China equity joint venture incorporation service
Hotline: 86-755-82143348, Email:amyhuang@citilinkia.com
Global Branches of ATAHK Group Limited
ATAHK adopts syndicated operations, chain management, global coalition and one-stop services. It has set up directly-owned or cooperative service branches in all popular cities of the world. Major directly-owned service branches include those in Hong Kong, Shenzhen, Beijing, Guangzhou, Shanghai, Nanjing, Chengdu, Quanzhou, Fujian, Yiwu, London, Delaware, San Francisco, Silicon Valley, Kuala Lumpur, Paris France, Berlin Germany, Labuan, Apia Samoa, Victoria Seychelles, Seoul South Korea, etc. Investors are welcome to contact one of the above branches for business consultation.
Step Description for China equity joint venture
(1)Obtaining the necessary work permits and resident permits for the legal representatives, etc.
(2)Obtaining approval and relevant certificate by Foreign Economic and Trade Bureau
(3)Researching and obtaining approval for the company name of JVE from Industrial and commercial registration office.
(4)Obtaining approval or certificates from various authorities such as the Planning Bureau, the Foreign Economic and Trade Bureau, the Industrial And Commercial Registration Office, the Statistics Bureau, the National Taxation Administration Bureau, the Local Taxation Administration Bureau, the Public Security Department, the Environmental Protection Bureau. the foreign Exchange Administration Bureau and the Customs etc.
(5)Opening necessary bank accounts, obtaining a report of corporate capital verification issued by a Chinese certified public accountant (CPA). Be ready with the original copy for check-up.
(6)Obtaining the necessary work permits and resident permits for the legal representatives, etc.
Equity joint ventures --- China equity joint venture
Equity joint ventures are the second most common manner in which foreign companies enter the China market and the preferred manner for cooperation where the Chinese government and Chinese businesses are concerned. Joint ventures are usually established to exploit the market knowledge, preferential market treatment, and manufacturing capability of the Chinese side along with the technology, manufacturing know-how, and marketing experience of the foreign partner.
Normally operation of a joint venture is limited to a fixed period of time from thirty to fifty years. In some cases an unlimited period of operation can be approved, especially when the transfer of advanced technology is involved. Profit and risk sharing in a joint venture are proportionate to the equity of each partner in the joint venture, except in cases of a breach of the joint venture contract.
Share holdings in a joint venture are usually non-negotiable and cannot be transferred without approval from the Chinese government. Investors are restricted from withdrawing registered capital during the live of the joint venture contract. Regulations surrounding the transfer of shares with only the approval of the board of directors and without approval from government authorities will probably evolve over time as the size and number of international joint ventures grow.
There are specific requirements for the management structure of a joint venture but either party can hold the position as chairman of the board of directors. A minimum of 25% of the capital must be contributed by the foreign partner(s). There is no minimum investment for the Chinese partner(s).
It is preferable that foreign exchange accounts are balanced in order to remit profits abroad so that the repatriated foreign exchange is offset by exports from the joint venture. With the elimination of foreign exchange certificates and the further opening of the China market, this requirement is becoming more and more relaxed.
The permissible debt to equity ratio of a joint venture is regulated depending on the size of the joint venture. In situations where the sum of debt and equity is less than US$ 3 million, equity must constitute 70% of the total investment. In joint ventures where the sum of the debt and equity is more than US$ 3 million but less than US$ 10 million, equity must constitute at least half of the total investment. In cases where the sum of the debt and equity is more than US$ 10 million but less than US$ 30 million, 40% of the total investment must be in the form of equity. When the total investment exceeds US$ 30 million, at least a third of the sum of the debt and equity must be equity.
Equity can include cash, buildings, equipment, materials, intellectual property rights, and land-use rights but cannot include labor. The value of any equipment, materials, intellectual property rights, or land-use rights must be approved by government authorities before the joint venture can be approved.
After a joint venture is registered, the entity is considered a Chinese legal entity and must abide by all Chinese laws. As a Chinese legal entity, a joint venture is free to hire Chinese nationals without the interference from government employment industries as long as they abide by Chinese labor law. Joint ventures are also able to purchase land and build their own buildings, privileges prevented to representative offices.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143348, or emailing to amyhuang@citilinkia.com.