Type of Organisations
Foreign Investment Enterprises in China
Foreign Investment Enterprises (“FIE”) refer to enterprises established under Chinese law using foreign investment, which constitutes an important form of utilizing international private direct investment. Chinese law fails to expressly define the concept of FIE. The-term "FIE" is loosely referred to in Chinese laws and regulations. Literally an FIE refers to an enterprise with foreign investment. However, as a legal concept, the concept of FIE is more complicated than the above literal understanding.
According to current Chinese law, FIEs are divided into four categories: Sino-foreign equity joint ventures ("EJV") , Sino-foreign co-operative joint ventures ("CJV"), wholly foreign owned enterprises ("WFOE") and foreign investment companies limited by shares ("FICLBS").
(1) Equity Joint Venture (EJV)
An EJV is formed jointly by at least one Chinese investor and at least one foreign investor in accordance with the Sino-foreign Equity Joint Venture Law and other relevant laws and regulations. Foreign companies, enterprises, other economic organizations and individuals may act as foreign investors. Chinese companies, enterprises and other economic organizations may act as Chinese investors. The Chinese investors and the foreign investors should enter into a Joint Venture Contract and contribute capital subscribed by them as set forth in the Joint Venture Contract. The investors share profits and losses pursuant to the ratio of capital subscribed by them. The capital subscribed by the foreign investors should not be less than 25% of the registered capital. More Information and Formation Costs...
A CJV is formed jointly by at least one Chinese investor and at least one foreign investor in accordance with Chinese laws and regulations. Foreign companies enterprises, other economic organizations and individuals may act as foreign investors. Chinese companies, enterprises and other economic organizations may act as Chinese investors. The investors contribute capital or provide cooperation conditions to the CJV as set forth in a cooperative joint venture contract between the Chinese and foreign investors. Their respective rights and obligations are set forth in the cooperative joint venture contract.
The registered capital of a Wholly Foreign Owned Enterprise (WFOE) should be subscribed and contributed solely by foreign investors. A WFOE does not include branches established in China by foreign enterprises and other foreign economic organizations. The Chinese Laws on Wholly Foreign Owned Enterprises does not have a clear definition of the term "branches". The term "branches" should include both the branch companies engaged in operational activities and representative offices, which are generally not engaged in direct business activities. Therefore, branches and representative offices set up by foreign enterprises are not WFOE. More Information...
Procedures and Documents Required ; Formation Costs
A FICLBS refers to an enterprise legal person established pursuant to the Tentative Provisions of MOFTEC on Several Issues Regarding the Establishment of Foreign Investment Companies Limited by Shares. The total capital of a FICLBS should be divided into shares of equal amount. The shareholders of a FICLBS should bear liabilities to the FICLBS to the extent of the capital they subscribed. A FICLBS shall bear liability for the debts of the FICLBS within the limit of their assets. Both Chinese and foreign shareholders jointly hold the shares of the FICLBS. The shares purchased and held by foreign shareholders should account for over 25% of the capital of the FICLBS.
Introduction to Representative Office
Legal status of Representative Office
Business scope of Representative Office
Authorities of Chief Representative
Procedures for setting up Representative Office
- Step 1 : Examination and Approval Procedures
- Step 2 : Registration Procedures
Summary of set up procedures and documents required for RO
RO Formation Costs