Investment Policies & Relevant Regulations
Q10: What organization
is responsible for the examination and approval of Sino-foreign
funded financial institutions?
The application will be submitted to the General Office of the People's
Bank of China for approval after its first examination by the Shanghai
Branch of the People's Bank of China.
Q11: Are there any differences
between cooperative enterprises and joint ventures?
The main difference between cooperative enterprises and joint ventures
lies in the fact that shares are not calculated merely by capital
and that profit is divided not according to the proportion of shares
but according to the investment-distribution ratio based on the
content.
Q12: How does a Sino-foreign
joint venture divide its profit?
The profit is divided according to the proportion of each party's
investment to the total capital.
Q13: How does a Sino-foreign
cooperative enterprise divide its profit?
The profit or product is divided, and risk and loss are shared according
to the agreement in the contract.
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Q14: What if the contract
of a Sino-foreign joint venture which has already been signed conflicts
with the newly promulgated law?
The contracts carried out inside the border of China, such as that
of Sino-foreign joint ventures, of Sion-foreign cooperative enterprises
and of Sino-foreign collectively exploring and developing natural
resources, can still be carried out according to the contract even
if there is a new law.
Q15: What are the regulations
on foreign investor's proportion in a jointly invested or solely
foreign-funded enterprise?
A foreign investor's investment can not be less than 25% of the
registered capital in a Sino-foreign joint venture.
Q16: What is the lowest
investment quota of overseas businessmen in a jointly invested or
solely foreign-funded enterprise?
The lowest investment of an overseas businessman in a Sino-foreign
joint venture or a wholly foreign-invested enterprise shall be no
less than USD 200,000 and that in a foreign funded enterprise shall
be no less than USD 200,000.
Q17: By what means
of forms can a Sino-foreign joint venture pay the investment?
Each party of the joint venture can invest by means of either money
or other things that can be evaluated in terms of money like buildings,
machinery, materials, industrial property right, know-how and land-using
right. Each party cannot draw back its capital within the term of
joint venture.
Q18: Are there any
regulations stipulating the time limit of investment?
Sino-foreign joint ventures: each party of the joint venture shall
include in the contract the timing of investment and shall pay its
capital before the deadline drawn up in the contract. The enterprise
shall, according to the related provisions, issue a certificate
of receiving the amount of investment, which shall be handed over
to both the original authoritative office and ICAB.
If the investment capital is required to be paid off at one time,
each party of the joint venture shall pay it off within six months
after the issue of the business license. If the investment capital
is paid up by installment, each party of the joint venture shall
pay no less than 15% of the total investment within three months
after the issue of the business license.
The failure of either party of the joint venture to pay off the
investment capital before the deadline means self-dismissal of the
joint venture and invalidity of the enterprise's approval certificate.
The joint venture shall have it written off at ICAB and hand in
the business license for cancellation. If not, the ICAB shall withdraw
the enterprise's business license and make it known to the public.
Sino-foreign cooperative enterprises: Chinese and foreign partners
shall carry out their duties of paying off all the investment capital
and offering cooperation in accordance with laws, regulations and
contract. If any party cannot fulfil its duty beyond the time limit,
the ICAB has the right to set a deadline; if it still hasn't fulfilled
its duty when the deadline is due, the authoritative office for
approval and ICAB shall handle it according to the relevant regulations.
Q19: What shall be
done if the foreign party wants to withdraw its shares?
(1) The board of directors shall decide to terminate the joint venture
ahead of schedule;
(2) The joint venture shall work out its liquidation account according
to the regulations;
(3) The property after liquidation shall be allocated to each party
according to the proportion of their investments.
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