Door Ching Mia Kuang

Beginnend vanaf 1 December 2004, is een nieuw investeringsvoertuig beschikbaar aan buitenlandse investeerder geweest - de Chinese overheid staat en moedigt buitenlandse investeerder toe aan om de „Buitenlandse Commerciële Onderneming van de Investering“ (FICE) in China op te richten om in het groot, kleinhandels, en andere toegelaten ondernemingen te leiden. Zulk een type van bedrijfsentiteit bezit van het totale recht van handel en industrie. Het kan de invoer/de uitvoeractiviteiten alleen uitvoeren, onafhankelijk van de lokale invoer en het de uitvoerbedrijf of vestiging een verwerkende bedrijf.

Voorts vanaf 1 Maart 2006, laat de wet FICE toe om goedkeuringsdocumenten toe te passen en te verkrijgen bij de de lokale gemeentelijke Buitenlandse Economische Relatie en Commissie van de Handel, in plaats van uit Ministerie van Handel in Peking.

FICE is een openbare volledige aansprakelijkheidsvennootschap door buitenlandse investeerder. Het is een rechtspersoon. De buitenlandse investeerder heeft enige verantwoordelijkheid voor zijn winsten en verliezen. De beperkte aansprakelijkheid wordt door de hoeveelheid geregistreerd kapitaal erkend dat in de entiteit wordt ingebracht. FICE kan strategieën toepassen die effectief in het buitenland met de belangen van de moedermaatschappij in overeenstemming zijn. Om verschillende handelzaken te doen, moet het de vereiste vergunningen en de certificaten hebben.

Om een FICE in Shanghai te vestigen, wordt de buitenlandse investeerder opgedragen om de vereiste integratiedocumenten aan diverse autoriteiten voor registratie voor te leggen. It’s advisable for the investor to entrust an authorized consulting body or agency to do the tedious submission and application processes. [SBA Stone Forest Corporate Advisory (Shanghai) is an authorized agency]

Investor
The foreign investor may be a foreign company, enterprise, other economic organization, or a natural person.

(1) For a company/enterprise, the Certificate of Incorporation, Bank Reference Letter, and Audit Report in the recent one year are required.

(2) For a natural person, the Identity Certificate and Bank Reference Letter are required.

• the Certificate of Incorporation/Identity Certificate—-certified by the notary organ and the Chinese Embassy in your country

• the Bank Reference Letter—- issued by the bank in which foreign investor has a working or trading account and signed by an authorized bank officer

Capital Contribution
FICE’s minimum registered capital shall conform to relevant provisions of the Company Law. The registered capital shall be matched with the actual business activities. The amount of the initial capital contribution shall not be less than 15% of the registered capital, nor less than the statutory minimum amount of registered capital.

The investor is allowed to contribute registered capital in cash, in kind, or technology/intellectual property right, or other non-monetary properties that may be assessed on the basis of currency. The amount of the capital contribution in cash shall be no less than 30% of the registered capital.

Business Scope

According to “Administrative Measures on Foreign Investment in Commercial Fields”, an FICE can undertake the following business activities:

• Wholesaling: Selling goods and providing relevant auxiliary services to retailers, to industrial, commercial and institutional users, and to other wholesalers;

For FICE engaged in wholesale business, Commodity import and export is to be allowed.

• Retailing: Selling goods and providing auxiliary services for individual or collective consumption at a fixed location or via television, telephone, mail order, internet or vending machines;

For FICE engaged in retail business, import of commodities for self-marketing and purchase of domestically made products for export are to be allowed.

• Commission Agency: sales agents, brokers, auctioneers or other wholesalers selling other’s goods and providing relevant auxiliary services based on the contract for gaining commission fee;

• Franchising: Authorizing others to use one’s own trademark, trade name business model, etc. by signing a contract de name, or business method, in exchange for remuneration or franchising fees.

Registration

Reservation and application of Name
Prior to any of the following applications, the investor(s) should reserve a name for its prospective FICE with Shanghai Administration of Industry and Commerce (SAIC). SAIC requires that a proposed name and three other names be provided.

