When incorporating in China, it is important to have an understanding of the country's legal framework. China introduced a new Company Law on 1 January 2006, streamlining procedures for investors and entrepreneurs planning on incorporating in China. Healy Consultants' experience of Chinese Company Law is invaluable to Clients who are considering incorporating in China, and the following information provides a guide to the most relevant areas of China Company Law in relation to incorporating in China:
1. When incorporating in China, note that the minimum registered capital requirement for a limited liability company (which includes a Wholly-Owned Foreign Enterprise (WOFE) or Foreign-Invested Commercial Enterprise (FICE)) is Rmb30,000 (US$3,750).
2. When incorporating in China, note that a domestic limited liability company requires just one shareholder. This type of entity requires a minimum registered capital of Rmb100,000 (approximately US$12,500).
3. When incorporating in China, note that the capital can now be paid in installments within two years, as opposed to in a lump sum.
4. When incorporating in China, note that cash contributions to a Company must account for at least 30% of capital, and can also include in-kind contributions, industrial property and land use rights.
5. When incorporating in China, note that a shareholder in a Chinese entity can request that the company repurchases their shares if they oppose a merger or acquisition, if they oppose the disposal of major assets, and if the Company does not distribute dividends for five years running (if it has earned profit for those five years).
6. When incorporating in China, note that though foreign-based companies may continue to establish and maintain representative offices in China, Foreign-Invested Commercial Enterprises (FICEs) that qualify as companies under the revised Company Law may not establish new representative offices.
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