| Investment Procedures of Shanghai Minhang ETDZ |
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2007-09-06 |
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(Firstly)Several kinds of forms of foreigner invested in Minhang ETDZ
1.Chinese-foreign equity joint venture (hereinafter referred to as equity joint venture)
An equity joint venture is an incorporated company of limited liabilities which, after being approved by the Chinese government according to the Chinese laws, is established in China between a foreign corporation, enterprise and other economic entity or individuals and a Chinese company, enterprise, or other economic entities on the basis of equity and mutual benefit. Both parties shall make investment in the enterprise according to the proportion mutually agreed upon and shall jointly manage the enterprise, bear risks, share profits and losses. According to " The Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment", an equity joint venture established in China is a Chinese legal person under the jurisdiction and protection of the Chinese laws. Foreign parties shall contribute not less than 25% of the registered capital. Both parties may contribute their investment in the forms of cash, buildings, factory premises, equipment facilities or other materials, industrial properties, know how and land use right. They cannot withdraw their capital within the duration of the joint venture.ª¥
In the management of the equity joint venture, the general manager assumes responsibility under the leadership of the board of directors. The board of directors is vested with the highest authority and shall decide all major issues relating to the joint venture.ª¥
2.Chinese-foreign cooperative joint venture-namely, contractual joint venture (hereinafter referred to as cooperative joint venture)
A cooperative joint venture refers to an economic organization which, upon approval by the Chinese government, is established between a foreign enterprise, economic entity or individuals and a Chinese enterprise or other economic entities in China, according to " The Law on Chinese-foreign Cooperative Joint Ventures" and based on a contract which stipulates the rights and obligations of each party.
The contract shall include articles on the terms of investment and cooperation, distribution of profits or products, sharing of risks and losses, way of management, and ownership of properties when the cooperative joint venture winds up. A cooperative joint venture can be structured either as a cooperative enterprise which enjoys the status of an independent legal person, or as a contractual project. The enterprise or the project approved is under the protection and jurisdiction of the Chinese law.ª¥
The Chinese party contributes land, natural resources, labour and labour services, existing buildings, equipment and facilities, while the foreign party provides funds, technology, essential equipment and materials. The major difference between a cooperative joint venture and an equity join venture is that the share of capital may not necessarily be measured in monetary terms and profit is not necessarily shared in proportion to the ratio of investment. In fact, profits are shared according to the form of investment and the ratio of sharing is stipulated in the contract.ª¥
3.Enterprise operated exclusively with foreign capital (hereinafter referred to as wholly foreign-owned enterprise)
A wholly foreign-owned enterprise is an enterprise established exclusively by a foreign corporation, enterprise, other economic entity or individuals in China according to " The Law of the People's Republic of China on Enterprise Operated Exclusively with Foreign Capital" and approved by the Chinese government. It does not include branches set up in China by a foreign corporation, enterprise or other economic entity.ª¥
A wholly foreign-owned enterprise should be able to help foster the development of China's national economy, use advanced technology and equipment, or export all or most of their products.ª¥
A wholly foreign-owned enterprise is a legal person according to the Chinese law. The investment made by foreign investors in the territory of China, foreign investors' profits as well as other rights and interests are protected by the Chinese laws. When wholly foreign-owned enterprises are operated in lined with their rules of associations which have been approved by the Chinese government, their operations shall not be interfered with.
(Secondly)Procedure for Establishment of Equity Joint Ventures Cooperative Joint Ventures and Wholly Foreign-owned Enterprise
Shanghai Foreign Investment Commission (hereinafter referred to as SFIC) and its entrusted people's government at district or county level, the relevant industrial bureaus or the economic and technological development zones shall be responsible for the examination and approval of foreign-invested projects except those stipulated to be examined by the competent departments of the State Council. Authorized by SFIC, the Project Examination and Approval Office of Shanghai Minhang Economic and Technological Development Zone (hereinafter referred to as PEAO Minhang Zone) can examine and approve the projects which are within the limitation of restricted investment and manage wholly foreign-owned enterprises registered in the Zone
Any manufacturing project with total investment of over US$ 30 million, and other projects which need to be approved by the competent department of the State Council, shall be preliminarily examined by SFIC jointly with all related departments of Shanghai before submitted to competent departments of the State Council for examination and approval.
