When does a share buyer become shareholder in a Chinese company when buying its shares?

To many, it may seem a simple and even stupid question. But it is not.

I   In the Case of Domestic Company

In a country with the tradition of statute laws, when a statute law fails to offer a clear answer to a certain legal issue, it can be a problem in practice.

With respect to the captioned question, China Company Law does not provide clearly for when a buyer of the …

Registered capital, the greater, the better? Not really!

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…

Who the hell has the right to represent a company in China?

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…

Derivative Action/lawsuit in China: protection of (small) shareholders

[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.…

Case study on legal representative: a good lesson on corporate governance of companies in China

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 …

Appoint a Chinese lawyer as supervisor for your company in China

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 …

China’s reforms on companies’registered capital

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…

stretched understanding of shareholder’s pre-emptive right to purchase equity interests under China Company Law

It is a landmark court decision in China corporate law practice in the judicial system, having far-reaching impact for anyone that holds equity interests in China limited liability companies.

The decision was made not long ago by a Shanghai People’s First Intermediary Court in the high profile dispute between Fosun and Soho in regard of the equity interest…

close/wind up your China business? liquidate it properly

Amid global financial crisis, China is not a safe harbor. Many foreign invested companies in China are hit seriously and some of them are definitely considering winding up their business or are compelled to do so.

Here are some basic ideas about closing a Chinese company.

I.  Dissolution, Liquidation and Deregistration

In the course of winding up your China…

liquidate your company properly, no kidding

I am helping a long-term client, a Chinese businessman from Wenzhou, Zhejiang Province with his trouble that befell him totally out of blue recently.

Client set up an entertainment company (the “Company“) back in 1996 with another two individuals in Wenzhou. In 1998, the Company guaranteed as surety the repayment of a loan taken out from…

The Concept of Legal Representative in China Corporate Laws

When advising foreign investor clients (esp, those from common law jurisdictions) on corporate governance structure of the company they invest, the concept of legal representative often causes great confusion and puzzle. There have been also frequent inquiries from people on what it means to them to be a legal representative of a company in China, as such…