Wholly Foreign Owned Enterprises

By Gregory Sy

Wholly Foreign Owned Enterprises (WFOEs) or limited liability companies whose investors are purely foreign are quickly becoming the most popular method of foreign investment in China. While foreign companies once thought (and were often compelled by laws) that a local partner was necessary to operate business in China, this is increasingly no longer the case in a wide range of industries.

Characteristics of WFOEs:
- Between one to fifty shareholders
- Restricts the right to transfer shares
- Prohibits public offering of shares
- Equity is divided based on contribution to registered capital and not allocation of shares
- Liability is limited to the amount of registered capital contributed Read the rest of “China Business Vehicles: Part II” or post a comment

By Gregory Sy

While domestic companies have a wide range of alternatives in establishing business operations in China, foreign companies are more restricted, with the most common business vehicles for foreign investors being:

- Representative Offices
- Wholly Foreign Owned Enterprises 
- Joint Ventures (Cooperative and Contractual)

1. Representative Offices

General
The fastest and easiest method for a foreign company to establish a presence or ‘footprint’ in China is through registration of a Representative Office of a foreign company. Read the rest of “China Business Vehicles: Part I” or post a comment

By Gregory Sy, Grandall Legal Group

V. Termination and ‘Layoffs’

1. Under what circumstances can an employee be terminated without notice?

An employer may terminate an employee without requirement for notice in the following situations:

- during the probation period, if the employee is determined to be unfit for the position;
- employee materially breaches employer’s rules and regulations;
- employee engages in serious dereliction of duty, graft or corruption causing substantial damages to the employer’s interests; Read the rest of “Guide to Employment Law in China – 2008 (Part II)” or post a comment

By Gregory Sy, Grandall Legal Group

I. Employment Law Legislation

1. What legislation governs employment law in China?

Employment law in China is governed by a relatively comprehensive set of laws, more recently supplemented in late 2007 to strengthen workers’ rights.

Major laws include:
- Labour Law of the People’s Republic of China (1994) (“Labour Law”)
- Labour Contract Law of the People’s Republic of China (2007) (“Labour Contract Law”)
- Labour Arbitration and Dispute Resolution Law of the People’s Republic of China (2007) (“Labour Arbitration Law”) (effective May 1, 2008) Read the rest of “Guide to Employment Law in China – 2008 (Part I)” or post a comment

Maintaining your IP Portfolio

By Maarten Roos 

To maintain the exclusive rights to IP, an organization must have the mechanisms in place to guarantee continued protection.

First of all, someone must ensure that registered IP rights maintain their validity. Trademarks are registered for 10 years at a time, thus registrations should be extended before the ending of such a validity period. Failure to do so will result in the loss of all exclusive rights to the trademark. Domain names are cheap and easy to register, but a maintenance fee must be paid. Granted patents and designs will have a non-extendable validity of 10 years (for design and utility model patents) or 20 years (for invention) from the filing date, but an annuity must be paid each year to ensure continued validity. Read the rest of “Protection vs. Enforcement: Where to start your China IPR Strategy? Part II” or post a comment