PEAO Minhang Zone and SFIC shall be responsible for examination and approval of the manufacturing projects with total amount of investment under US$ 30 million.
Procedures for establishment of equity joint venture and cooperative joint venture
1.Preparing and presenting project proposal
Chinese or foreign investors may choose their partners through various ways. Those who intend to invest in Minhang Economic and Technological Development Zone may choose their partners through Shanghai Minhang United Development Co., Ltd. (hereinafter referred to as SMUDC). After they have known well of the counterpart's business scope and credibility, and reached an agreement of cooperation, the Chinese party shall work out a project proposal and present it to the examination and approval authority. Duplicates of the project proposal shall be sent to relevant departments. The examination and approval authority shall give a reply (approval or disapproval) within 20 days on receipt of the proposal.ª¥
The Chinese party shall apply to Shanghai Administrative Bureau for Industry and Commerce for enterprises' name registration after getting a positive reply.
2.Preparing and submitting feasibility study report
After the project proposal is approved, the Chinese and foreign partners shall jointly prepare a feasibility study report covering items such as financing, site selecting, technological process, equipment, raw material supply, market survey, economic results, foreign exchange balance, infrastructure facilities, etc. Meanwhile, problems, if there are any, can be presented to the examination and approval authority for help.ª¥
The examination and approval authority shall make a decision within 15 days after receiving the report, or at the time when the contract and articles of association are examined and approved.
For projects with construction and production conditions matured, and the project proposal detailed enough to meet the requirements of a feasibility study report, at the request of Chinese and foreign partners and the approval of SFIC or PEAO Minhang Zone, the approved project proposal is allowed to be used as the feasibility study report as well.ª¥
3.Submitting the contract and articles of association
While the Chinese and foreign partners are preparing the feasibility study report, they may also draw up the contract and approval authority by the Chinese party. The examination and approval authority shall give a reply (approval or disapproval) within 30 days on receipt of the feasibility study report, contract and articles of association.ª¥
4.Application for the issuance of the approval certificate
After the feasibility study report, contract and articles of association are approved, the Chinese party shall apply for the issuance of the approval certificate to the examination and approval authority.
SFIC shall issue the approval certificate within 7 days upon receipt of the application.ª¥
5.Application for the business license
The Chinese and foreign parties may register with Shanghai Administrative Bureau for Industry and Commerce within 30 days after receiving the approval certificate and apply for the business license. Shanghai Administrative Bureau for Industry and Commerce shall issue the business license within 15 days for those projects approved by the examination and approval authority of Shanghai.
The enterprise is deemed as established on the date when the business license is issued. Customs registration, tax registration, opening bank accounts for both foreign exchange and RMB and recruit employees shall then be executed against the business license of the company.ª¥
Procedures for establishment of wholly foreign-owned enterprise
For establishing an enterprise operated exclusively with foreign capital, the foreign investor is required to entrust the authorized consultative bodies or agencies with the tasks of application and documents submission for approval. The foreign investor who wants to invest in Minhang Economic and Technological Development Zone can also entrust SMUDC as its consultative agency. The entrusted agency, after receiving the letter of entrustment, shall submit project proposal in accordance with the intention of foreign investor to PEAO Minhang Zone.
For the rest of the procedures in this regard, please refer to the procedures for the establishment of equity joint ventures and those for the establishment of cooperative joint ventures.
(Thirdly) Required contents of the project proposal for a manufacturing joint venture of Chinese foreign investment
General description of the Chinese partner, including :name of the Chinese partner, business situation, legal address, legal representative, position, and superior administration.
Purpose of joint venture : emphasizing on the necessity and possibility of generation of foreign exchange as well as acquisition of technology.
General description of the foreign partner, including : name of the foreign partner, business situation, registered country, legal address, name of legal representative, position and nationality.
Scope and scale of joint venture : territory of marketing, selection of products and future development.
