All articles by Doroto
Loans made between enterprises in China still invalid?
For many years, loaning activities were tightly controlled and regulated, only duly licensed banks are allowed to lend money to the public, and loans made between domestic enterprises are often held as invalid, and consequently, the borrowed shall return the loan principal to the lender and interests are seized by the state. With this rule in place, borrowings…
Share Repurchase under China Company Laws – Commentary on China Supreme Court Ruling
Sparked by court cases in private equity investment world recent years, share repurchase by the company (whose shares are being repurchased) has been a hot topic in the legal arena. Foreign investors in China may well be involved in such a share repurchase arrangements, and it is of interest to foreign investors…
Can company’s creditors go after shareholders who have not paid up subscribed capital?
This is not a new topic on this blog. However, it prompted me to look further into the issue when I realized that in judicial practice, courts are actually very much divided on this issue.
Following the company registered capital reforms initiated back at the end of 2013, the market has witnessed many newly setup companies that have a huge amount of registered …
New notary rules to affect real estate transactions in China
On August 14, China Ministry of Justice issued a new notice entitled “Notice of “Five Forbiddances Concerning Notary Work”, listing five notarisations that shall be forbidden in the course of notary businesses by notary offices and notary public.
Among the five forbiddances is the forbideance of conducting notarisation on power of …
Watch out your manager for your China business
Just recently a client of mine, a foreign company that has a subsidiary business presence in China, approached me for a service to investigate some suspicious dealings that were made by one of his senior manager in Shanghai subsidiary.
The foreign parent company apparently discerned something fishy from a decline in profits of the subsidiary company and commenced…
40% of Children of China’s rich refuse to carry on family business
A recent interesting case has sparked interests in China’s rich with regard to their family business continuation and inheritance.
A rich couple in China Jiangsu province was sued by their son to nullify a share transfer which was carried out by his parents without his knowledge in order to force the son to take up the family business to carry it on. Unfortunately…
American Legal Systems, a Summary of Foreign Lawyers Training Program at ILI
Just recently concluding a four-week long training program on American legal systems designed for foreign lawyers at International Law Institute (the “ILI“), I am very pleased to have attended this program which apparently bore a lot of fruits indeed in the end.
In memory of this valuable experience, I would like to jot down some interesting …
Sale of co-owned property in China
Properties, I mean real estate such as houses, apartments, condos, and offices, can be owned by more than one owner, resulting in co-ownership in a certain piece of property.
I. Co-ownership under China Property Law
Under China Property Law, there are two types of co-ownership: tenancy in common and joint tenancy. However please be noted that the tenancy…
Notarization and Legalization of Documents to be Used in China
Documents originating outside of China shall be first notarized and then legalized at China consulate in that country before they can be used in China official proceedings such as court lawsuit, notary office or other governmental agencies.
In practice, I generally prepare those documents in bilingual version in both English and Chinese so it is easier for…
Security provided to foreign creditors by Chinese citizens
Here is the situation presented before me: a Chinese citizen who does business in Singapore (or USA) wishes to borrow money in USD from an American citizen, and the American lender requires security or collateral to guarantee that the borrower will be able to pay off the debts (principal and interest). Fortunately, the Chinese debtor has an apartment in Shanghai…
When a foreign testamentary trust involves a property in China
As I deal with quite a number of matters of inheritance by foreigners of estates in China, a few cases in which clients from Anglo-Saxon jurisdictions such as Canada and USA inherited estates left by their family members have involved trusts that are set up by the decedents, which are very interesting to me, a lawyer in China where civil trusts are rarely used in…
The Dilemma of Minority Shareholder in a China Limited Liability Company
Facts: a limited liability company (“LLC”) incorporated in 2013 in China has two shareholders with the majority shareholder having 60% of equity interests (there is no share in a China LLC, and equity is expressed in percentages), and the minority shareholder having 40%. The Company has a three-member board of directors with the majority shareholder…
A New Understanding of Trust Laws-Close the Gap between Civil and Common Law Systems
You can download the PDF version of this post HERE.
Trusts have been hot in China recent years esp in the financial sector of China economy. As a business and family lawyer in China, I find it intriguing how the trust mechanisms can help with respect to estate planning for wealthy Chinese and business planning as well, which has prompted to further explore the world…
Citizen-state relation culture difference between China and the western countries
I have been doing research on trust laws for some time in particular the comparison between Chinese trust laws and those of the Western countries such UK and USA.b
An obviously observatory difference manifested from trust laws is that western countries recognize and allow its citizens to use trusts and other legal instruments to reduce and evade tax burdens…
A trust is an independent legal entity?
It is actually quite a predominant view that a trust is often considered to be an independent legal entity or in other words, a trust once settled, has come to have its own legal personality capable of engaging to legal activities such as owning properties or entering into contracts.
