A Chinese-foreign equity joint venture refers to an enterprise in which foreign companies, enterprises and other economic organizations or individuals engage in certain business activities with China companies, enterprises or other economic organizations in People's Republic of China (PRC) on the principle of equality and mutual benefit, * * * invest, * * * operate, * * * bear risks and * * * lose profits and losses.
Characteristics of Sino-foreign joint ventures:
1. The joint venture holds shares according to the contract, but only has the certificate of capital contribution and does not issue shares. Therefore, different foreign joint-stock companies have holding problems. Whoever holds more shares in the company will control the management right of the company.
2. According to foreign regulations, foreign investors can only account for less than 49% of the shares, and domestic investment must account for more than 5 1%. The regulations in China are different from those in foreign countries. For the shares of a foreign-funded joint venture, there is only a lower limit of not less than 25%, and there is no clear upper limit.
3. There is a certain proportion between registered capital and total investment. If the total investment is less than USD 3 million, the registered capital shall be equal to 70% of the total investment; Moreover, the registered capital shall not be reduced during the term of the joint venture, and it shall not be liable for the capital subscribed by the parties to the joint venture.
4. Sino-foreign joint ventures are limited liability companies, and their economic responsibilities are limited to their respective capital contributions.
The profits earned by foreign investors and their legitimate income can only be remitted in foreign exchange, which requires that the export proportion of products be stipulated in the contract and the balance of foreign exchange receipts and payments be emphasized in the operation.
Extended data:
Procedures for establishing Sino-foreign joint ventures
The general procedures for establishing a joint venture are: project initiation, negotiation, signing, examination and approval, registration and registration. The application for the establishment of a Sino-foreign joint venture is put forward by the Chinese side, and then the two sides sign the contract on the basis of equality, mutual benefit and consensus.
The examination and approval authority shall decide whether to approve or not within three months after receiving all the documents, and issue an approval certificate; A joint venture shall go through the registration formalities with the provincial industrial and commercial department where the enterprise is located within one month, and obtain a business license with this approval certificate. The date of issuance of the license is the date of establishment of the enterprise.
Baidu Encyclopedia-Sino-foreign joint venture