Regarding the listing of multinational companies in the Mainland, the China Securities Regulatory Commission recently put forward six requirements: First, it is hoped that foreign investors will be internationally renowned enterprises; Second, the industry is a high-tech industry or an industry that China needs to develop; Third, it has a considerable scale; Fourth, it has good economic benefits; Fifth, the development prospect is good, and the research headquarters is located in China; Sixth, Sino-foreign cooperation is good and there is a good management structure. This points out the direction for multinational companies to list in China. However, some specific legal problems will be encountered in the operation process.
One of the conditions for the transformation of a foreign-funded enterprise into a joint stock limited company is that the registered capital in a document of the Ministry of Foreign Trade and Economic Cooperation is not less than 30 million yuan, which is higher than the minimum amount of 6,543,800 yuan stipulated in the Company Law.
Nowadays, people often confuse reorganization with listing. Actually, this is two different things. The requirement of three years' continuous profit is the condition of listing, not the condition of reorganization. People often think that limited liability companies, joint-stock companies and group companies are three-level companies, and the first level is more profitable and larger than the first level. In fact, the form of a company should not be directly linked to its profitability, and the form of a unit should not be used as the standard of corporate profitability. As long as the restructuring emphasizes a certain scale, it is not necessary to take three years of continuous profit as the prerequisite for restructuring. Otherwise, after the reorganization 1 year counseling period, it takes four years of continuous profit to apply for listing, which is not in line with international practice. And a company that can make profits for four years in a row may have a lower demand for funds.
Multinational companies want to give management, including China management, some options to become sponsors and grow together with the company, which can easily meet the requirement that more than half of the sponsors must have a residence in China. The Law on Sino-foreign Joint Ventures does not list natural persons as joint venture partners in China, so they can only introduce other legal persons. Multinational companies are worried that the introduced legal person is not very related to the direct operation of the company, but becomes an obstacle, which has an adverse impact on the efficiency and direction of the company's operation. Therefore, some foreign-funded enterprises explicitly allow foreign-funded enterprises to go public before restructuring in waiting policies. In addition, according to the regulations, the direct and indirect shareholding of a single shareholder cannot exceed 75%. Whether it can be listed in the end, how high the threshold will be and how flexible the conditions will be, they are still waiting to see.
Since multinational companies initially set up foreign-funded enterprises in different regions of China through overseas or domestic holding companies, listing now involves structural restructuring. First of all, in operation, we will encounter local protectionism. With the integration of production enterprises, companies all over the country may concentrate all corporate income tax returns in one place. Secondly, the company law stipulates that any enterprise's foreign investment cannot exceed 50% of its net assets. For example, for a company in Shanghai, it is difficult to take local production enterprises as part of the company and list them in the form of branches or reinvestment. Third, whether the holding company can go public. A foreign-funded company or holding company is usually an empty shell, and it has no R&D, sales, production or business entity. However, the possibility that the holding company will be listed as a company in the future still exists.
Foreign-funded enterprises listed in China will also encounter related transactions, horizontal competition with multinational groups, foreign companies or similar domestic branches, land use rights acquisition and other issues. In principle, the company to be listed obtains land by means of transfer; If the main sponsor or controlling shareholder obtains the legal land use right through lease, the lease term and payment method shall be determined. If the original land use right is not standardized, it may take three months to achieve this step, and this is just one of the many problems that must be solved in the restructuring. Therefore, if foreign-funded enterprises have plans to list on the mainland, they should make plans as soon as possible, because many problems will take some time to solve.