Q&A for Foreign Business Practice in China

Q:I come from Malaysia and intend to invest in my friend’s existing company to be a small shareholder (accounting for 10%)， and my friend is engaged in pre-school English teaching materials. I’d like to know how to invest in the company in the premise of not affecting his current business or the status of businAe ss: li Ace jnoisnet. venture may be allowed for your small investment if the company is a domestic company of China. You may refer to the Law of the People，s Republic of China on Foreign-Capital Enterprises and the Rules for the Implementation of the Law of the People’s Republic of China on Foreign-Capital Enterprises and please consult the Several Provisions for the Equity Alteration of Investors of Foreign Investment Enterprises if the company itself is a foreign-invested one. Please consult the local commerce management department for specific formalities.Q:What ways are there to know the laws and regulations related to foreign exchange mAan:a Tgheem laewnst ?and regulations newly released by the State Administration of Foreign Exchange(SAFE) shall be publicized in the column tilted“Policies and Regulations” in the website of the SAFE (www.safe.gov.cn). In addition， the SAFE has organized and formulated the data base of laws and regulations of the Assembly of China Foreign Exchange Management Laws (electronic edition)， covering all the laws and regulations related to foreign exchange management released by the SAFE since the founding of new China and conducted marks on the validness and invalidation of each item. The data base simultaneously also collected the laws related to foreign exchange passed by the NPC， the administrative regulations of the State Council and rules of the People’s Republic of China and other governmental departments， international treaties， conventions， judicial interpretations as well as important data and news data of laws and regulations related to foreign exchange， which is so far the most complete and authoritative laws base in foreign exchange management.Q:Suppose the registered capital applied by a Sino-foreign joint venture (cooperative) enterprise decreases， what does the competent commerce authority mainly review? What materials shall be provided by a Sino-foreign cooperative enterprise? And what does the cAo m:pTehtee napt pcloicmatmione rocfe a lateurath tioonri tsyh amlla bin e lfyil ered vinie twh?e commerce department conducting examination and approval of the enterprise while a Sino-foreign joint venture (cooperative) enterprise applies the alteration of registered capital (increase or decrease of registered capital). The enterprise shall submit the new board resolution， the amendment agreement of the articles of association and the report on alteration of application while applying for alteration. The Sinoforeign joint venture (cooperative) enterprise approved by the Ministry of Commerce or the higher-level commerce management department shall also report to the higher commercial management department for filing. Please consult the local provincial-level foreign economic and trade commission (department) or the commerce bureau for specific information.Q:Shall a Sino-foreign joint venture (cooperative) enterprise conduct import and export trade by holding the Registration Form of Foreign Trade Operator or the Approval Certificate for Foreign-Invested Enterprises while conductiAn g t:heO nimlyp wohrte na nad S ienxop-foorrte itgrand joei nbtu vseinnteusrse? (cooperative) enterprise shall firstly handle the Registration Form of Foreign Trade Operator and all the follow-up formalities (including industry and commerce， alteration of taxation， customs and registration of commerce inspection can it carry out import and export business.Q:Providing that our company has registered a foreign-invested commercial enterprise in a certain province and set up several branches(retail sales of electric appliances) in the same province and whether can branches be set up across China (inclusive of other provinces and cities) with this brand? If not， what formalities sAhall: bTeh eh aapnpdlilceadti?on of a foreign-invested commercial enterprise for the establishment of a branch in other places shall be examined and approved by the provincial-level competent commerce authority where the enterprise is domiciled within its approval authority. Providing that a cross-provincial branch is set up， the enterprise should also seek the opinion of the provincial-level competent commerce authority where the branch is domiciled. Please refer to the Measures for the Administration of the Foreign Investment Commerce Area (No. 8 circular of the Ministry of Commerce in 2004).Q:A Sino-foreign cooperative hospital is presently preparing to alter its Chinese investor. Would you please tell whether there are specific requirements for the registered capital and business scope of the transferee while altering CAh in:eIsne t einrmves soto f ar?lteration of equity of the investors of a foreign-invested enterprise， please refer to the related provisions on printing and distributing the notice concerning the Several Provisions on the Equity Alteration of the Investors of Foreign-Invested Enterprises.Q:What conditions shall be satisfied for setting upAa:nA icnctoerrdniangti oton athl es hreip lepvainng t p arogveisniot ncso pmrepscarinbye?d in the(Interim) Measures for Filing of International