Viewpoints from Kaizen

(The procedures described below apply to registration of Wholly Foreign Owned Enterprises, Sino-Foreign Equity Joint Ventures, Sino-Foreign Cooperative Joint Ventures.) The establishment of foreign investment enterprises consists of three phases: (1) approval of the project proposal, feasibility study report, Joint Venture Contract and Articles of Association; (2) registration with the AIC; and (3) post-establishment procedures. APPROVAL PHASE All foreign investment projects are subject to approval by government authorities. The major legal documents involved in this phase are the project proposal, feasibility study report Joint Venture Contract and Articles of Association. Relevant Chinese laws provide that a joint venture agreement should also be executed and submitted to the Chinese government authorities. However, as a practical matter, the joint venture agreement has been abolished. For joint venture projects relating to infrastructure construction, the project proposal and feasibility study should be submitted to the State Development Planning Committee or its local counterparts for […]

A foreign-invested enterprise located in Guangdong province shall abide by relevant state and provincial labor management regulations in recruitment. 1. Recruitment of local staff For recruitment of staff, the enterprise shall carry out relevant formalities with local labor and social security authorities against the business license issued by the administration of industrial and commercial registration. For the recruitment of staff locally or within other places of Guangdong Province, the enterprises are permitted to decide the place, number and conditions; For the recruitment of staff from other provinces, the enterprises shall apply to the labor and social security authorities of county and above level for ratification. It is prohibited to recruit persons under 16 years old. A recruit shall, apart from effective identification document, holds other relevant documents according to registration statues: I. An urban resident who lives within the city or county where the enterprise is located shall hold an […]

Foreign-invested enterprises shall approach to the insurance institutions established within the territory of China to buy insurance policies in accordance with the Insurance Law of the People’s Republic of China. Major Insurance Items Transportation insurance for import and export commodities (sea, land, and air transportation). This shall be covered for the duration of shipment when foreign equipment or materials are imported, or domestic products are exported. The seller o~ buyer shall cover the insurance policy according to goods value as provided for in the trade contract. In principle, imported or exported goods shall be covered by local insurance companies if possible. Construction and installation projects insurance, this is t (be covered for new or expansion projects of construction (e.g. factory building) or equipment installation for the duration o: construction. Property insurance. When the operation starts, building equipment, raw materials, finished and semi-finished product shall be covered for the duration of […]

1. Foreign Exchange Registrations and Foreign Exchange Account Within 30 days of obtaining the Enterprise Legal Person Business License of the People’s Republic of China, the enterprise shall present the State Administration of Exchange Control or its branches (hereinafter referred to as AECs) with the following documentation (duplicate or photocopy) to go through foreign exchange registration formalities and to obtain the Foreign-Invested Enterprises Foreign Exchange Registration Certificate” (hereinafter referred to as the “Registration Certificate”):the approval documentation by examining and approving authorities, feasibility study report, business license issued by State Industrial and Commercial Administrative Department and other materials needed by the AECs. When having gone through foreign exchange registration formalities, the enterprise can go to the designated foreign exchange bank in the place where the enterprise is registered to open the foreign exchange capital account, the foreign exchange balance account and other special-purposed foreign exchange accounts upon presentation of the “Registration […]

Upon issuing of the business license, a foreign-invested enterprise shall go to the local finance authorities for financial registration against relevant documents. The provincial authority is the Department of Finance of Guangdong Province. There are finance bureaus in the cities as well as counties. 1. Registration upon Commencement of Business The foreign-invested enterprises shall apply to the financial authorities for financial registration within 30 days after the industrial and commercial registration and present the following documents: A. A photocopy of the approval of establishment; B. The enterprise’s contract or agreement, articles of association, (duplicate) and their respective approval documents; C. A photocopy/duplicate of the business license; D. The feasibility study and its approval document; E. Other relevant documents (e.g. leasing contract for land, factory premises or equipment, certificate of investment in the forms of land of patent right, other certificates for transfer of state assets or capital, and regulations of […]

Overseas residents who come to Guangdong for field studies, business talks, factory management, employment, technical consultations or other economic activities in connection with a foreign invested enterprise, processing or assembling for export purpose, or compensation trade, shall abide by entry and exit procedures. 1. Entry formalities for nationals of countries with which China has diplomatic relations Businessmen from countries with which China has diplomatic relations may apply for approval of entry and exit through the Department of Foreign Trade and Economic Cooperation of Guangdong Province, while specific formalities shall be handled by the receiving establishment. The approved invitation shall be issued to the entrant through the receiving establishment. The entrant shall go to a Chinese embassy or consulate, or the visa office of China’s Ministry of Foreign Affairs in Hong Kong and Macao for visa against the invitation. 2. Entry formalities for nationals of countries with which China has no […]

1. Import and Export Commodities Inspection All the import and export commodities under “the Catalogue of Import and Export Commodities to be Implemented Statutory Inspection and Quarantine by the Entry and Exit Inspection and Quarantine Authorities” (hereunder called The Commodities Catalogue), as well as those stipulated by other laws and provisions, must be presented to the entry and exit inspection and quarantine authorities or their entrusted inspection organizations for statutory inspection. If the imported goods subject to statutory inspection have not been inspected, they are not allowed to be sold or used; if the export goods have not passed the inspection, they are not allowed to be exported. The contents of the statutory inspection of import and export goods include quality, specification, quantity, weight, packaging, safety and sanitation, etc. 2. The Safety and Quality Permits for Imported Commodities For the import of the Commodities that are highly concerned with safety, […]

Upon receipt of a business license and approval by the local AEC, the foreign-invested enterprises shall open a foreign exchange account and carry out other banking formalities with a bank entitled to foreign exchange operations against relevant documents. 1. Opening of Foreign Exchange Account and outward Remittance by a foreign -invested enterprise I. A foreign exchange account shall be opened against the following documents: the approval documents and certificates for establishment of the foreign-invested enterprises; the Note of Opening Accounts and the Foreign Exchange Registration Certificate for foreign-invested enterprises issued by AEC; an application for opening such an account by the foreign-invested enterprises; business license, legal person ID code certificate, contract and articles of association. II. Outward remittance of payments for imported goods, materials and equipment shall be made against the following documents: Import contract, import exchange payment writing-off certificate, invoice, and original customs declaration form and original bill of […]

The shareholder’s right of first refusal is established based on the attribute of combination of people of the limited liability companies, and the purpose is to maintain the trust relationship between the shareholders. The direct legal basis is Article 71 and Article 72 of the Company Law of the People’s Republic of China. That is, unless otherwise provided in the Articles of Association of the company, where a shareholder transfers its equity interests to a person other than the shareholder, it shall notify the other shareholders in writing of the transfer of equity interests and seek their consent. Under the same conditions, other shareholders have the right of first refusal. When a people’s court transfers the equity interests of a shareholder pursuant to the enforcement procedures stipulated in law, it shall notify the company and all shareholders, and other shareholders shall have the right of first refusal under the same […]