Chapter One: Choice of Organizational Forms in China Suppose A and B plan to open a flower shop. Sole Proprietorship (Sole Proprietorship Enterprise Law of China 1999) General Partnership (full partner) Limited Partnership (limited partner) ( Partnership Enterprises Law of China,1997,2006) Corporation (Limited Liability Company) (Company Law of China, 1994,1999,2004,2005)
Organizational Forms for Foreigners Wholly-owned Foreign Enterprises Law of China (1986,2000) Chinese-Foreign Joint Venture Enterprise Law of China (1979, 2001) Chinese-Foreign Cooperative Enterprise Law of China (1988, 2001)
The Classification of Companies in China Q: In which organizational form may companies in China be established? LLC and Company Limited by Shares Article 2 The term "company" as mentioned in this Law refers to a limited liability company or a company limited by shares established within the territory of the People's Republic of China in accordance with the provisions of this law.
Classification of Company in China Corp. LLC Common LLCOne-person LLC Common One-person LLC SOC Stock Company Listed Corp.Non-Listed Corp.
1999 Corporation law2005 corporation law Minimum capital requirem ent LLC: Corp in manufacture : 500 thousand Corp in wholesale : 500 thousand Corp in retail : 300 thousand Corp in service : 100 thousand SC: 10 million LLC :30 thousand SC : 5 million Forms of contributi on Limited List forms In cash or in kind, intellectual property, land use rights and other non-cash properties which can be valuated and transferred in accordance with the law Capital contributi on rules Shareholders should make full contributions in accordance with the subscribed amount The first installments should not be less than 20% of registered capital Remaining: paid in 2 years
Two Organizational Forms of Corporation Attributes Org. Forms Amount of Capital (RMB) Number of Shareholders Number of Directors limited liability company 30,000 Or 100,000 for One-person Company only Less than company limited by shares 5,000,000More than 55-19