JV Registration
Written by jayshaw   

JV Introduction

Establishing Steps

Checklist for Clients

 

JV Introduction

Foreign-invested joint venture (JV) is the enterprise that foreign companies, enterprise and other economic organizations or individuals (hereinafter referred to as “foreign investors”) to establish equity joint venture together with Chinese companies, enterprise and other economic organizations (hereinafter referred to as “Chinese partners”) within the territory of the People's Republic of China, on the principle of equality and subject to approval by the Chinese Government. Both parties to the venture shall share the profits, risks and losses in proportion to their contributions to the registered capital. Remarkably, Chinese individuals are not qualified to invest in the JV. On the other hand, a minimum of 25% of the capital must be contributed by the foreign partner(s). There is no minimum share-holding percentage of investment for the Chinese partner(s). Share holdings in a joint venture are usually non-negotiable and cannot be transferred without approval from the Chinese government. Similarly, investors are restricted from withdrawing registered capital during the existence of the joint venture contract.

JV is the second most common manner in which foreign companies enter the China market. Chinese government encourages foreign investors to use this form of company in order to obtain exposure to advanced technology and new management skills. In return, foreign investors can enjoy low labour costs, low production costs and a potentially large Chinese market share. Joint Ventures are sometimes the only way to register in China if a certain business activity is still controlled by the government. e.g. Restaurants, Bars, Building and Construction, Car Production, Cosmetics etc.

The capital contribution 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 JV is registered, it 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, thus enabling JV especially attractive for foreign investors who are interested in purchase real estate properties in China in term of Chinese ever increasing restriction on foreign capital fluid to China geared to real estate industry.

As a form of business associations, Chinese government applies the same tax policy of WFOE to JV.

Establishing Steps

  • Step 1: Name Registration with local State Administration for Industry and Commerce (SAIC)

  • Step 2:Pre-approval from local government authorities concerned if business scope entails such pre-approval

  • Step 3: Certificate of Approval by local Ministry Of Commerce

  • Step 4: Apply for temporary Business License with local SAIC

  • Step 5: Chops made by Public Security Bureau (PSB)

  • Step 6: Organization Code License by local Bureau of Quality and Technical Supervision (BQTS)

  • Step 7: Tax Certificate by Taxation Bureau

  • Step 8: Registration and Approval with State Administration of Foreign Exchange (SAFE)

  • Step 9: Open Foreign Currency and RMB bank account

  • Step 10: Inject Capital from investor’s overseas bank account

  • Step 11: Capital Verification Report by Certified Public Accountant (CPA)

  • Step 12: Applying for Permanent Business License with SAIC

  • Step 13: Financial certificate Registration with Ministry of Finance

  • Step 14: Statistics license Registration with local National Bureau of Statistics

 

Checklist for Clients

1. Five optional company names and business scope description

2. 2x foreign investor's ID certified by Chinese Embassy

For corporate investor, the certified document including:

  • Business license

  • Investor’s shareholder list

  • BOD member list

  • Authorization resolution on signing representative

  • The photocopy of the signing representative’s ID

 

For individual investor, certified ID photocopy

For individual investor who is living in China need not fulfill ID certification

3. Chinese company’s photocopy of business license stamped by its official seal

4. a photocopy of JV Contract

5. 2x Bank Reference Letters from investor’s bank to declare a good standing

6. Letter of Appointment signed by both Chinese and foreign investors with photocopies of ID of related persons:

  • BOD members

  • Chairperson of BOD

  • General Manager

  • Supervisors

 

7. JV legal representative's CV and 8 photos

 


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