Chinese Lawyer in Shanghai


A Blog about Chinese Civil and Business Laws Devoted for Foreign Investors and Expats in China

You may say it is crazy to buy Chinese properties esp those first-tiered cities like Shanghai, Beijing, where the expectation of price drop just seems to take hold.  Probably people should wait for some time before the market gets clear where it will be going. Not everybody has that patience. According to a Wall Street Journal article “China buzzards look for property deals“, both foreign and domestic property investors are  [ Read More ]

With China adopting the full authorized capitalization regime in its Company Law (click here for more about China reform on company’s registered capital), there has been a clear trend in the market that companies present a much bigger amount of the registered capital to the public (now through the corporate information registration and publishing system). Under the new rules, the amount of registered capital is left for the decision of shareholders,  [ Read More ]

I have been helping a client dealing constantly with lease disputes. I found that due to lack of basic legal knowledge, tenants can find themselves in very unfavorable position. A typical scenario is like this: in the course of leasing, the tenant decides to cancel the lease and therefor refuses to pay rent and finally may move out of the leased office or residence. But for some reason, the tenant  [ Read More ]

Prohibited and limited sectors in China for foreigners The 12th Five-Year Chinese Plan covering the years 2011-2015 aims to further forge relationships with foreign companies. Although its plan is promising for the development of China, foreigners keep in mind that many economic sectors are prohibited or restricted from entering. Regularly, the Chinese government publishes a list of the prohibited and limited sectors.  This list can be found in the Catalogue for  [ Read More ]

The State Council passed a comprehensive plan to set up a free trade experiment zone in Shanghai on August 26, 2013 [see our analysis of the New Rules for Commercial Factoring in Shanghai Free Trade Zone] . Few months later, how to evaluate the real impact of Shanghai pilot FTZ in China ? The Shanghai FTZ is made up of three extant bonded areas – Yangshan, Waigaoqiao including a logistics park  [ Read More ]

This is a true story.  The question here may well boggle minds of fellow professionals in China. I. Facts of the Case A foreign investor has set up a wholly foreign owned enterprise (“WFOE“) in Shanghai, a limited liability company. The WFOE has a board of directors with three members, and one supervisor. One of the board member, a foreigner, was appointed as general manager who concurrently served as legal  [ Read More ]

[You may wish to download a PDF version of this post, click New Rules for Commercial Factoring in Shanghai Free Trade Zone_140604.] New and detailed rules regarding special treatments for certain industries in China (Shanghai) Pilot Free Trade Zone (the “Shanghai FTZ“) have erupted recently covering quite a number of sectors that may otherwise not be accessible by foreign investors, among which is commercial factoring. According to the website of  [ Read More ]

[You can also download the PDF version for review here Derivative Action_140516] Derivative actions are regarded worldwide as an effective enhancement of corporate governance in terms of protecting shareholders from the misbehaving management of their invested company, and protecting small shareholder from being repressed by controlling shareholders. China adopts this mechanism when overhauling its Company Law in 2006. Article of 151 of China Company Law (revised just recently for reforming registered  [ Read More ]

This is a true case that I am handling. FACTS: A European investor set up a wholly foreign-owned trading company in Shanghai, China as its foothold in China to sell its advanced products. The shareholder appointed three members on the board of directors who are all foreigners with no regular residence in China. One of the director was appointed to serve as the general manager of the WFOE company and  [ Read More ]

I am still working on behalf of a European corporate client to clean up the mess of its invested WFOE in Shanghai caused by the WFOE’s general manager and legal representative. The WFOE has a board of directors and a supervisor as well. The management of the WFOE is left to a general manager who also serves as the legal representative of the WFOE. It seemed that the board fully  [ Read More ]

As part of the China’s big promise of overall reforms, state cabinet announced “Plan on Reforming Registration System of Registered Capital (of Companies)” on February 14, 2014. It is a significant move to inject vitality into Chinese ailing economy, as it lowers the threshold substantially for more ordinary people to embark on building their own business. As these reforms will also apply to foreign investments in China, it is important for  [ Read More ]

My clients, two foreigners, operate a successful restaurant in Shanghai for a few years. They invest in the business but the restaurant was registered in two Chinese persons’ names in order to save time for starting the business. Of course, there is a contract between the two foreigners and the Chinese nominee shareholders. Recently, the two clients are tired of running the catering business, too tiresome, so they decide to  [ Read More ]

As a relatively young country with the concept of rule of law, China has a long way to go before building itself into a ripe rule of law state. In the fundamental field of property laws, there are too many controversies over many legal issues that may well vex a smart mind. A young colleague in our firm discussed his case with me. It is an interesting situation: a piece  [ Read More ]

In advising a client in selling his property outside of Shanghai, I was annoyed by local practice that seems so stupid. I have sold quite a few properties here in Shanghai on behalf of foreign clients over the years. In Shanghai, things can be simple  and straightforward. For example, when a person is registered as a single owner on a title deed of a property, he or she, either national  [ Read More ]

An expat working in Shanghai came to me the other day for advice on his non-competition obligation under his labor contract with in foreign invested company here. The expat was ready to quit the current job and moved forward for a better one. In his contract with the Shanghai employer, he, as a senior manager, was subjected to a non-competition obligation. But the clauses didn’t specify the area or territories  [ Read More ]

This is a stupid question indeed. But it is not a chitchat here on this blawg. I.  Judicial Change from Denial to Affirmation of Validity of Unauthorized Disposal Contract In the not-long past, if anyone (even if your spouse, parents, co-owner) sells your property without your consent, the legal outcome is outright:  the contract underlying the sale is void and the ownership or title cannot be transferred. Section 51 of  [ Read More ]

One of my clients, a bank, has approached me for advice on a dispute involving factoring financing with a trade company in Shanghai. It is a domestic factoring dispute. The amount of money involved is huge and I devoted a great deal of time to make sure that sound legal advice is given. Factoring is relatively new in China. The industry has just witnessed a rapid growth in the past  [ Read More ]

As a professional serviced office provider, TEC and other similar operators deal with various kinds of tenants: domestic companies, individuals, and foreign companies. Very often, who signs on the lease contract matters a lot to such “professional landlords“. Here are some typical situations that shall be given special attention to by those professional landlords. As their external legal counsel, lawyers shall incorporate these circumstances into their risk management system for  [ Read More ]

The strategy I talk about here may apply in other cases at Chinese courts. While it may sound weird to foreign minds, it is very true in China. Our real estate team at Dacheng Law Offices (Shanghai) has dealt  with a quite controversial case recently. Here are the facts: The client bought a factory building in an Industrial Park in Fengxian District, Shanghai. This industrial park was developed by a  [ Read More ]

Though you may think otherwise of Shanghai property market, many people are starting losing confidence and thus selling their properties in China. The biggest sale is made by Asia No. 1 tycoon from Hong Kong, Li Ka Shing. He has sold several properties in Shanghai, indicating that he sensed a turning point to be coming soon. But for individual foreign property owners, selling Chinese property is a complex process requiring  [ Read More ]