But it is not correct. Recent case rulings by American courts have confirmed …
China Divorce: divide corporate equities indirectly held by one spouse
A client asked an interesting question regarding her attempt to divide her husband’s equity interests in a China limited liability company. Here is the story: the Chinese lady client got married with a foreigner husband ten years ago and now they are in the process of divorcing. The husband has invested indirectly through a BVI company, in a foreign-invested…
Foreign corporate owners of China properties: how to sell property and take money out of China
There has been quite a few inquiries in the past from foreign companies that own properties in China (either residential or commercial) on how they can sell their China properties and then convert the sale proceeds into foreign hard currencies such as USD or Euros and take the same out of China.
I wrote a post regarding foreign corporate owners intending to sell…
Fire the General Manager of a China Company
A foreign client approached me for advice to fire the general manager of its WFOE subsidiary in Shanghai.
Indeed, firing a general manager can be a real headache in China.
Following the high-profile case in Shanghai, in which a fired general manager of a listed company wrestled with his employer and won (not really in a strict sense) the fight by having the…
Change title of China property based on a foreign court judgment?
A client from United States just got divorced with his American wife through court proceeding, and in the American court judgment, a piece of real estate that was bought by the couple in Shanghai China was ordered to be owned by the husband only and the husband in turn will pay a sum of money to the wife.
Now the question is whether and how the husband can …
“Houses are for living in, not for speculating on” sounds sincere this time
This “houses are for living in, not for speculating on” has been out there since last December when China top leaders met up for an economic meeting. It has become a very popular slogan among either local governments and the media.
Since then, we have seen a steady increase of property curbing measures that are put in place by Chinese local governments…
China land ministry clarifies the mystery of how to deal with expired land use right
Finally, China Ministry of Land and Resources posted on its website yesterday a Q&A series in which the long-waited guideline on how to deal with land use rights that have expired in some cities in China.
Early this year, local government in Wenzhou, Zhejiang province was reported to be ready to collect renewal fee from people whose properties are sitting…
China to boost its property leasing market
As a way to rein in the wild-going property market in China, China State Cabinet in May of this year stepped up a new piece of notice telling its local counterparts to promote property leasing market to provide shelter for people who cannot afford to purchase properties.
I personally fully agree on the move which can be a successful way to tame the property market,…
See what China says about its capital outflow restrictions
News started telling that China is tightening its foreign exchange rules to restrict money outflow from the beginning of this year or late last year, and recently, we saw an explosion of internet discourse on this topic. Many panic.
Right, China is worried about its capital outflow which will surely have adverse impact on China's economy which is struggling…
International Trade Dispute Resolution in China: get affiliated companies to pay
A while ago, I wrote another post disclosing fraudulent international trade practice some Chinese exporters engage themselves in: Again, be aware and vigilant about who you are trading with in China.
So when you are deceived and caught in such fraud and you don’t want to just walk away bruised, you may have to think of a way to recover your loss. Here in…
New curbing measures send chill in Shanghai property market
Just the other day, on the night of November 28, Shanghai government has stepped up a few new measures to cool down the property market that has despised the previous two rounds of curbing measures in this year.
Basically, the new notice issued by Shanghai government says that
- families that purchase property in Shanghai for the first time (meaning having no other
Cross-border Financing: offshore loan against onshore security
With more and more Chinese companies going overseas for acquisition of foreign assets or equities, China State Foreign Exchange Administration (the "SAFE") has gone in line with the tide by facilitating cross-border financing whereby it has reorganized its rules on cross-border security or guarantee. In May, 2014, SAFE issued its restated regulation …
Mortgage loans for Chinese buyers of foreign properties
You all know that the Chinese people are buying up your land, esp in the USA, Canada, Australia or Singapore, unfortunately pushing up local property price, precipitating homes out of the reach of a lot more ordinary families. But sorry, I am not here to alleviate the problem but to add fuel on the fire.
Many foreign property developers have been targeting Chinese…
Property Management Services in Shanghai
Through my real estate legal practice, I have noted that quite a number of foreign clients leave their properties either to friends or relatives for care, and even some clients just simply leave their property unattended for years after purchase.
On the other hand, we do also note that many clients entrust their properties to properties to property management…
International Factoring In China Part II: assignment of receivables
YOU MAY DOWNLOAD THE PDF VERSION OF THIS POST HERE: china-factoring-law-assignment-of-account-receivables.
Assignment of receivables is the core of factoring business. An accurate and clear understanding of Chinese laws in respect of assignment of receivable is vital and paramount for engaging in factoring business in China.
As you may have noticed…
Again, be aware and vigilant about who you are trading with in China
It is not the first time I write about this topic for foreign companies trading with Chinese seller. You can check on this post “Check out who you are trading with in China“.
An American client recently complained to me about his problem with his Chinese vendor. The client has been purchasing aluminum sheets from the Chinese seller for years and they…
China Family Law: spouse interests in real properties and corporate equities
As a part of family law practice, divorce cases are increasing in China esp in first-tiered cities such as Shanghai, Beijing and Shenzhen.
