105
[ESTABLISHING A BUSINESS ENTITY IN CHINA]
that it meets the restrictive requirements set forth in the negative list (for example, the foreign investor can only hold minority percentage of equity in the business entity). The assessment of whether a proposed business is prohibited, restricted, or permitted; and if restricted, what requirements apply, can be complicated. It is highly recommended that the foreign investor consult a legal counsel in advance in this regard. The introduction below focuses on the establishment of an FIE that does not fall within the negative list. Also, the formation of a new FIE by a foreign investor and the investment in an existing FIE by a foreign investor require similar procedures. The below discussion does not specifically distinguish between the two. a) Registration with the AMR Although the registration of an enterprise is under the unified administration of the State Administration for Market Regulation, the foreign investor shall keep in mind that the relevant AMR where the FIE will be domiciled may have its own nuanced requirements regarding the application documents and procedures. In general, the application package shall include an application form, the AOA signed by all the shareholders, the appointment documents for all required positions, and identity documents of the legal representative, the directors, the supervisors and the manager, and the incorporation certificate (or its equivalent) or identity document of each investor, etc. To date, almost all local AMRs administer the application process online through its online system (“ AMR System ”), but local AMRs may still require original copies or
photocopies to be submitted onsite for FIE. After the registration application is approved, the AMR will issue a business license to the FIE which evidences its due formation. b) Reporting to MOFCOM As mentioned in the recital, MOFCOM is responsible for regulating the admission of foreign investment. While a foreign investor applies to the relevant AMR for business registration, it shall submit a report to MOFCOM regarding the proposed foreign investment. To ease the burden on foreign investors, instead of a separate reporting procedure, now the reporting to MOFCOM may be completed through the AMR System, where MOFCOM will collect and review information regarding the proposed foreign investment. For the purpose of reporting to MOFCOM, the basic information of the FIE (such as its name, registered office, type, industry involved, business scope, registered capital, senior managers, etc.), as well as the basic information of its investors (such as place of establishment, place of funds source, subscribed and paid-in capital, ultimate controller, etc.) shall be submitted through the report form on the AMR System. If the foreign investor is making the investment by acquiring interests from an existing shareholder of the enterprise, it will need to submit additional information regarding the proposed transaction and the parties to the
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator