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Company Laws in China --- Establishing a Company, Branch Office in China

Company Laws in China --- Establishing a Company, Branch Office in China. Prof. GAO yongfu Shanghai University of International Business and Economics May 16-17, 2013. Company Laws in China --- Establishing a Company, Branch Office in China. 1. To Know the Company Laws in China

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Company Laws in China --- Establishing a Company, Branch Office in China

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  1. Company Laws in China--- Establishing a Company, Branch Office in China Prof. GAO yongfu Shanghai University of International Business and Economics May 16-17, 2013

  2. Company Laws in China--- Establishing a Company, Branch Office in China • 1. To Know the Company Laws in China • 2. What Kind of Company Do You Want to Establish? • 3. How to Establish a Company Wholly-owned by Yourself? • 4. How to Establish a Joint-venture Company? • 5. How to Establish a Financial Company?

  3. 1. To Know the Company Laws in China • Company Law of the PRC • Law of the PRC onChinese-foreign Equity Joint Ventures • Law of the PRC on Chinese-Foreign Contractual Joint Ventures • Law of the PRC on Foreign-capital Enterprises •  Regulations of the PRC on Administration of Registration of Companies

  4. 1. To Know the Company Laws in China • Administrative License Law of the PRC • Commercial Banking Law of the PRC • Insurance Law of the PRC • Securities Law of the PRC • Measures on the Administration of Foreign-capital Financial Institutions’ Representative Offices in China

  5. 2. What Kind of Company Do You Want to Establish? • A limited liability company or a joint stock company limited ? • A manufacturing company or a financial company ? • Catalogue for the Guidance of Foreign Investment Industries (Amended in 2011) and China’s Commitments in GATS of the WTO • A Joint-venture Company or a Company Wholly-owned by Yourself? • A Company, or a Branch Office?

  6. 3. How to Establish a Company Wholly-owned by Yourself? • The Law • Advantage and Disadvantage • Basic Requirements • Procedures

  7. 3. How to Establish a Company Wholly-owned by Yourself? • The Law • Company Law of the PRC • Law of the PRC on Foreign-capital Enterprises • China’s Commitments in GATS of the WTO

  8. 3. How to Establish a Company Wholly-owned by Yourself? • Advantage • Making decisions by yourself • Wholly control • Disadvantage • More risks • Less familiar with the investment environments • Prohibited by law

  9. 3. How to Establish a Company Wholly-owned by Yourself? • Basic Requirements • To help the development of China's national economy. • To encourage the establishment of foreign-capital enterprises that are export-oriented or technologically advanced. • Enterprises with foreign capital shall abide by Chinese laws and regulations and may not engage in any activities detrimental to China's public interests.

  10. 3. How to Establish a Company Wholly-owned by Yourself? • Procedures • Making the application • Examination and approval by the government department • The authorities in charge shall decide whether or not to grant approval within 90 days • Applying to the administrative department for industry and commerce for registration in order to obtain a business license.

  11. 4. How to Establish a Joint-venture Company? • The Law • Advantage and Disadvantage • Basic Requirements • Procedures

  12. 4. How to Establish a Joint-venture Company? • The Law • Company Law of the PRC • Law of the PRC onChinese-foreign Equity Joint Ventures • Law of the PRC on Chinese-Foreign Contractual Joint Ventures • China’s Commitments in GATS of the WTO

  13. 4. How to Establish a Joint-venture Company? • Advantage • Familiar with the invest environments • Fast progress • Share the risks • Disadvantage • More time needed • More disputes possible

  14. 4. How to Establish a Joint-venture Company? • Basic Requirements • The joint venture agreement, contract and articles of association shall be submitted to the State's competent department for examination and approval. • An joint venture shall take the form of a limited liability company. • The proportion of the foreign joint venture's investment in a joint venture shall be, in general, not less than 25 percent of its registered capital. • An equity joint venture shall have a board of directors

  15. 4. How to Establish a Joint-venture Company? • Procedures • Making the application • Examination and approval by the government department • The authorities in charge shall decide whether or not to grant approval within 90 days • Applying to the administrative department for industry and commerce for registration in order to obtain a business license.

