The new Company Law will be officially implemented on July 1, 2024, resulting in many enterprises starting to deal with capital reduction matters. Kaizen has summarized the following issues to pay attention to during the capital reduction process for clients' reference.
All foreign invested enterprises (FIEs) registered in China shall complete annual compliance procedures as required by laws and regulations of the PRC. It is crucial to be aware of the relevant deadlines as failure to complete these procedures on time may result in fines and penalties.
Foreign invested enterprises (FIEs) incorporated in China may repatriate profits from China when they have generated profits. However, China’s mainland maintains strict controls on foreign exchange. Repatriation of profits from China will be tightly regulated. Before profits repatriation, the FIE shall satisfy certain conditions and complete certain procedures, which are listed as follows.
The State Council issued Decree No. 734 on January 19, 2021, amending and passing the "Provisions on the Administration of Enterprise Name Registration", which has implemented on March 1, 2021.The executive meeting of the State Council has made extensive revisions to the " Provisions on the Administration of Enterprise Name Registration", and the main revised clauses are now extracted for clients’ reference.
The National Development and Reform Commission, Ministry of Commerce publicly issued Decree No. 38 on December 28, 2020, issuing the full text of the Catalogue of Encouraged Industries for Foreign Investment (2020 Edition), which comes into effect on January 27, 2021. The Catalogue of Encouraged Industries for Foreign Investment (2019 Edition) shall be repealed at the same time.
Companies registered in Beijing must confirm with the lessor or property owner whether the address allows the company to be registered and used before applying for establishment registration or address change registration. It is illegal to change the use of a property without authorization because the property ownership certificate clearly states its intended use.
On 1 January 2020, the Foreign Investment Law of the PRC came into effect and replaced the Law of the PRC on Chinese-Foreign Equity Joint Ventures, the Law of the PRC on Chinese-Foreign Contractual Joint Ventures and the Law of the PRC on Wholly Foreign Owned Enterprises. Since then, foreign invested enterprises in China are no longer divided into sino-foreign equity joint ventures, sino-foreign contractual joint ventures or wholly foreign owned enterprises.
According the Company Law of the PRC, a joint stock limited company may be established by the way of promotion or stock floatation.Establishment by promotion means that the promoters establish a company by subscribing for all of the shares that should be issued by the company. Where a joint stock limited company is established by promotion, the promoters shall
The key roles in a China company include the director, supervisor, general manager and other senior management personnel of the company. The Company Law of the PRC has set forth their qualifications and obligations in a separate sector. Kaizen hereby summarizes the provisions as follows for your easy reference.
The shareholders of a China company are allowed to freely agree on the amount of the subscribed capital and term of capital contribution under the subscribed registered capital system as stipulated in the Company Law of the PRC. If the term of capital contribution of the shareholders has not expired, is it possible for the company creditors to ask for the accelerated expiry of shareholders’ capital contribution obligation so as to realize their creditor rights?