Can public institutions invest to set up companies?

Institutions can apply for the establishment of a company. According to the current company law, there are two forms of establishing companies in China, namely, limited liability companies and joint stock limited companies. For these two forms of companies, the law does not stipulate the restrictions of their institutions. Therefore, as long as the corresponding conditions of the Company Law are met, institutions can set up limited liability companies or joint stock limited companies. Moreover, the establishment of a company by a public institution shall be registered in accordance with the Regulations of the People's Republic of China on the Administration of Company Registration.

There are certain special regulations for the establishment of companies by public institutions, and the so-called "special regulations" are basically determined by the special status of their public institutions. "Special provisions" include sources and uses of funds, forms of investment and specific procedures:

Funds-the legitimate income obtained by institutions from activities in accordance with relevant state regulations must be used for activities that are compatible with their purposes and business scope. When a public institution accepts donations and subsidies, it must conform to the purpose and business scope of the public institution, and it must be used in accordance with the time limit, methods and statutory purposes agreed with the donors and sponsors; Institutions must implement the relevant national financial and price management systems and accept the supervision of financial, taxation and auditing departments;

Procedures-institutions shall conduct necessary feasibility studies on foreign investment of state-owned assets, submit applications, and report to the finance department at the same level for examination and approval after examination and approval by the competent department;

Specific regulations of public institutions-every specific public institution has special regulations on foreign investment, for example, railway institutions. Article 4 of the Measures for the Administration of Overseas Investment of Railway Institutions clearly stipulates that institutions shall not buy or sell futures or stocks, purchase various corporate bonds, various investment funds and other forms of financial derivatives, engage in any form of financial risk investment, or make overseas investments. Government funds shall not be used for foreign investment.