Investment appraisal, which comprises the total sum of fixed and working capital.
Form of investment and source of funds, it comprises the proportion of each party.
Production technology and main equipment.
Quantity and sources of main raw materials, water, electricity, and gas supply.
Number of personnel, its structure and source.
Economic benefit, emphasizing on the balance of foreign exchange.
Duration of joint venture.ª¥
Appendices:
£¨ 1 £© Letter of intent of both partners;
£¨ 2 £© Investigation of credibility of the foreign investor;
£¨ 3 £© Business licenses of both partners.
(Fourthly) Required for the Procedure
For manufacturing project with an investment under US$ 30million |
| Procedure |
Documents required |
| Submitting project proposal for approval |
Financial credit certificate
Letter of intent (Letter of entrustment for wholly foreign-owned enterprises
Project proposal compiled by Chinese party
Papers certifying the legal status of both parties issued by respective authorities |
| Registration of the name of the venture with SABIC |
Application letter for the name registration
Application form for the name registration
Project proposal and approval documents
Papers certifying the legal status of both parties issued by respective authorities (All the above documents should be in duplicate) |
| Submitting contract, articles of association and feasibility study report for approval |
Approved project proposal
Feasibility study report compiled by both parties
Contract and articles of association signed by both parties (only articles of association for wholly foreign-owned enterprises)
A name list of members of the board of directors and seniorª¤management personnel
Papers certifying the legal status of both parties issued by respective authorities
Approval document of asset assessment |
| Application for the issuance of approval certificate with SFIC |
Chinese party's application letter for approval certificate
Papers certifying the legal status of both parties issued by respective authorities
project proposal with approval document
Approved feasibility study report, contract and articles of associationª¤with other relevant documents
A name list of the members of the board of directors, senior management personnel together with appointment documents |
| Application for the issuance of business license with SABIC |
Application for registration signed and application registration form filled in by Chairman and vice Chairman
The copy of approval certificate by Shanghai municipal government
contract, constitution, agreement, feasibility study report and their respective approval of a Chinese-foreign equity joint venture
Name list of members of the board of directors and advanced management personnel (including the power of attorney of Chinese and foreign parties ), the identification paper of Chinese partner from former institution, the identity card or the passport copy of the foreign partner, the legal open certificate and the capital credit of their respective country or region government
Certificate of the right to use the site for operation(if not submitted when applying for enterprise name registration ), approval notice of enterprise name registration | |
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(Fifthly) Required Contents for the Feasibility Study Report of a Manufactureing Joint Venture Chinese and Foreign Investment
*General description
£¨ 1 £© Name of the joint venture, legal address, purpose, scope of business and its scale.
£¨ 2 £© Name of the partners, registered country, legal address, name, position, and nationality of the legal representative. State the superior administration of Chinese partner.
£¨ 3 £© Total investment of the joint venture, its registered capital, (self-owned fund, investment proportion, form of investment, term of honoring the investment), ratio of profit and loss sharing of both parties.ª¥
£¨ 4 £© Term of the joint venture.
£¨ 5 £© Approval certificate of project proposal.
£¨ 6 £© List of persons responsible for preparing the feasibility study report.
£¨ 7 £© Summary and conclusion of the feasibility study report including problems, issues and suggestions.
*Plans of production and their basis. Explain the demand of the market both at home and abroad and how the market survey is carried out. Also explain similar facilities already existing or being built at home and abroad.
*Source of raw materials, stating the amount needed and purchase channels.
*Selection of the location of the project and the reason thereof amount of water, electricity and communication facilities needed and present situation.ª¥
Selection of the equipment and the process of manufacturing, and their reason thereof. (including classified list of domestic and imported equipment.)
*Organizational structure of the joint venture and its reason, including total number, composition and recruiting sources of employees, departments to be established, and management.ª¥
*Environmental protection, labour safety, health care and their
*Mode of construction, time schedule, and their reason.
*Method of raising funds which include building and equipment as capital investment and their calculation.
