Legal Articles - China
ARTICLES ON LAW, BUSINESS AND CHINA
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In recent years, there have been many changes to the rules regulating foreign invested enterprises ("FIEs") in China. Most of these changes are very positive, simplifying and streamlining the processes for foreign investment and reducing the related costs.
SELLING AN OWNERSHIP INTEREST IN A COMPANY IN CHINA
Although equity transfers by foreign invested enterprises in China have become very common in recent years, the process to complete an equity transfer is still time consuming and should be handled by experienced professionals with legal and financial knowledge using up-to-date practices. We provide a brief summary of the key steps for a seller/transferer to complete an equity transfer in China based on general requirements and practices adopted in various transactions in China.
Although equity transfers by foreign invested enterprises in China have become very common in recent years, the process to complete an equity transfer is still time consuming and should be handled by experienced professionals with legal and financial knowledge using up-to-date practices. We provide a brief summary of the key steps for a seller/transferer to complete an equity transfer in China based on general requirements and practices adopted in various transactions in China.
Closing a subsidiary or wholly foreign-owned enterprise in China is time consuming, but simplified procedures are now available for companies that have a positive inspection record, owe no taxes, and have no record of debt evasion or non-compliance. We outline a recent WFOE deregistration to illustrate time savings that can be realized using simplified procedures.
The National People’s Congress of the People’s Republic of China passed the Foreign Investment Law on March 15, 2019, replacing an earlier version of the same law. The new law, which has been under negotiation since 2015, will come into effect on January 1, 2020. Although many provisions, such as relaxed approval requirements for foreign investment, are already in place under existing regulations, other provisions offer intriguing possibilities for California investors interested in accessing the large market for goods and services in China.
EMPLOYEE NON-COMPETES IN THE PRC
Non-disclosure, non-compete and non-solicitation clauses are commonly used in PRC employment. A non-compete clause in particular, due to its restrictive nature, has a significant impact on both parties and typically requires use of complicated drafting and implementation techniques to achieve the parties’ goals. Understanding the legal impact and requirements is key for both employers and employees.
WRITE A JOB DESCRIPTION FOR CHINESE EMPLOYEES
Almost all employment contracts in China include clauses describing the position, scope of work and duties of the employee. They are such common clauses that many employers neglect or underestimate their importance to a practical binding relationship and as a key basis of the employer’s legal rights vis-à-vis its employees in the employment relationship. When dismissal becomes necessary, the written job description can be key.
Non-disclosure, non-compete and non-solicitation clauses are commonly used in PRC employment. A non-compete clause in particular, due to its restrictive nature, has a significant impact on both parties and typically requires use of complicated drafting and implementation techniques to achieve the parties’ goals. Understanding the legal impact and requirements is key for both employers and employees.
WRITE A JOB DESCRIPTION FOR CHINESE EMPLOYEES
Almost all employment contracts in China include clauses describing the position, scope of work and duties of the employee. They are such common clauses that many employers neglect or underestimate their importance to a practical binding relationship and as a key basis of the employer’s legal rights vis-à-vis its employees in the employment relationship. When dismissal becomes necessary, the written job description can be key.
