DoingBusinessinChina–recentdevelopments.pptVIP

Doing Business in China – recent developments Vivienne Bath Senior Lecturer and Director of the Centre for Asian and Pacific Law Legislative change Proliferation of new legislation post-WTO accession Significant new legislative developments in the corporate and business sector over the last year Themes: modernisation of corporate legislation; introduction of bankruptcy regime; possible step back from totally open-door policy for foreign investment Legislation Changes to Company Law and Securities Law 2005 New Bankruptcy Law 2006 Changes to mergers and acquisitions regime 2006 Draft anti-monopoly law – 2007? Amendments to Criminal Law 2006 Proposed changes to Trademark Law, Patent Law, draft Property Law, draft Labour Contract Law Company Law First effective 1 July, 1994 Most recently amended 2005, effective 1 January 2006 Deals with Limited liability companies Joint stock companies (companies limited by shares) Foreign investment enterprises, except to extent FIE laws otherwise provide Limited liability companies – changes to capitalisation Registered capital, not shares Minimum amount RMB30,000 ($5,000) May be paid over 2 years (5 for an investment company) Must pay in 20% or statutory minimum amount as initial contribution May be paid in cash (at least 30%), in kind, in IPR, land use rights or other non-monetary contributions One shareholder companies now possible Flexibility to nominate legal representative Implications for Foreign Investors Limited liability companies for Chinese investors only Now referred to as “foreign invested companies” (FICs), with numerous sub-classifications Single shareholder rules apply to WFOEs with one shareholder Provisions relating to capital contributions apply to FICs Implications for Foreign Investors Previous limit on investing more than 50% of assets removed Requirement for FICs to go through special procedure to invest in Chinese companies also removed Shareholder rights Duties of shareholders (Art 20) Controlling sharehol