1 An Introduction to Asia – the Mokko case September 13 th, 2012 Caroline Berube Managing Partner Guangzhou Shanghai Singapore

2 Contents 1.Introduction 2.Mokko – a Singapore or HK entity? 3.Mokko – a RO or a WOFE? 1.Types of Legal Entities in China 2.Contract Law 3.Intellectual Property Rights 4.Labor and Employment Laws 5.Question & Answer Session Guangzhou Shanghai Singapore

3 A Singapore or Hong Kong entity? 1.Easy to set up – 5 days! 2.International Tax system – Double Tax Treaty Agreement 3.Income Tax 4.Tax advantages – the first 3 years 5.Intellectual Property – PCT and Paris Convention 6.Arbitration 7.Media city 8.Bank account – Standard Chartered Guangzhou Shanghai Singapore

4 Types of Legal Entities in China - Mokko (1/2) Representative Office (RO) – Not a legal entity – can only serve as a liaison between overseas parent company and the Chinese market; – Cannot conduct business activities – ie sales, manufacturing, etc; – Quickest and easiest way to establish a market presence in China – Recent changes have restricted their role, as now the parent company must be in existence for two (2) years and the RO must also meet annual filing requirements like other companies Wholly Owned Foreign Enterprise (WOFE) – Most common type of foreign company; – Owned entirely by foreign individual(s) and/or company(ies); – Different types: trading, consulting, manufacturing, etc; – Must meet minimum registered capital requirements which are determined according to the WOFEs industry, location, and business activities; – Subject to annual exam by Chinese authorities Guangzhou Shanghai Singapore

5 Types of Legal Entities (2/2) Joint Venture (JV) – 2 types: Equity JV and Cooperative JV – Equity JV is formal contractual arrangement between foreign party(ies) and Chinese party(ies) – Foreign party must contribute at least 25% of the registered capital; – Cooperative JV is informal arrangement – not necessarily a legal entity – between the parties Guangzhou Shanghai Singapore

6 Contracts Key Elements: – Name of the party (in Chinese); – Legal representative or authorized signatory; – Company seal (chop); – Language – parties can determine the language for most contracts but certain contracts that will be registered with the Chinese authorities – ie JV Agreement, asset transfers – must be drafted in Chinese Main Types of Contracts: – Sale and Purchase Agreement; – Distribution Agreement; – Confidentiality Agreement; and – License Agreement. Guangzhou Shanghai Singapore

7 Intellectual Property Rights These do exist in China! Trademark: – Chinese law follows a first to file system so parties must register early; – Registered trademark valid for ten (10) years from the date of approval and may be extended for additional ten (10) year periods; – Issues with trademark squatting Patents: – Protection depends on type of patent Invention – new technical solution put forward for a product, process, or the improvement thereof; Utility Model – new technical solution that is put forward from the form and/or structure of a product that has a practical utility; Design – a new design of a products shape and/or pattern or the combination of its colors and its shape and/or patter that is aesthetically pleasing and suitable for industrial use – Validity period – duration starts from date of application but the protection only begins from the date of approval Inventions – 20 years Utility Models and Design – 10 years Guangzhou Shanghai Singapore

8 Labor and Employment Laws Social Insurance Law – both Chinese and foreign employees must contribute to the social insurance scheme Labor laws offer significant protection for employees: – Very difficult to fire employees – especially for a foreign company; – Employers must make significant contributions in form of time and money to employees – generous injury benefits, death benefits, maternity leave, etc Non-competition – must pay former employee during the non-compete period for this to remain enforceable – Payment generally ranges from 20% to 60% of the empolyees salary; – Can be enforceable up to two (2) years; – Terms – period, geographic scope, amount, etc – must be specified by the parties in the agreement If company does not have legal entity in China (RO, no presence), can hire workers through FESCO or through independent contractor arrangement Guangzhou Shanghai Singapore

9 Question & Answer session... Thanks for your attention Guangzhou Shanghai Singapore

10 HJM Asia Law & Co LLC Caroline Berube B-1002, R& F Full Square Plaza No. 16 ma Chang Road ZhuJiang New City Guangzhou China Tel: ext. 808 Cell: Guangzhou Shanghai Singapore