collega - Károli Gáspár Református Egyetem

– Foreign-founded Medical Institutions
27
– Foreign-founded Financial Institutions
28
3.3 Company law
A modern Company Law was enacted
in China in 1994, followed by partially
different promulgating regulations
in each province. 29 It established
two company types: the limited liability
company and the company limited
by shares. Because of their similarity
to their western counterparts, only
their specific or otherwise important
features will be mentioned.
The scope of business of the companies
shall be defined in the articles
of association and it needs to be registered.
If a company wants to pursue
other business activities, the
change in the scope of business must
be registered. 30
Companies may have branches
and subsidiaries, the latter of them
being separate legal entities having
legal personality. 31
3.3.1 Limited Liability Company
(LLC)
For Limited Liability Companies the
number of shareholders (quotaholders)
must be between 2 and 50.
This means that a one-person company
is not permitted by the law.
The minimum amount of registered
capital is generally Rmb
500,000 and Rmb 100,000 for companies
involved in scientific and technological
development, consultancy
and services. Investment in kind is
possible, with a limitation of maximum
proportion of 20% for industrial
property rights (evaluated and
certified by a verification organization)
in the whole registered capital. 32
The LLC may have either a Board
of Directors (BoD), whose Chairman
is the legal representative of the company,
or an Executive Director (for
smaller companies). Their term of
office may not exceed three years and
they may be removed before the end
of their term by the Shareholders’
General Meeting only for specific reasons.
33
The LLC also has a Manager
for the direction of the daily business,
appointed and dismissed by the BoD.
The Manager may attend Board meetings
as a non-voting member. For
larger LLCs, a Supervisory Board of at
least 3 members is compulsory, with
the employees of the company being
entitled to be represented therein.
3.3.2 Company Limited by Shares
Companies Limited by Shares can be
formed by promotion or share offer.
In case of promotion, at least five promoters
are needed, at least the half of
them having their domicile in China.
The minimum registered capital is
Rmb 10 million, while enterprises
with foreign investment must have a
registered capital of at least Rmb 30
million. 34
Rules for contribution in
industrial property are the same as
for LLCs. If the company is established
by a share offer, the promoters
have to subscribe at least 35% of the
shares and they may not assign their
shares within three years after the
establishment of the company. Shares
may be registered or bearer shares.
Conditions for listed companies are
more stringent, most importantly
they must have a registered capital of
at least Rmb 50 million.
Upon approval of the China
Securities Regulatory Commission,
the company may offer shares to foreign
investors (“B shares”), representing
the same rights as other
shares, but their trade is regulated
separately in regulations issued in
Shanghai and Shenzhen. 35
The main organs of a Company Limited
by Shares are the Shareholders’
Meeting, the Board of Directors (having
5-9 members elected by the
Shareholders’ Meeting) the Manager
and optionally a Supervisory Board. 36
IV. Conclusion
The cornerstone of the Chinese FDI
law is the set of Sino-foreign joint
enterprise forms. It is clear, that JVs
represent a temporary element in the
regulation of FDI in China, similarly
as they did in other transitory countries
(like in Hungary in the late
1980s). They are not company forms
but legal categories created for the
purpose to control the flow of foreign
investments. Their basic aim is to
force foreign investors to form joint
enterprises with domestic companies,
for a number of reasons: to secure a
share of the profit to be earned by
such enterprises to domestic companies,
to provide them an opportunity
to learn the more advanced technical
and business methods and enable
some level of control over foreign
investments by the state (since the
domestic enterprises are typically
state-owned). On the other hand,
they serve as the framework of providing
preferential treatment to foreign-invested
enterprises. It is not difficult
to predict that the laws related
to JVs as means both for encouraging
and restricting foreign investment,
will rapidly lose their importance in
the future. Because of its WTO accession,
the PRC will have to lift means
of both positive and negative discrimination
for FDIs, the preeminent function
of the legal construction of JVs, or
more broadly, of the foreign-invested
enterprise laws in the Chinese legal
system. The role of JVs as the legal
form of FIEs shall be substituted with
the general company forms regulated
in the Company Law. This law is fairly
modern and in its content similar
to its western counterparts, with
some weak points that can be corrected
without much effort.
27 Regulated by the Interim Measures on Administration of Sino-foreign EJV or JCE Medical Institutions, promulgated by the MOFTEC.
28 Regulated by the Administrative Rule of the PRC Governing Foreign-founded Financial Institutions and the Detailed Rules for the
Implementation of the Administrative Rule of the PRC Governing Foreign-founded Financial Institutions.
29 Effective as of July 1, 1994.
30 Article 11 of the Company Law.
31 Id., Art. 13.
32 A regulation on the proportion of contributions in cash and in kind to the registered capital seems to be missing.
33 Id., Art. 47.
34 Id., Art. 78.
35 China Investment Manual (Asia Law and Practice, 1997) at p. 55.
36 Id., at p. 57.
326 XI. évfolyam 2–3. szám