Prof. GAO yongfu Shanghai University of International Business and Economics May 16-17, 2013

Company Laws in China --- Establishing a Company, Branch Office in China 1. To Know the Company Laws in China 2. What Kind of Company Do You Want to Establish? 3. How to Establish a Company Wholly-owned by Yourself? 4. How to Establish a Joint-venture Company? 5. How to Establish a Financial Company?

1. To Know the Company Laws in China Company Law of the PRC Law of the PRC on Chinese-foreign Equity Joint Ventures Law of the PRC on Chinese-Foreign Contractual Joint Ventures Law of the PRC on Foreign-capital Enterprises Regulations of the PRC on Administration of Registration of Companies

1. To Know the Company Laws in China Administrative License Law of the PRC Commercial Banking Law of the PRC Insurance Law of the PRC Securities Law of the PRC Measures on the Administration of Foreign-capital Financial Institutions’ Representative Offices in China

2. What Kind of Company Do You Want to Establish? A limited liability company or a joint stock company limited ? A manufacturing company or a financial company ? Catalogue for the Guidance of Foreign Investment Industries (Amended in 2011) and China’s Commitments in GATS of the WTO A Joint-venture Company or a Company Wholly-owned by Yourself? A Company, or a Branch Office?

3. How to Establish a Company Wholly-owned by Yourself? The Law Advantage and Disadvantage Basic Requirements Procedures

3. How to Establish a Company Wholly-owned by Yourself? The Law Company Law of the PRC Law of the PRC on Foreign-capital Enterprises China’s Commitments in GATS of the WTO

3. How to Establish a Company Wholly-owned by Yourself? Advantage Making decisions by yourself Wholly control Disadvantage More risks Less familiar with the investment environments Prohibited by law

3. How to Establish a Company Wholly-owned by Yourself? Basic Requirements To help the development of China's national economy. To encourage the establishment of foreign-capital enterprises that are export-oriented or technologically advanced. Enterprises with foreign capital shall abide by Chinese laws and regulations and may not engage in any activities detrimental to China's public interests.

3. How to Establish a Company Wholly-owned by Yourself? Procedures Making the application Examination and approval by the government department The authorities in charge shall decide whether or not to grant approval within 90 days Applying to the administrative department for industry and commerce for registration in order to obtain a business license.

4. How to Establish a Joint- venture Company? The Law Advantage and Disadvantage Basic Requirements Procedures

4. How to Establish a Joint- venture Company? The Law Company Law of the PRC Law of the PRC on Chinese-foreign Equity Joint Ventures Law of the PRC on Chinese-Foreign Contractual Joint Ventures China’s Commitments in GATS of the WTO

4. How to Establish a Joint- venture Company? Advantage Familiar with the invest environments Fast progress Share the risks Disadvantage More time needed More disputes possible

4. How to Establish a Joint- venture Company? Basic Requirements The joint venture agreement, contract and articles of association shall be submitted to the State's competent department for examination and approval. An joint venture shall take the form of a limited liability company. The proportion of the foreign joint venture's investment in a joint venture shall be, in general, not less than 25 percent of its registered capital. An equity joint venture shall have a board of directors

4. How to Establish a Joint- venture Company? Procedures Making the application Examination and approval by the government department The authorities in charge shall decide whether or not to grant approval within 90 days Applying to the administrative department for industry and commerce for registration in order to obtain a business license.

5. How to Establish a Financial Company? The Law Characteristics Basic Requirements Procedures

5. How to Establish a Financial Company? The Law Company Law of the PRC Commercial Banking Law of the PRC Insurance Law of the PRC Securities Law of the PRC Measures on the Administration of Foreign- capital Financial Institutions’ Representative Offices in China China’s Commitments in GATS of the WTO

5. How to Establish a Financial Company? Characteristics Very important in economic development of a country More restriction High requirements Restricted national treatment Commitments made by oneself

5. How to Establish a Commercial Bank? Basic Requirements The establishment of a commercial bank shall require the examination and approval by the People's Bank of China. The establishment of a commercial bank shall satisfy the following requirements ： （ 1 ） having its statute in pursuance of this Law and the Company Law of the People's Republic of China ； （ 2 ） having the minimum registered capital defined by this Law ；

5. How to Establish a Commercial Bank? Basic Requirements （ 3 ） having chairman of directors （ president ）， general manager and other senior managerial personnel with expertise and professional experience required by their positions ； （ 4 ） having complete organization and management ； （ 5 ） having up-to-standard business site ， safety measures and other facilities relevant with the business thereof.

