All articles by Doroto

 

What A Foreign Executor Can Do About Estates in China

We have been helping and advising a good number of clients over the years who are the executors in wills made outside of China by testators, in regard of the administration and distribution of estates (real estates, corporate shares and bank deposits) located in the mainland of China.

Unfortunately in most cases, foreign executors would find themselves ending…

 

Hire China Lawyer for Handling China Estate

Just approached by a client from Southeast Asia who inquired about inheriting his Dad’s estate in China, a real property in Shanghai.

He contacted me because he felt suspicious of something that must have gone wrong about his current lawyer working on the inheritance matter. It has been almost a year and the client has spent most of their budget for the …

 

Guardianship for the Elderly under China Law

Part of the estate planning services always concerns the caring of the elderly people. After all, we are all getting old each day and we all probably lose capacity to act on our own some day in the future.

Guardianship is the legal system designed for people of no or limited capacity due to young age or loss of mental capability, so that their interests are being taken…

 

China Foreign Investment Law and Cross-Border Inheritance and Estate Planning

China has enacted its long-awaited Foreign Investment Law this March but will only come into effect as of January 1, 2020. So far this law is warmly welcomed and hailed at large by the international communities.

Well, there are a lot of comments on the Law and its impact and implications on existing and future foreign investment in China. But hardly is there any…

 

Strategically Deal with Your China Property When You Divorce

Pretty often I am approached by clients or by foreign peer attorneys inquiring about how they should deal with their China properties when they divorce in a foreign jurisdiction.

Some of them are too late when they call me. Kate (not the inquirer’s true name) is one of them.

She has been living with her husband in California for many years and now is the process…

 

Overview of Inheritance and Estate Planning under Chinese Laws

Over the last 10 years, I and my team have been offering legal services related to inheritance and estate planning for clients from many other countries outside of China. We have written a number of posts on this blog in that regard.

As per request from an American lawyer, Ms. Jiah Kim, who specializes in cross-border estate planning catering to her American clients,…

 

Happy New Year of Pig from Landing Law Offices in Shanghai

In China, today is the first day of China lunar new year of pig.

The whole country is in a happy mood. A 7-day holiday has started from yesterday. A lot of celebration activities are going on in all parts of the country, from Beijing China Central Television to local TV stations, from big cities to small towns.

China Lunar New Year or Spring Festival is a time for family…

 

The Ways of Moving Money Out of China by Individuals

This is a hot topic in today’s China: how to move money in China to a foreign country. With the backdrop of the trade-war and tech-war between China and USA simmering with no assuring sign of cooling down, China economy has been hurt somehow, and 2019 is a tough year for China and in the meantime, United States is still looking buoyant, …

 

Child Custody and Visitation under Chinese Laws

International or cross-border marriages in China and with Chinese have been on steady rise in the past, and thus international or cross-border divorces have seen increase as well in China. We have been repeatedly approached by clients who wish to divorce in China with his or her spouse that is also a foreigner.

With regard to divorce (without regard to child …

 

Inheritance of Personal Properties/Chattels in China: a Real Headache

In most cases in the past years, we help foreign clients in dealing with inheritance or succession of real properties, mainly residential properties like apartments or houses in cities like Shenzhen, Shanghai, Guangzhou, Beijing and even Suzhou.

Ocassionally, we received clients’ inquiries about inheriting chattels or personal properties (properties…

 

Make a Will for Your China Assets: why and how?

With so many Chinese emigrating to foreign countries while having substantial assets within China or so many foreigners holding China assets, it is no wonder that we have seen the increase of inquiries regarding estate plan for their China assets, mainly real properties, corporate shares or bank deposits.

I.  Why Do You Need a Separate Will for Your China…

 

Inheritance of Corporate Shares of a China Company (IV)

We have already written a few articles regarding inheritance by foreigners of corporate shares (a stock company limited by share) or equity interests (a general limited liability company) in a China company, where typically the deceased is a Chinese citizen being a shareholder in a China domestic company and the heirs (often spouse and children) have already…

 

Case Report: new factual situation for lifting corporate veil under China laws

Limited liability has been recognized as one of the fundamental features of companies and corporations throughout world, which was heralded as great an invention as the steam engine.

Under Chinese laws and in Chinese judicial practice, it has proven that it is difficult to get the court to pierce the corporate veil, a metaphor referring to the limited liability…

 

Chose in possession and Chose in Action under Common Laws

This post is rather an effort of myself in learning property laws in common law countries.

As a lawyer, one of my main law practices is to help China’s high net worth individuals to work out their estate plan under which very often clients wishes to allocate their assets or properties in both China and offshore countries. It is critical for me to understand…

 

China overhauls its individual income tax law

China has enacted its recently revised individual income tax law, a big overhaul of the law over more than 30 years from its inception.

Some of the changes will be set to have an impact on you, either foreigners or oversea Chinese.

1.  New Definition of Tax Residents

In the prior version of the IIT law, a tax resident is one who has domicile within China or otherwise…

 

China Estate Planning I: How to deal with your China assets generally

I have observed one interesting thing in my legal practice in family law area. While Chinese people within China are not much interested in making their estate plan, those overseas Chinese are however more keen to prepare for their late years of life and post-demise affairs.

