The webinar named “Setting
up a company in Mainland China” organized by KTEO, PolyU on 23rd Mar
2023. Ms. Sandy Chui (Attorney at-Law, Guanghe Law Firm) was the guest speaker.
Her topics mainly covered General Company Law of PRC, Legal Representative,
Wholly Foreign-owned Enterprise (WFOE) and Hong Kong Company in GBA.
Firstly, Ms. Sandy Chui
introduced different types of company in China including Sole Proprietorship,
Partnership, Limited Company and Franchising Company. Franchising required at
least two direct shops and matured operation with trademark, etc.
Then she explained the
Foreign Investment Law of the PRC (外商投資法). Where “foreign investment” means the investing
activities within China directly or indirectly conducted by foreign natural
persons, enterprises, and other organizations, including all the business mode
mentioned above. And then she summarized the characteristics among different
types of business.
After that she mentioned
the Company Law of PRC (民法典 - 公司法). Capital contributions could be included cash,
assets, IP, technology or land use right, etc. It is no need to contribute registered
capital immediately that depends on your plan.
Ms. Chui also explained that
shareholders hold >67% of the shares and have absolute controlling rights.
Shareholder call up >25% of the shares that could hold irregular meeting.
For directors, they should hold >34% have controlling rights of company and
>25% could hold irregular meeting.
Finally, she discussed the
concept of legal representative. Legal representative is assigned to nature
people but not company. Legal representative would have risk including liable
to compensation due to deliberate acts or serious faults, joint responsibility
of withdrawing capital, administrative responsibility, coercive measures, and
criminal liability, etc. If you didn’t take those risks, you could only be
shareholder.
Lastly, she also explained
Wholly Foreign Owned Enterprise (WFOE). Three key advantages are mentioned
including Autonomy, Legal Status, Revenue and Remittance.
At the end, Ms. Sandy Chui
introduced the profit tax to 15% and exceed profit enjoying free taxation to
income from new foreign direct investment. There is different policy in
Guangzhou-Nansha, Zhuhai-Hengqin, Shenzhen-Qianhai, etc.
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