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
外商投资产业指导目录如何分类管理?
中国对外商投资实行产业准入管理,核心依据是《外商投资产业指导目录》,其将投资项目划分为鼓励类、限制类、禁止类和允许类四大类别。鼓励类项目涵盖现代农业技术、能源交通、高新技术、节能环保以及中西部优势资源开发等领域,此类项目通常享有税收优惠或审批便利。限制类项目主要包括技术落后、不利于资源节约或环境保护、涉及特定矿产保护性开采以及国家逐步开放的行业,需满足额外的审批条件。禁止类项目涉及危害国家安全、公共利益、污染环境、破坏资源、占用耕地、损害军事设施安全或使用中国特有技术生产产品的情形,一律不得外商投资。未列入前三个类别的项目自动视为允许类,且允许类项目中产品全部直接出口的,可视为鼓励类;限制类项目若出口比例超过70%,经批准可视为允许类。这种分类管理体现了国家产业政策导向与对外开放的阶段性安排,投资者需首先确认拟投资项目所属类别,以判断可行性与审批路径。
中外合资经营企业与合作经营企业有何区别?
中外合资经营企业与中外合作经营企业均属于外商投资企业形式,但两者在法律性质与运作机制上存在显著差异。合资企业即股权式合营,采取有限责任公司形式,具备中国法人资格,中外投资者共同出资,外方持股比例一般不低于25%,利润与亏损按注册资本中的出资比例分配,治理结构以董事会为核心决策机构。合作企业即契约式合营,可以设立为法人型企业或非法人型合伙企业,双方不按出资比例而依合同约定投入资本、分配收益或产品并分担风险,中方投资者通常获得固定收益,经营管理可由一方(实践中多为外方)负责,灵活性更高。合作企业还有一个特殊安排,即外方在合作期限内先行回收投资后,合作期满时企业净资产可无偿归中方所有,资本回收经财税部门批准可在税前进行。合资企业模式更利于长期稳定合作,适合对外国法律环境不太熟悉的投资者;合作企业则适合短期项目或需快速回收投资的情形。投资者应结合项目特点、控制权需求、利润分配偏好及退出安排综合选择,并注意合同条款务必清晰约定各自权利义务。
设立外商独资企业有哪些优势与限制?
外商独资企业即由外国投资者全额出资设立的企业,通常采用有限责任公司形式。其优势十分明显:第一,管理灵活,外国股东可完全掌握决策权,避免合资中的文化冲突与沟通成本;第二,知识产权保护更加有力,技术秘密和商业秘密不因中方合作者参与而外泄;第三,企业终止程序相对简便,无需处理复杂的合资清算问题;第四,便于实施全球统一的管理模式和财务制度。但独资形式也存在劣势,最为突出的是受到更严格的产业准入限制,许多行业明确要求中方控股或不允许外商独资;此外,缺乏中方合作者的本地资源支持,在行政审批、市场开拓、政府关系处理方面可能面临更多困难。设立流程包括市场调研、编制可行性研究报告与公司章程、向商务部门申请批准证书,再办理营业执照,整个过程可委托律师事务所代办。审批法定期限一般为自受理之日起90天,实际操作中约30天内可完成,注册费用按注册资本比例收取。投资者若选择独资模式,应提前核查拟从事行业是否允许外商独资,并充分评估本地化运营能力。
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