5. How to Establish a Commercial Bank? Procedures The applicant shall apply to the People's Bank of China for the establishment of a commercial bank by submitting the documents and information listed below ： （ 1 ） an application for the establishment of a commercial bank ， specifying the name ， location ， registered capital and business scope of the bank thereof ； （ 2 ） a feasibility study report ； （ 3 ） other documents and information required by the People's Bank of China.

5. How to Establish a Commercial Bank? Procedures The applicant shall fill a formal application form and submit the documents and information listed below ： （ 1 ） a draft of the statute of the commercial bank to be established ； （ 2 ） qualification documents of the senior managerial staff to be employed ； （ 3 ） a certificate of capital confirmation from a legitimate capital confirmation authority ； （ 4 ） a list of the names ， capital contributions and shares of the share holders of the commercial bank ；

5. How to Establish a Commercial Bank? Procedures （ 5 ） credit certificate and other relevant information of the share holders ， each holding more than ten percent of the registered capital of the commercial bank ； （ 6 ） the guideline and plan for the operation of the commercial bank ； （ 7 ） information of the business site ， safety measures and other facilities relevant with the business of the commercial bank ； （ 8 ） other documents and information required by the People's Bank of China.

5. How to Establish a Insurance Company? Basic Requirements The establishment of an insurance company is subject to the approval of the financial supervision and regulation department. To establish an insurance company, the following are required: 1. Articles of Association in compliance with this Law and the Company Law; 2. a minimum registered capital as prescribed in this Law;

5. How to Establish a Insurance Company? Basic Requirements 3. senior management with professional knowledge and operational experience; 4. a sound organizational structure and management systems; and 5. business premises and other facilities commensurate with an insurance business in compliance with relevant operational requirements.

5. How to Establish a Insurance Company? Procedures The applicant shall submit the following documents and materials: 1. a formal application letter for the establishment of an insurance company on which the name, registered capital and the scope of business of the proposed insurance company shall be specified; 2. a feasibility study report; and 3. other documents and information requested by the financial supervision and regulation department.

5. How to Establish a Insurance Company? Applicants shall submit a completed form of formal application form together with the following documents: 1. the Articles of Association of the company; 2. a list of shareholders and their shares; 3. a certificate of the credit standing and relevant information of those shareholders holding more than ten (10) percent of the company's shares; 4. a certificate verifying the paid-up capital issued by a legally authorized institution; 5. resumes and evidence of qualification of the proposed senior management;

5. How to Establish a Insurance Company? 6. operation strategy and business plan; 7. details of business premises ; and 8. other documents and information requested by the financial supervision and regulation department. The financial supervision and regulation department shall make a decision approving or disapproving the application, within six (6) months. An insurance company shall be issued an insurance license by the approving department and obtain a business license from the Bureau of Administration for Industry and Commerce.

5. How to Establish a Security Company? Basic Requirements The establishment of a securities company must be examined and approved by the State Council's securities regulatory body. Dividing securities companies into two: comprehensive securities companies and brokerage securities companies.

5. How to Establish a Security Company? Basic Requirements The establishment of a comprehensive securities company must conform with the following requirements: (1) A minimum registered capital of 500 million yuan; (2) Qualified managerial personnel and employees; (3) A fixed operational site and up to standard trading facilities; (4) A perfect management system and a standard operational system for its business and brokers. A brokerage securities company must have a minimum registered capital of 50 million yuan.

5. How to Establish a Security Company? Procedures The applicant shall apply to the State Council's securities regulatory body. Being examined and approved by the State Council's securities regulatory body. Issuing an securities license by the approving department. Obtaining a business license from the Bureau of Administration for Industry and Commerce.

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