Companies Limited by Shares

June 02, 2001 | BY

clpstaff &clp articles

There have been an increasing number of multinational companies transforming, or planning to transform, their subsidiaries in China into companies…

There have been an increasing number of multinational companies transforming, or planning to transform, their subsidiaries in China into companies limited by shares with foreign investment (CLSFIs). For the purposes of such transformation, the following issues need to be taken into consideration.

Approval Authority

The PRC Company Law  (中华人民共和国公司法) (Company Law) governs CLSFIs. The Certain Questions on the Establishment of Foreign Investment Companies Limited by Shares Tentative Provisions (Tentative Provisions) promulgated by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) in 1995 are also applicable to CLSFIs in practice and supplement the Company Law. According to the Tentative Provisions, the approval authority for CLSFIs is MOFTEC. However, in practice, approvals have been granted by MOFTEC or the local authority in charge of foreign direct investment authorized by MOFTEC.

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