Terms of Building a Company in China

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Regulation of the Minister of Foreign Trade and Economic Cooperation Number 1 of 1995, amended by Decree of the Minister of Trade concerning Amendments to Several Regulations and Normative Documents on October 28, 2015.

Chapter 1 To further expand international economic and technological cooperation and exchange, introduce foreign capital and promote the development of the socialist commodity economy, foreign enterprises, enterprises, and other economic organizations or individuals (hereinafter referred to as foreign shareholders) may, by the principle of equality and mutual benefit, cooperate with Chinese enterprises, enterprises or other economic organizations (hereinafter referred to as Chinese shareholders) jointly establish a foreign investment company limited by shares (hereinafter referred to as enterprises) within China.

Chapter 2 What is meant by “foreign company limited by shares” as referred to in this Regulation is one which is established according to this Regulation, with all capital consisting of shares of the same value, the shareholders are responsible for the company with the share participation. by them, and the company is responsible for the company’s debts with all its properties, Chinese and foreign shareholders jointly hold the company’s shares. Corporate legal entities whose shares are purchased and held by foreign shareholders account for more than 25% of the company’s registered capital.

chapter 3 A company is a form of a foreign investment company, and the provisions of relevant national laws and regulations concerning foreign investment companies shall apply.

chapter 4 The establishment of a company must comply with state regulations regarding the industrial policy of foreign investment companies. The state encourages the establishment of technologically advanced production enterprises

chapter 5 Companies can be established through initiation or fundraising.

chapter 6 A company established by way of sponsorship, in addition to meeting the requirements for promoters as regulated in the Company Law, at least one of the promoters must be a foreign shareholder.

For a company incorporated by way of offering, in addition to meeting the requirements in the previous paragraph, at least one of its promoters must also have a record of sustained profitability in the three years before the share offering. Chinese shareholders must provide information about their registration in China for the last three years Financial accounting reports are audited by accountants; if the sponsor is a foreign shareholder, financial statements are audited by a certified public accountant at the foreign shareholder’s place of residence must be provided.

chapter 7 The transfer of promoter shares is carried out 3 years after the establishment and registration of the company and must be approved by the original inspection and approval authority of the company.

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