Inheritance of shares in a China company

Readers may notice that most posts I wrote about inheritance of estates in China is related to inheritance of real properties in China. Indeed, there are more inquiries about inheritance of real estate than those about corporate shares or corporate equity interests from visitors.

With more and more people now holding corporate shares, the demand from overseas…

Happy New Year to you all!

Welcome to the new year of 2018. Wish you all have a prosperous and healthy year ahead.

I hope you have been enjoying and you are enjoying the posts on this blog.  I have tried my best to keep this blog informative and helpful to visitors that stumbled hereon.

In the new year of 2018, as always i will try to write about Chinese laws in respect of civil and commercial…

Company to transfer property title in China and tax implications

Recently a corporate client from United States hired us for legal advice in its attempt to transfer a piece of residential property owned by its China subsidiary entity to one of its employee under an incentive plan that has been executed some 15 years ago.

The China subsidiary bought the properties 15 years ago in Beijing and at the same time, entered into a gift…

China inheritance tax not to come any time soon

At the end of last month, in response to an inquiry by a member from National Committee of Chinese People’s Political Consultative Conferrence, China State Administration of Taxes published on its website its reply. It said:

(1) China has not levied inheritance taxes so far, and has never published any regulation on this or even any draft regulation on inheritance…

Overview of China Trust Law

Does China has its own version of trust law?  Many may not have a ready answer.

Yes, China does have its own Trust Law enacted back in 2001. This post will summarize the main provisions and talk about the main issues.

1.   Definition of Trust

Article 2 of the Law provides for the definition of trust:

“For purposes of this Law, trust refers to that the settlor,

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

[For a PDF version of this post, please click here.]

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 …

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…

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…

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…

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…

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…

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

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…

Sue a Chinese company: tap the pockets of its shareholders and even directors

More than often, when you deal with a Chinese company, supplier, business partner or contractors, you are dealing with a China limited liability company incorporated under China Company Law. As a universal principle, the limited liability doctrine offers the “veil” protection for the shareholders or members of the those limited liability…

OEM定牌加工过程中的商标侵权问题:重要判例解读

上海律师点评本案是有关OEM定牌加工业务中涉及的法律问题的典型案例,也是具有重要转折意义的重大案例。在某种意义上,这一判决是平衡各方利益的结果,既要维护国内商标专用权人的合法利益,打击真正的商标侵权行为,又要维护国内目前还大量存在的代工厂的经济利益。一概认定为侵权,则将会极大打击国内的定牌加工等外贸经济行业的利益。本博主认为,这一认定本身是合理的,其说理也是充分,应该得以推广,并结束实践中对这一问题的争议。

Issues related to sale of Chinese properties by foreign corporate owners

I have been helping foreign owners in selling more than a dozen of their Chinese properties in the past years. In practice, there is no big roadblock on the way including the final step of converting and repatriating their sale proceeds denominated in Chinese currency, namely, Renminbi, or RMB.

However, sale of China properties owned by foreign companies…