Shipping Agent Companies (No. 9 Decree of the MOFCOM， 2005)， any person or entity that intends to conduct international shipping agent businesses shall go through procedures for registration with the administration for commerce and industry in the place where the company to be set up is located and then go through procedures for filing with the competent commercial department in the said place. For details， please read the said Measures.Q:I’m a Hollander and have my own company and business license in the Netherlands. Now， I want to set up an industrial design company in China and employ Chinese industrial designers. What procedAu re:s Yaore u r meaqyu gire o dth aronudg hho pwro tcoe dguor etsh rfoou r grehg?istration in the competent commerce， administration for industry and commerce and tax departments according to the provisions on contents and procedures of registration as provided in the Detailed Rules for Implementation of the Law of the People’s Republic of China on Foreign-invested Enterprises.Q:What are the specific procedures for approval of the establishment of a joint sales and service eAn te:rpTrhisee M?inistry of Commerce and the competent commercial authorities at provincial level conduct the approval of investment of enterprises at abroad， namely， the actions including establishment of non-financial enterprises abroad and acquisition of such rights of ownership， right of control and business management right of the existing non-financial enterprises. The related procedures have been specifically prescribed in the Measures for Overseas Investment Management (Decree No. 5， 2009 of the Ministry of Commerce)， which took effect as of May 1， 2009， please for reference.Q:With respect to the current state，s provisions for foreign equity transfer， does it go through appAr ov:a1l .o Wr air tchh rievsaple cfitli ntog i?ssues concerning the alteration of investors， equities in foreign-funded enterprises， in accordance with the provisions of Article 17 of the Provisions for the Alteration of Investors， Equities in Foreign-Funded Enterprises， the approval authority shall decide whether or not to approve within 30 days upon reception of the full documents submitted as prescribed.2. With respect to the issues concerning the alteration of foreign-funded enterprises， except the application for alteration， copies of certificate of approval， and copies of business license， in accordance with the Implementing Regulations for the Law of the PRC on Sino-foreign Equity Joint Ventures， the Rules for the Implementation of the Law of the PRC on Chinese-foreign Contractual Joint Ventures， the Rules of the Implementation of the Law of the PRC on Foreign- funded Enterprises and related special regulations and rules， such materials as board resolution， agreement on contract modification and agreement on revision of articles shall be submitted for approval.Q:We are a foreign-invested enterprise (an auto distributor). Since we plan to engage in auto renting business， we want to consult issues about relevant laws and regulations and procedures for application. As we have the same business in other places of China， may we ask whether those regulatAions: aSre in caep tphli ecrae bisl en toh rporuog vihsioount C cohnicnear? ning auto renting industry in the Catalogue for the Guidance of Foreign Investment Industries (amended in 2007)， such business is allowed. You may file an application to relevant local departments according to the type of the company that makes such application in accordance with the Detailed Rules for Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Venture， the Detailed Rules for Implementation of the Law of the People’s Republic of China on Sino-foreign Cooperative Joint Venture and the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Foreign-invested Enterprises. The administration of auto renting enterprises shall be subject to local regulations or governmental provisions. If there are no relevant local regulations or governmental provisions， such administration shall be undertaken by local competent transport department. For details， please consult local commercial department， administration for industry and commerce and transport department.Q:If the scale of the fixed-assets of a foreign-invested enterprise exceeds that of the original investment amount due to purchase of equipment with business profits for expanding production capacity， does the enterprise need to alter its registered capital and the total amount of investment?Whether the failure of alteration of the registered capital and the total amount of investment will have any impact on the policies applicable for the fAo rei:gnA-cincv oerdst iendg eton ttehrep rriesele?vant interpretations of the Interim Provisions of the State Administration of Industry and Commerce on the Proportion of Registered Capital and Total Amount of Investment of Sino-Foreign Joint Venture， please refer to the actual situation of your company first and you do not need to alter the registered capital if the original proportion does not exceed. The alteration， if necessary， shall comply with the relevant articles of the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Foreign-invested Enterprises or the Regulations on the Implementation of Law of the People’s Republic of China on Sino-Foreign Joint Venture. Please go through alteration procedures with local administration for industry and commerce.