*Arrangement of foreign exchange balance, and its reason, stating the percentage of export of its products.ª¥
*Composite analysis (including economic, technical, financial and legal analysis) of benefit and foreign exchange revenue and expenditure using dynamic, risk, or sensitivity method.ª¥
*Appendices:
£¨ 1 £© Written comment on planned selection of the site and the letter of intent substantiating supply of utilities;
£¨ 2 £© Certificates of legal representative of both partners;
£¨ 3 £© Annual financial reports including balance sheets and profit and loss statements of each partner;
£¨ 4 £© Opinions of relevant superior administration on the fund to be contributed by the Chinese partner;ª¥
£¨ 5 £© A form of report approved, describing how the project will affect its surrounding environment.
Appendix 2: Institutions Handling the Procedures and Documents Required
* Get Official Seal Engraved : This is handled in Shanghai Public Security Bureau. Address: 185 Fuzhou Rd. Tel: 62402338. Zip Code: 200002. Required documents: the original business license and its copy, letter of introduction, the applicants I. D. Card. Letter of introduction is prepared by the Chinese partner of the equity or contractual joint venture, or by the agent of the wholly foreign-owned enterprise.
* Apply for Foreign Exchange Business Certificate : This is handled in Shanghai Administrative Bureau of Foreign Exchange, its address: 2F, 18 Lujiazui Rd. Tel: 58845000. Required documents: the copy of business license, the copies of F.S., contract, articles of association and approval certificate issued by Shanghai Municipal Government.
* Open the Foreign Exchange and RMB Account: The enterprise may choose the bank according to its own requirement. Required documents when opening RMB account: the copies of business license, approval certificate, letter of entrust signed by the chairman concerning account opening, filling in the application form, filling in the seal specimen card. Required documents when opening foreign exchange account: the copy of business license, the foreign exchange business certificate letter of entrust signed by the legal representative concerning the account-opening, application letter, filling in the seal specimen card.
* Tax Registration : For a joint venture whose Chinese partner is directly under the jurisdiction of Shanghai Municipality or a solely foreign invested enterprise whose total investment is over USD 5 million, it is handled in Shanghai Taxation Bureau, Foreign Taxation Sub-bureau. Address: 2F, West Wing Building, Guo Xin Business Mansion, 31 Jiangguo Rd (M.). Zip Code: 200025. Tel: 64459814. For a joint venture whose Chinese partner is under the jurisdiction of a district or a county or a solely foreign invested enterprise whose total investment is under USD 5 million, it is handled in the local district or county taxation bureau.
Required documents for tax registration: copy of business license, copy of approval certificate, copy of I. D. card of the legal representative, copy of approval of project proposal, copy of tax registration card of the Chinese partner, contract, articles of association, bank account, names of board of directors and tax registration form.
* Customs Registration : This is handled in Shanghai Customs House. Address: 28 Jinling Rd. (west).Zip Code:200021. Tel:6387380 £¿ . Required documents: copy of business license, copies of approval certificate, contract, articles of association, tax registration card (Enterprise located in Minhang Development Zone may go to the Customs House of development zones).
* Registration for Commodity Inspection : This is handled in Inspection Department, Shanghai Inspection Bureau of Import and Export Commodity. Its address: 3F, 13 Zhongshan Road (E1). Tel: 63211285. Required documents: copy of business license, feasibility study report, contract, articles of association, approval certificate, application form for commodity inspection. Export enterprise should also apply for the preferential treatment registration for export products.
* Procedure of Employment of Workers : For enterprises registered in the municipality, it is handled through the administrative office of foreign invested enterprises, Shanghai Labour Bureau. Address: 865 Zhongshan Road (S.). Zip Code: 200011. Tel: 63689900.
* Procedure for Overseas Personnel to Get Employment in Shanghai: : (1) Foreigners: Enterprises which employ non-resident foreigners (Who get F. L. G. C. visas) must apply to Foreigner Employment Administration Office, Shanghai Labour Bureau to get work permits.ª¥
(2) Compatriots from Taiwan, Hongkong, and Macau: Enterprises must apply to Employment Administration Office for Compatriots from Taiwan, Hongkong and Macau, Shanghai labour Bureau to get work permits.
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SOURCE:invest in china
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