With the number of cross-border marriages between Chinese and foreigners, it is good for the foreigner spouse to understand the legal environment in China in case of an inevitable divorce, in particular, in terms of the …
Right and Power: a new understanding of their relationship
I have just read two articles regarding “right” which reactivate my interests on the jurisprudence issue and other related thoughts on some basic civil law issues. The two articles are “Rights” and “Legal Rights“.
Back ten years ago, when I was preparing my graduation paper for master degree, I was intrigued by the…
Bill of Lading in the perspective of China laws: a case study
In the year of 2016, a court judgement concerning Letter of Credit dispute handed down by China Supreme Court has caught immense attention from banks, freight forwarders, sea carriers and maritime lawyers.
I. Basic Facts
For a detailed account of the case facts, you can refer to another post on this blog, but unfortunately, it is in Chinese.
A China bank (CCB)…
China Further Relaxes Control on Conversion of Capital Account Foreign Exchange
Understanding China's foreign exchange rules is never an easy job, esp in an era when China is aggressively reforming its financial systems. A new rule can well be revised in a few months.
On June 9, 2016, China SAFE (State Administration of Foreign Exchange) issued its new Decree No. 16, entitled "关于改革和规范资本项目结汇管理政策的通知…
The Skeleton Regime of China Administration of Foreign Debts
China is still on the way to open up its capital account in terms of cross-border capital flow, in a well-calculated manner.
When looking at China's management of its foreign debts, one can easily get dizzy while navigating through tons of rules that have been issued, revised and replaced frequently over time.
This post only attempts to give you a basic idea on…
11 reasons divorce is better than staying in a bad marriage
This post is copied from huffingtonpost.com. Good points for people in failing marriages to know and consider. However, when it comes to divorce, or anything involving deep feeling and emotion, no one is as sober as a third party bystander. But, I am not saying the bystanders know the best thing for the people caught in divorce. People are just different.
A frequent inheritance-related scam many foreigners succumb to
Does it, the following cited paragraph, look familiar to you in any way?
Good Day Sir
I am an American and was contacted by Citic Bank in November of 2015 some months ago as heir to a sum of money from there bank. They have set fees for months and I have paid all but this final fee which is in route to them by transfer, but they only give me 72 hours. They have never
China tightened control over money outflow via personal bank accounts
China has witnessed its foreign exchange reserve dwindling over the last couple of years on the backdrop of its economy slowing down and its attempt to maintain its currency value.
With that concern, China is trying to manage, if not stop, the holes from which its money is flowing out to overseas. Many foreigners have already felt the pinch and I did get a couple…
foreigners in Beijing not allowed to receive gifted real properties if not eligible for purchasing
First of all, please note that I have not been able to locate the related decree or notice issued by Beijing local government, therefore not able to verify the captioned statement.
Just recently, in advising a foreign client in inheriting estate apartment left by his late father, I came to learn from local notary office a piece of new rule that was said to take…
Notarize your will to avoid trouble for your heirs/beneficiaries thereunder
Every year I deal with quite a few inheritance cases (litigious or non-litigious) involving foreigners inheriting estate (properties, shares and bank deposits) in China.
Very often, there is a written will produced by one heir to support his or her claim over the estate. The problem is that these wills are not properly notarized, leaving a great deal of uncertainty…
Sell your China property in Beijing: your marital status matters
Maybe it is really time to sell your China properties, either in Shanghai, Beijing or Shenzhen, these first-tiered cities in China.
Despite the fact that China applies its uniform sets of laws throughout the country as a centralized political system, it is not uncommon to find out that different places may have different interpretations of the same piece…
International Factoring in China Part I: overview of legal regimes for factoring industry
Factoring has been a big thing in China trade arena recent years. Ever since a push by China Ministry of Commerce promulgating in 2012 a set of new rules regarding setup of commercial factoring firms, commercial factors have been mushrooming in China with particularly robust growth in Tianjin, Shanghai, Guangzhou and Shenzhen.
However, bank factoring…
The Tenure Issue of Land Use Right in China: what if it expires?
Most of you don’t really care about this as it has nothing to do with you, unless you have a property in China. By a property, I mean mainly apartments, houses, residential or commercial.
A piece of news from Wenzhou, a economic hub of Zhejiang province, an eastern China province, has sort waken up Chinese people who have been intentionally or inadvertently…
Rights for minority shareholders under China Company Law
Being a minority shareholder in a China limited liability company can be a nightmare for investors, foreign or domestic. You get stuck there with no hope and find yourself no easy exit. I have witnessed many such sad stories happening to foreign clients who participated in Sino-foreign equity joint ventures.
So it will be meaningful for investors to know what…
FCI GENERAL RULES FOR INTERNATIONAL FACTORING
FCI GENERAL RULES FOR INTERNATIONAL FACTORING
(printed July 2013)
Section I General Provisions 2
Article 1 Factoring Contracts and Receivables 2
Article 2 Parties taking part in two-factor international factoring. 3
Article 3 Receivables included. 3
Article 4 Common…