LAWS, RULES AND REGULATIONS OF FOREIGN INVESTMENTS IN CHINA
Foreign Investors in Hong Kong
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Overseas companies intend to carry out business in Hong Kong need to apply for registration within one month of establishing a place of business in Hong Kong....
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Foreign Investors in China
The Wholly Owned
Foreign Enterprise (WOFE), also called Wholly
Owned Foreign Enterprise (WOFE), is a Limited Liability Company established and wholly owned by the foreign investor(s) in China. ...
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Representative Office (RO), also known as Permanent Resident Office, is an office of a foreign enterprise set up in China for liaison with Chinese businesses and customers on behalf of its parent company.....
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Law of the People's Republic of China on Wholly Foreign-Owned
Enterprises (Adopted by the Fourth Session of the Sixth National People's
Congress on April 12, 1986,and amended by by the 18th Session of the
Standing Committee of the 9th National People's Congress on October
31, 2000)
Article 1. In order to expand international economic cooperation and
technological exchange and to promote the development of China's
national economy, the People's Republic of China permits foreign
enterprises and other economic entities or individuals (hereinafter
referred to as foreign investors) to establish wholly foreign-owned
enterprises within the territory of China and will protect the
lawful rights and interests of such enterprises.
Article 2. Wholly foreign-owned enterprises referred to in this Law
mean enterprises established within the territory of China in
accordance with the relevant laws of China, the entire capital of
which is invested by foreign investors. Such enterprises do not
include branch offices established by foreign enterprises and other
economic entities within the territory of China.
Article 3. The establishment of wholly foreign-owned enterprises
must be beneficial to the development of China's national economy.
The state encourages to establish such enterprises as shall export
all or most of their products or adopt advanced technology.
Industries in which the establishment of wholly foreign-owned
enterprises is forbidden or restricted by the state shall be
stipulated by the State Council.
Article 4. The investment of, the profits obtained by and other
lawful rights and interests of foreign investors within the
territory of China shall be protected by the laws of China.
Wholly foreign-owned enterprises must observe China's laws and
regulations and shall not harm the social and public interests of
China.
Article 5. The state will not nationalize or expropriate wholly
foreign-owned enterprises. Under special circumstances, the state,
based on the need of social and public interests, may expropriate
wholly foreign-owned enterprises pursuant to legal procedures and
give commensurate compensation.
Article 6. Applications for the establishment of wholly
foreign-owned enterprises shall be examined and approved by the
department under the State Council in charge of foreign economic
relations and trade or the authorities authorized by the State
Council. The examination and approval authorities shall decide to
approve or disapprove within ninety days from the date of receiving
the application.
Article 7. After the application for establishing a wholly
foreign-owned enterprise has been approved, the foreign investor
shall, within thirty days from the date of receiving the approval
certificate, apply for registration with the administrative
authorities for industry and commerce and obtain a business license.
The date on which the business license of a wholly foreign-owned
enterprise is issued shall be the date such enterprise is
established.
Article 8. A wholly foreign-owned enterprise that meets the
requirements regarding legal persons as stipulated by the laws of
China shall obtain the status of a Chinese legal person according to
law.
Article 9. A wholly foreign-owned enterprise shall make the
investment within the territory of China within the period approved
by the examination and approval authorities. If no investment has
been made at the end of the period, the administrative authorities
for industry and commerce shall have the right to revoke its
business license.
The administrative authorities for industry and commerce shall
examine and supervise the investments of wholly foreign-owned
enterprises.
Article 10. Reorganization, merger or other important changes of a
wholly foreign-owned enterprise shall be submitted to the
examination and approval authorities for approval and shall go
through the procedures of the administrative authorities for
industry and commerce for changes in the registration.
Article 11. No interference shall be allowed in the operation and
management activities of a wholly foreign-owned enterprise conducted
according to its approved articles of association.
Article 12. A wholly foreign-owned enterprise employing Chinese
staff and workers shall enter into contracts according to law and
shall specify in the contracts provisions relating to matters of
employment, dismissal, remuneration, benefits, labour protection and
labour insurance.
Article 13. The staff and workers of a wholly foreign-owned
enterprise shall establish a trade union according to law, carry on
trade union activities and protect the lawful rights and interests
of the staff and workers.
A wholly foreign-owned enterprise shall provide the necessary
facilities for the activities of its trade union.
Article 14. A wholly foreign-owned enterprise must keep account
books within the territory of China, carry out independent
accounting, submit accounting statements according to regulations
and accept supervision by the finance and tax authorities.
If a wholly foreign-owned enterprise refuses to keep account books
within the territory of China, the finance and tax authorities may
impose a fine on the enterprise and the administrative authorities
for industry and commerce may order it to stop its business
operations or revoke its business license.
Article 15. Supplies such as raw materials and fuel needed by a
wholly foreign-owned enterprise within the approved scope of
business may be purchased in China or on the international market.
Article 16. All items of insurance of a wholly foreign-owned
enterprise shall be insured with insurance companies within the
territory of China.
Article 17. A wholly foreign-owned enterprise shall pay taxes in
accordance with the relevant tax regulations of the state and may
enjoy preferential treatment in tax reductions and exemptions.
If a wholly foreign-owned enterprise reinvests its after-tax profits
within the territory of China, it may apply for a refund of part of
the income tax already paid on the reinvested amount in accordance
with the regulations of the state.
Article 18. The foreign exchange matters of wholly foreign-owned
enterprises shall be handled in accordance with the foreign exchange
control regulations of the state.
A wholly foreign-owned enterprise shall open an account with the
Bank of China or another bank designated by state foreign exchange
control authorities. A wholly foreign-owned enterprise shall resolve
the balance between its foreign exchange income and expenditure by
itself.
Article 19. The lawful profits and other lawful income obtained by
foreign investors from wholly foreign-owned enterprises and the
funds they receive after liquidation may be remitted abroad.
Salaries and other lawful income of foreign staff and workers of
wholly foreign-owned enterprises may be remitted abroad after
payment of individual income tax according to law.
Article 20. The term of operation of a wholly foreign-owned
enterprise shall be submitted by the foreign investors and approved
by the examination and approval authorities. If an extension is
needed upon the expiration of the term, an application shall be
filed 180 days prior to the expiration of the term with the
examination and approval authorities, which shall decide to approve
or disapprove within 30 days from the date of receiving the
application.
Article 21. When a wholly foreign-owned enterprise terminates, a
prompt public announcement shall be made and liquidation shall be
conducted in accordance with legal procedures.
Prior to the completion of the liquidation, the foreign investors
shall not dispose of the assets of the enterprise except for
carrying out the liquidation.
Article 22. When a wholly foreign-owned enterprise terminates, it
shall go through the procedures for cancelling its registration with
the administrative authorities for industry and commerce and return
its business license.
Article 23. The department under the State Council in charge of
foreign economic relations and trade shall, on the basis of this
Law, formulate detailed rules for implementation which shall come
into force after being submitted to and approved by the State
Council.
Article 24. This Law shall come into force on the date of
promulgation.
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