Choosing a business name
The Chinese name should be formatted as follows:
• First word - company name;
• Second word – activity;

If engaged in retail business, using Chinese words “商贸” ( read as “shang mao”, mean “business and trade” );
If engaged in wholesale business, using Chinese words “贸易” ( read as “mao yi”, mean “trade” )

• Third word - Shanghai;
• Fourth word - company structure
The use of ‘China’ ‘Sino’ and ‘International’ are not permitted in the Chinese name unless very special permission is given, although they are permitted in the non-Chinese name.

Registration of Approval Certificate
After the completion of Name Approval Notification, Approval letter and Approval Certificate are the next to be registered.

(1) For FICE intending to conduct retail business, the approval from “Shanghai Economic Committee” is required. The Articles of Association, Feasibility Study Report, Lease Agreement of the proposed store, etc. should be submitted at the time of application. Without retail business, registration procedure starts from item (2).

(2) With similar documents, apply for Approval Letter and Approval Certificate from Shanghai Foreign Economic Relation and Trade Commission. The municipal Approval Authority will review all documentation and give instructions in accordance with the Company Law and administrative regulations.

(3) If all is up to standard, the authority is able to give its approval and issue the certificate within 10 to 15 working days upon receiving all the required documentation.

Registration of Business License
Within 30 days after obtaining the approval certificate, the foreign investor will need to register and apply for a business license for the FICE from the municipal SAIC. As part of this step, the foreign investor should submit similar documentation to the authority for approval and filing.

Once the business license is issued, the FICE is deemed to be a legal person duly organized and existing under PRC laws and will have full operational rights to operate a business in China within the scope of its Business License.

Registration of Organization Code Registration Certificate
This is purely a procedural step. Organization Code Bureau will issue certificates within 1-3 working days.

Registration of Tax Registration Certificate
Once your Organization Code registration Certificate is approved then you may proceed with applications to the local tax authority. At the same time, you should also apply for the company seal and legal representative seal. Together with Approval Certificate, Business License and other documents, the formal application form affixed with seals should be submitted to the authority for their examination and approval.

Other Certificates
• Statistics Registration Certificate issued by Statistics Bureau;
• Foreign Exchange Registration Certificate issued by Foreign Exchange Supervision Bureau;
•Finance Registration Certificate issued by Finance Bureau;
•Customs Registration Certificate issued by Customs Bureau

Others
Having obtained approval from the tax and foreign exchange authorities, you are legally entitled to open USD Capital and RMB Basic Accounts. Then you may proceed with capital injection, capital verification and certificates renewal.

Information and Documents

• name and address of FICE
• lease agreement of FICE
• a written application for the establishment of FICE;
• Feasibility Study Report covering items such as technological process, equipment, raw material supply, market survey, economic results, infrastructure facilities, expected profitability, etc
• Articles of Association of the proposed FICE;
• Catalogue of import and export commodities for the FICE being applied for;
• a list containing the proposed chairman and the members of the FICE board of directors and appointment letters;
• an original Bank Reference Letter of the FICE investor;
• an original Certificate of Incorporation of the FICE investor;
• Audit Report in the recent one year of the FICE investor;
• other documents as may be required by the Approval Authority.

For establishing a store

Already existent foreign invested commercial enterprises applying to establish a store shall meet the following conditions:

1. Meet relevant regulations on urban development and urban commercial development.

2. Participate on time in and pass the joint annual review on foreign invested enterprises;

3. The registered capital of the enterprise has been paid up.

The whole procedure of establishing a store is the same with an enterprise set-up. The existent FICE is required to obtain a series of certificates for the proposed store. While in the process of application, the following submissions shall be made:

• an written application letter;
• the modified Articles of Association;
• the Feasibility Study Report pertaining to opening of the store;
• the Board’s Resolutions on opening of the store;
• the Lease Agreement of the store and copy of the Real Estate Certificate (landlord);
• the Capital Verification Report of FICE;
• copy of Auditing Report of FICE for the most recent year;
• copy of the Incorporation Certificate of the FICE investor;

Time and governmental charges

The whole process time shall be within 60 working days if all supporting documents and additional information are provided.

The total government charges for establishment of an FICE are estimated to be between USD 1,500 and USD 2,000.
The total government charges concurrently for establishment of an FICE and a store are estimated to be between USD 2,500 and USD 3,000.

Ching Mia Kuang, Partner SBA Stone Forest Corporate Advisory Co., Ltd.