise (WFOE)
• 100% owned by one or more foreign entities (generally is a limited liability company)
• greater flexibility in terms of management and control
Better intellectual property protection
Easier to terminate
more stringent investment restrictions
Lack of local support
Holding company (Advantages)
• centralized management, employment, marketing and distribution
• balance foreign exchange within the group
• R&D, buy-sell distribution and systems integration, technical training, test marketing and holding shares
Holding Company (Qualifications)
• registered capital of the proposed holding company : at least US$30 million
• applicant:
total assets: not less than US$400 million
already established FIEs in China with paid-up capital of more than US$10 million; OR
established more than 10 FIEs with total paid-up capital of more than US$30 million.
Regional Headquarter (Shanghai)
• applicant:
total assets: not less than US$400 million
established FIEs with total paid-up capital of more than US$30 million.
already established or being authorized to manage no less than 3 FIEs in China
• Regional Headquarter can be a holding company or a management company
R&D Center
• Can be a JV, WFOE or a branch of a JV, WFOE
• R&D investment no less than US$2 million
• Staff:Bachelor degree and above no less than 80%
• Training center not included
Establishment of WFOE
• Marketing survey
• Feasibility study report and articles of association
• Certificate of approval
• Business license
You need to entrust a law firm to help you go through all the procedures till you get the business license.
Representative Office
• Non-direct-business-operational institution
• Representing its enterprise
• Engage in liaison services, marketing survey, product introduction and technical exchange for its enterprise
• Establishment: to entrust a law firm to help you get the certificate; for special industries, approval is needed.
Branch Office
• not legal person
• Generally in certain industries such as banking and insurance
• have a representative office in China for over 2 years
• the minimum working capital of the branch office must exceed US$10 million
Time needed for establishment
• Name pre-registration: 7 working days
• Approval (If no pre-approval needed)
In law: within 90 days for EJV and WFOE
within 45 days for CJV
In Practice: generally no more than 30 days
• Registration: generally 15 days
Cost for establishment
• Generally very small cost for approval
• Registration fee:
0.08% of the registered capital if the registered capital is no more than RMB10m
0.04% of the part of the registered capital which is above RMB10m
RMB44,000 for the registered capital is above RMB100m
• Legal service fee
Mergers & Acquisitions (M&A)
• Acquisition of Equity Share in Existing FIE
• Acquisition of Off-shore Vehicle
• M&A Conversion of Domestic Enterprises
• Strategic acquisition of A-share of listed companies
Acquisition of Equity Share in Existing FIE
• registered capital in an existing FIE held by a domestic or foreign investor
• consent of other party(ies)
• pre-emptive right of other party(ies)
• amendment to the Articles of Association
• approval of the FIEs board of directors and authority
Acquisition of Off-shore Vehicle
• PRC law not directly applicable
• No Consents or approvals needed
• good relationships with other party(ies) are the key to the success for CJVs or EJVs
• Use off-shore vehicle as investor:
tax-efficient
Easy exit
M&A Conversion of Domestic Enterprises
• Share Deal
directly acquire an equity interest in an existing domestic enterprise
inject investment into an existing domestic enterprise
• Asset Deal
establish a new FIE to acquire assets of a domestic enterprise
acquire assets to establish a new FIE
Share Deal
• If foreign ownership share is more than 25%, the target domestic company can be converted into a new FIE
• The price should based on the evaluation and be paid in 3 months after the issuance of the business license of the FIE
• The FIE assume the liabilities of the former domestic company
Asset Deal
• The FIE does assume the liabilities of the domestic company
• the domestic company must notify and announce the deal to creditors and creditors are entitled to be guaranteed
• The price should based on the evaluation and be paid in 3 months after the issuance of the business license of the FIE
Strategic acquisition of A-share of listed companies
• Approval of Ministry of Commerce
• Holds at least 10%
• Cannot transfer within 3 years
• Assets: owns no less than US$100m or manages no less than US$500m
Thank you!