With so many Chinese migrating to foreign countries across the globe, many of them don 

 

New policy in China for curbing property market: companies banned from buying

In the past a couple of days, four cities in China, Shanghai, Xi’an, Changsha and Hangzhou, has announced that they will restrict corporate entities in purchasing local properties, a new round of efforts in reining in local property market.

For a decade, China (mainly the central government) has been wrestling with property markets. On one hand, the…

 

Tax implications related to your inheritance of overseas estates in China

Taxes are one of the major concerns of foreign heirs inheriting estates located in China.  What taxes are levied on the estates or the inheritance? Is there any way of optimizing taxes in China on acquiring and cashing in on the estate assets?

I. Taxes for Inheritance of Estates

(1)  No Estate Tax or Inheritance Tax in China 

In today’s world, many countries…

 

Oversea Chinese from Canton (Guangdong): the way back to your roots

This is not something new, though I reckon not every oversea Chinese who are affected (in a positive sense) by the local policy really know about it.

I am talking about the policy stepped up by local Guangdong government back in 2011, entitled “Several Opinions on Earnestly Safeguarding Oversea Chinese’s the Residential Land Use Right in Rural…

 

China Land VAT: how to avoid or defer payment of land value added tax

Land value added tax is a big cut of profits from property owners in China.

Land VAT is applicable basically in two scenario: (1) corporate property owners that sell properties, including foreign entities that hold China properties,and (2) individual owners of non-residential properties.

If the owner simply sells in the market for cash, then the land VAT …

 

Legal Implications on the choice of trustees for properties in China

It is no longer anything fresh for a foreigner to have assets or properties in China. The foreigner can  be either real foreign individual without China root or overseas Chinese or naturalized Chinese. So when those people set up trusts in their residing countries (outside of China) and wish to place their China properties (either real properties or shares)…

 

Inheritance of Corporate Shares in a China Company (III)

This is the third post regarding inheritance of corporate shares in a China company. Again it is about a special situation that may become more and more in reality with more and more Chinese riches migrating to foreign countries.

I. Facts of the Case

In 2002, a Chinese husband set up a trading company with a third party, and business went well. In 2006, the…

 

International trade trap: who is your seller in China?

Not just a few but quite a number of foreign clients who bought goods from China complained about their Chinese sellers defrauding or otherwise defaulting under their purchase contracts, and when they tried to go after the Chinese exporters for damages or compensation, they found themselves unsure which entity or company they should sue.

The Tricks and Traps…

 

Nominee Shareholder Agreement under Current Chinese Laws

 

A nominee shareholder agreement (the “Agreement“) used herein refers to the agreement or contract concluded between two persons (individual or body corporate) whereby A wants to invest in a certain company but for various reason he is hidden from public disclosure and instead, his investment is made and registered in the name of B who …

 

Overview of China Cyber Security Law and Implications on Foreign Companies

China Cyber Security Law (“CCSL“) has been enacted and took effect (since June 1, 2017) for some time prompting many multinational companies to review and revise their internet policies and take actions to comply with the new law which has profound and far-reaching impact on their business operation in China.

I.   Overview of China Cyber Security…

 

Inheritance of Corporate Shares in a China Company (II)

In the first post regarding inheritance of corporate shares or equity interests in a China company, we have discussed the general procedures of completing such an inheritance.

In this second post, I will specifically address the issue of inheriting the corporate share estate left by a foreign national who is a foreign investor in a foreign invested company…

 

Do I have a claim in the property bought with the funds from my spouse’s parents?

Again this is a post for people who are caught in a divorce proceeding in either China or a foreign country but have marital properties located in China, in particular, real estate such as apartment, house, office or industrial premises.

As a Chinese tradition, parents often buy properties for their children even when they are very young or still babies. Nowadays,…

 

Inheritance of Corporate Shares in a China company (I)

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…

 

China Supreme Court interpretation on marital debts to save Chinese wives

We all love money but hate debts. In particular, you extremely hate paying debts incurred by others, even if debts incurred by your other half.

In response to the outcries from Chinese wives, on January 17, 2018, China Supreme Court issued a brief new interpretation (hereinafter the “New Interpretation“) on how to decide on what debts shall be …

 

Inheritance of estates in China: you may have to resort to courts

If you are looking for legal information regarding inheritance of estates in China, the blog is for you. You may have read a few posts (how foreigners inherit estates in China, tax issues of inheriting real estate in China, multiple heirs inherit one piece of estate property in China, make a will disposing of properties in China) already and you know that the basic…

 

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 Canada 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 contract…

 

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,

…  

Mainland and Hong Kong mutual recognition and enforcement of family court judgments

This is a new sign of integration of Hong Kong into its mainland. The two sides now mutually agreed to recognize and enforce the family court judgments delivered by the courts in the other side in full aspects, meaning that clients who have obtained a divorce judgments (child custody or other family issues decisions) from Hong Kong court (vice versa) can now request…

 

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 …

 

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 …