  16. 5. How to Establish a Financial Company? • The Law • Characteristics • Basic Requirements • Procedures

  17. 5. How to Establish a Financial Company? • The Law • Company Law of the PRC • Commercial Banking Law of the PRC • Insurance Law of the PRC • Securities Law of the PRC • Measures on the Administration of Foreign-capital Financial Institutions’ Representative Offices in China • China’s Commitments in GATS of the WTO

  18. 5. How to Establish a Financial Company? • Characteristics • Very important in economic development of a country • More restriction • High requirements • Restricted national treatment • Commitments made by oneself

  19. 5. How to Establish a Commercial Bank? • Basic Requirements • The establishment of a commercial bank shall require the examination and approval by the People's Bank of China. • The establishment of a commercial bank shall satisfy the following requirements： • 　　（1） having its statute in pursuance of this Law and the Company Law of the People's Republic of China； • 　　（2） having the minimum registered capital defined by this Law；

  20. 5. How to Establish a Commercial Bank? • Basic Requirements • 　　（3） having chairman of directors （president）， general manager and other senior managerial personnel with expertise and professional experience required by their positions； • 　　（4） having complete organization and management； • 　　（5） having up-to-standard business site， safety measures and other facilities relevant with the business thereof.

  21. 5. How to Establish a Commercial Bank? • Procedures • The applicant shall apply to the People's Bank of China for the establishment of a commercial bank by submitting the documents and information listed below： • 　　（1） an application for the establishment of a commercial bank， specifying the name， location， registered capital and business scope of the bank thereof； • 　　（2） a feasibility study report； • 　　（3） other documents and information required by the People's Bank of China.

  22. 5. How to Establish a Commercial Bank? • Procedures • The applicant shall fill a formal application form and submit the documents and information listed below： • 　　（1） a draft of the statute of the commercial bank to be established； • 　　（2） qualification documents of the senior managerial staff to be employed； • 　　（3） a certificate of capital confirmation from a legitimate capital confirmation authority； • 　　（4） a list of the names， capital contributions and shares of the share holders of the commercial bank；

  23. 5. How to Establish a Commercial Bank? • Procedures • 　　（5） credit certificate and other relevant information of the share holders， each holding more than ten percent of the registered capital of the commercial bank； • 　　（6） the guideline and plan for the operation of the commercial bank； • 　　（7） information of the business site， safety measures and other facilities relevant with the business of the commercial bank； • 　　（8） other documents and information required by the People's Bank of China.

  24. 5. How to Establish a Insurance Company? • Basic Requirements • The establishment of an insurance company is subject to the approval of the financial supervision and regulation department. • To establish an insurance company, the following are required: •   1.Articles of Association in compliance with this Law and the Company Law; • 2.a minimum registered capital as prescribed in this Law;

  25. 5. How to Establish a Insurance Company? • Basic Requirements •  3.senior management with professional knowledge and operational experience; •   4. a sound organizational structure and management systems; and •   5. business premises and other facilities commensurate with an insurance business in compliance with relevant operational requirements.

  26. 5. How to Establish a Insurance Company? • Procedures The applicant shall submit the following documents and materials: • 1. a formal application letter for the establishment of an insurance company on which the name, registered capital and the scope of business of the proposed insurance company shall be specified; • 2. a feasibility study report; and • 3. other documents and information requested by the financial supervision and regulation department.

  27. 5. How to Establish a Insurance Company? • Applicants shall submit a completed form of formal application form together with the following documents: • 1. the Articles of Association of the company; • 2. a list of shareholders and their shares; • 3. a certificate of the credit standing and relevant information of those shareholders holding more than ten (10) percent of the company's shares; • 4. a certificate verifying the paid-up capital issued by a legally authorized institution; • 5. resumes and evidence of qualification of the proposed senior management;

  28. 5. How to Establish a Insurance Company? • 6. operation strategy and business plan; • 7. details of business premises ; and • 8. other documents and information requested by the financial supervision and regulation department. •  The financial supervision and regulation department shall make a decision approving or disapproving the application, within six (6) months. • An insurance company shall be issued an insurance license by the approving department and obtain a business license from the Bureau of Administration for Industry and Commerce.

  29. 5. How to Establish a Security Company? • Basic Requirements • The establishment of a securities company must be examined and approved by the State Council's securities regulatory body. • Dividing securities companies into two: comprehensive securities companies and brokerage securities companies.

  30. 5. How to Establish a Security Company? • Basic Requirements • The establishment of a comprehensive securities company must conform with the following requirements: • (1) A minimum registered capital of 500 million yuan; • (2) Qualified managerial personnel and employees; • (3) A fixed operational site and up to standard trading facilities; • (4) A perfect management system and a standard operational system for its business and brokers. • A brokerage securities company must have a minimum registered capital of 50 million yuan.

  31. 5. How to Establish a Security Company? • Procedures • The applicant shall apply to the State Council's securities regulatory body. • Being examined and approved by the State Council's securities regulatory body. • Issuing an securities license by the approving department . • Obtaining a business license from the Bureau of Administration for Industry and Commerce.

  32. Thanks • for your attention

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