中文

I. HONGKONG COMPANY FORMATION

The following are 2 types of companies most commonly used in Hong Kong ( PRC citizen may be 100% owner of the following companies ): -

1. HONG KONG LIMITED COMPANY

.....Hong Kong limited companies need to have at least 1 shareholder, 1 director and 1 company secretary. All nationalities can hold the above posts including mainland Chinese or overseas people. Clients may also choose to use our nominee shareholder, nominee director and company secretary services. The company must have its registered office in Hong Kong. Clients may use our address as their registered office address.

.....Limited company means the liabilities of the shareholders are limited.

2. OFFSHORE OR BVI COMPANY

.....Many businessmen use BVI companies to hold shares or property in Hong Kong. BVI companies are also being used to open bank accounts in Hong Kong to keep savings in Hong Kong or foreign currencies.

.....BVI companies can be owned by one or more shareholders. The number of directors could be one or more. If a BVI company does not carry on business in Hong Kong, it needs not be registered with the Hong Kong Company Registry and does not have to pay tax in Hong Kong.

We need the following information for formation of companies: -

1 Company Name
2 Shareholders, / Owners, names, addresses, occupation, passport / ID No. and number of shares to be issued to each of them
3 Directors, names, addresses, occupation and passport/ ID No.
4 Company Secretary's name, address, occupation and passport/ ID No.
5 Registered Office / Correspondence Address

Please advise us as to which of the following services are required by you.

1. Formation of Company

a) Hong Kong Limited Company
b) Hong Kong Unlimited Company
c) BVI Company

2. Services on annual basis
a) Company secretary
b) Registered office
c) Nominee shareholder
d) Nominee director

3. Company Search

4. Others
a) Transfer of shares
b) Change of directors
c) Change of company secretary
d) Change of registered office
e) Annual returns
f ) Merger and acquisition and restructuring
g) Deregistration of company or winding up 

II. CHINA COMPANY FORMATION

(1) What is the economy in China?

Since the opening policy launched in China in 1979, there has been rapid economic growth. In 2005 the GDP is above US$2,225,700M and the growth rate is above 9.9% p.a.

Her major trading partners include Hong Kong, Japan, USA, Europe and Australia. Textiles, energy resources, agriculture and light industry are the major industries. Imported products include motorcars, aircrafts, machinery, steel and chemicals.

Following the entry of WTO it is envisaged that economy growth in China is still strong in the next couple of decades.

(2) What are the forms of companies for foreign investments doing business in China?

Foreign enterprises can establish in several forms of organization in China:

�� Co-operative joint venture

�� Equity joint venture

�� Wholly foreign-owned enterprise

�� Holding companies (foreign investment companies)

�� Representative offices

(3) Can foreign enterprises only establish representative offices in China? 

Foreign enterprises can set up representative offices in China.  According to Article 4 of the Detailed Rules on Foreign Representative offices, a foreign resident representative office must not engage in profit-making business operations in China directly.  It can only engage in business activities such as promotion, market studies and exchange of technology on behalf of its parent company. 

The following basic requirement has to be met in order to set up a resident representative office in China:

- Be a registered company in its country of origin;

- Have a good reputation in its business;

- Provide true documents as required by Law;

- Follow the required application procedures.

(4) Is business license required for doing business in China?

It is very important to obtain business license in China before setting up the operation of the business. The license permits the holder to open bank accounts, register with the local tax bureau for payment of income tax on the project and file employee income tax.

(5) What domestic markets will be opened for foreign investments following China's entry to WTO?

�� Textile

�� Import and export trading

�� Information technology

�� Automobiles manufacturing

�� Services including banking, telecommunications, insurance and professional services.

(6) What promises had been made when China entered WTO?

When Chinaˇs entry to WTO, four phases were promised as following: cutting tariff, diminishing or eliminating non-barrier tariff, agriculture and service industries, including:

1) Average rates of tariff will be lower from 15% to 10% by 2005.

2) 400 kinds of import quotas, that is, non-barrier tariffs, will be eliminated by 2005.

3) According to the Agreement of Agriculture Cooperation between China and USA, China agreed to lift the embargo on the export of TCK wheat from 7 states of USA and allow more than 6,000 meatpacking plants to enter China market.

4) Service market, including banking, insurance, tourism, telecommunications and so on, will be open step by step.

(7) What is Closer Economic Partnership Arrangement?

'CEPA' is China's free trade agreement with Hong Kong. It grants easier access to China markets for Hong Kong-made products, and Hong Kong-based service companies which include:-

1. Duty-free export to China for Hong Kong-made products
1,407 categories of 'Made in Hong Kong' products will be exempt from tariffs when exported to the mainland China.

2. Easier market entry for Hong Kong-based service providers
CEPA covers 27 service sectors and reduces, or removes geographical, financial and ownership restraints. Any nationality company can apply if it:

1) is incorporated in Hong Kong,

2) has operated for 3 to 5 years (depending on the sector),

3) is liable to pay Hong Kong profits tax, and

4) employs 50% of its staff locally

(8) How can non-HONG KONG companies benefit from CEPA?

Overseas companies, not based in Hong Kong, can take advantage of CEPA by outsourcing to, or partnering with a CEPA-qualified manufacturer or service provider in Hong Kong.

For Overseas manufacturers, you do not need to have an office in Hong Kong to benefit from CEPA. For your goods to qualify as 'Made in Hong Kong', you need only satisfy simple Rules of Origin. In essence, your products must be "substantially transformed" in Hong Kong.

If you are an overseas service-provider, you can partner with, or invest in, a CEPA-qualified company to benefit from easier access to the Chinese mainland

(9) What difficulties are the Processing Enterprises facing? Why shall three types of foreign-funded enterprises be chosen?

The Processing Enterprises Facing Difficulties

On 14 September 2006, five ministries jointly issued a circular on adjustments made to tax rebate rates for certain exports and on the expansion of the prohibited category under export processing trade (Circular No.139). Then on 29 September 2006, a supplementary circular (Circular No.145) on adjustments to tax rebate rates was issued under which export tax rebates for several product categories were removed and all the products for which export tax rebates were abolished this time round and earlier came under the prohibited category. Meanwhile, Customs stopped filing export processing trade contracts under the prohibited category.

Quite a chunk of raw materials imported by the processing enterprises are just under the limited or prohibited category; on the other hand, their products to sale in domestic market have been restricted, or even been absolutely prohibited, moreover, whoever has violated the foregoing regulations may be published on offense of smuggling. So most of the processing enterprises can’t operate normally without raw materials, and even though they have, they are still unable to develop the large domestic market.

We can foresee that the adjustment of the policies is just a start, but not an end at all. In the near future, more and more restrictions will be made by relevant government departments, especially on those processing enterprises which are lack of productivity with high environmental cost. It is an inevitable trend that the processing enterprises will certainly be replaced by three types of foreign-funded enterprises, including Sino-foreign joint ventures, Sino-foreign cooperative enterprise and wholly foreign-funded enterprise.

Six Major Advantages of Three Types of Foreign-funded Enterprises

1. Because of operating independently and being easily managed, they may have higher efficiency on operation, management and development in the future;

2. They are entitled to various kinds of preferential policies set to encourage foreign investment, such as, the preferential policy of one-year exemption and two-year 1/2 reduction of the charges of tax;

3. They can do various kinds of additional business officially whilst the processing enterprises can’t;

4. They can make out invoice of RMB and earn income with RMB;

5. They may reinvest their profits in their business and enlarge their production scale;

6. Their products may be sold to both domestic and overseas markets without any limitations on proportion of sales.

For more details, please see www.china-company-formation.com