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Types of Corporations
In China, the following are common forms of incorporation:
Overseas Investments:
Equity Joint Venture (EJY)
- The foreign investors will have a holding of at least 25% in the Chinese company.
- The registered share capital must cover a specific percentage of the total investment in the company. This percentage varies between 33% (an investment of over $ 36 million) and 70% (an investment of under $ 3 million).
A Joint Cooperative Venture (CJV)
- A Joint Cooperative Venture is usually set up for a specific project or partnership for a period of time that is defined in advance.
Wholly Foreign Owned Venture (WFO)
- There are no minimum or maximum limits regarding the amount of the foreign investment.
- In recent years over 65% of foreign investments in China have been in the form of a WFO, mainly because of the absence of a minimum investment requirement.
Chinese Holding Company (CHC)
- This is intended for a company that is interested in consolidating a number of investments in China to one body.
- There are legal requirements in China regarding the credit rating of a foreign investment in a CHC. The total value of the investor's assets and his investments in a company in China must be in excess of the legally defined minimum.
Joint Stock Company
- The minimum registered share capital is CNY 30 million. The minimum for a company traded on the Stock Exchange is CNY 50 million.
- The foreign investors' share must be at least 25% of the registered capital.
Branch
- At present, only foreign companies in the financial and services sector, subject to the restrictions specified in Chinese law, may set up a branch in China.
Representative Office (RO)
- A representative office is a type of operation with low financial expenses.
- The aim of the RO is the creation of a presence in China and promotion of contacts/supervision/management investigations in China.
- The RO may not issue accounts to the Chinese market for sales and services in China.
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