Haworth & Lexon
Address: Rm. 2415, China Merchants Tower
No. 161, Lujiazui Road (E)
Shanghai 200120
Tel: 021-68879799
Fax: 021-68878766
Website: www.hllawyers.com
Haworth & Lexon
(This speech is made at China Tax '06 on 8 March, 2006)
相关法律服务
杨春宝一级律师简介
杨春宝一级律师,大成上海高级合伙人、资本市场部主任、国资基金研究中心主任,大成中国区私募基金专业带头人、科技与文化法律研究中心联合牵头人。执业30余年,长期从事私募基金、投融资、并购重组法律服务,尤其对对赌研究颇深且具有非常丰富的实战经验,并专注于金融机构股权投资业务。2004年起多次入选The Legal 500"私募基金"和"公司与商业"等境内外各类律师榜单,代理的中国法院首例适用外国法律审理外国公司的董事损害小股东权益纠纷案入选上海高院发布的《上海法院域外法查明典型案例》和威科先行"要案头条"。入选上海涉外法律人才库、上海市司法局鼎新法治人才库、上海国有企业改制法律顾问团,具有上市公司独立董事任职资格,系多家知名高校的兼职教授或兼职研究生导师及上海市商务委跨国经营人才培训班讲师。出版《私募股权投资基金风险防控操作实务》等16本投融资法律专著。了解更多常见法律问题
外商投资指导目录如何分类管理?
外商投资指导目录是中国对外资准入实施分类管理的核心政策工具,将外商投资项目划分为鼓励类、限制类、禁止类和允许类四大类别。鼓励类主要针对农业新技术、能源交通、高新技术、节能环保以及能够发挥中西部资源优势且符合国家产业政策的项目;限制类通常涉及技术落后、不利于资源节约或环境保护、特定矿产勘探开采以及国家逐步开放领域的项目;禁止类则涵盖危害国家安全或公共利益、污染环境、破坏土地资源、影响军事设施安全以及利用中国特有技术生产产品的项目。未列入前三类的项目原则上属于允许类。此外,产品全部直接出口的允许类项目可视为鼓励类,限制类项目中出口比例超过70%的经批准可视为允许类。这一分类机制直接影响外资能否进入特定行业以及可享受的审批待遇,投资者在立项前必须准确判断项目所属类别。
中外合资经营企业有哪些法律特征?
中外合资经营企业简称合资企业,其法律特征主要体现在组织形式、资本结构与治理规则三方面。在组织形式上,合资企业通常采用有限责任公司形式,依法取得中国法人资格,需同时具备中方和外方投资者,且外方持股比例不得低于注册资本的25%。在资本结构上,合资各方按照认缴的注册资本比例分享利润并分担亏损,股权比例是决定控制权和收益分配的基础。在治理规则上,合资企业设立董事会作为最高权力机构,重大事项需经全体一致同意,日常经营由总经理负责。与契约式合作企业不同,合资企业的权利义务严格依照股权比例确定,而非通过合同自由约定。实践中,合资企业适合对中国市场尚不熟悉的外国投资者,也适用于某些要求中方参与的特殊行业。设立合资企业需要完成市场调研、选择中方伙伴、谈判签约、编制可行性研究报告及章程、取得批准证书并办理工商登记等程序,每个环节均涉及法律文件起草和行政审批。
外商独资企业与代表处有何区别?
外商独资企业是依据中国法律在中国境内设立的全部资本由外国投资者拥有的企业,通常为有限责任公司,具有独立法人资格,能够直接从事生产经营活动,在管理控制、知识产权保护和终止清算方面更具灵活性。相比之下,代表处是非直接从事经营活动的机构,其职能仅限于为其境外企业开展联络、市场调研、产品介绍和技术交流等非经营性活动,不具有独立法人资格,也不能以自身名义签订商业合同或开展盈利性业务。外商独资企业的设立条件相对严格,需满足产业准入要求,且设立程序包括市场调查、编制可行性报告、制定章程、取得批准证书并领取营业执照,整个流程通常需要委托律师事务所协助办理。代表处的设立程序则相对简化,一般需委托律所取得批准证书,特殊行业还需额外审批。两者在法律责任承担上也有本质区别,外商独资企业以其全部资产独立承担责任,而代表处的民事责任最终由其境外总公司承担。投资者若计划长期开展实质性业务,应选择外商独资企业,若仅需市场联络与形象展示,则设立代表处更为经济便捷。
以上内容仅供参考,不构成法律意见。如需专业法律服务,请联系杨春宝一级律师:chambers.yang@dentons.cn




