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Equity Joint Venture (EJV) is the second most common manner
used by more than 25% of foreign investors establishing a company in Nanchang.
Therefore knowing the EJV registration in Nanchang is important for investors
to decide their business blueprints. Nanchang EJV Registration is also called
Nanchang EJV setup, Nanchang EJV registration, Nanchang EJV incorporation and
Nanchang EJV establishment.
Nanchang Equity Joint
Venture (EJV) – Concept of Equity Joint Venture (EJV) in Nanchang
Equity joint venture in Nanchang is also called as
Sino-Foreign Equity Joint Venture (EJV). Joint ventures are usually established
to exploit the market knowledge, preferential market treatment, and
manufacturing capability of the Chinese side along with the technology,
manufacturing know-how, and marketing experience of the foreign partner. Other
economic organizations or persons and Chinese companies, which are featured by
joint contribution, are sharing of risk, profits and losses in proportion to
their respective contributions towards the registered capital.
Nanchang Equity Joint
Venture (EJV) - Advantages for Foreign Equity Joint Venture
1. Shared resources and complementation of advantages, given
full play of the network and the famous brand already established by the
Chinese enterprise, as well as smooth entry into the Chinese market；
2. Joint venture enables the foreign investor to utilize the
geographic advantage of the Chinese enterprise for reasonable and lawful
reduction of various fiscal charges and large reduction of operating cost；
3. Entitled to foreign investor preferences.
Nanchang Equity Joint
Venture (EJV) - Required documents for Nanchang EJV Registration
1. Business registration documents of all parties to the
joint venture;
2. The foreign partner's bank reference letter;
3. Real estate rights certificate or office lease contract;
4. The curriculum vitae and ID card of the legal
representative;
5. The ID cards of individual shareholders and directors;
6. The feasibility study report of the proposed
incorporation;
7. The contract and articles of association of the joint
venture.
Nanchang Equity Joint
Venture (EJV) - Forms of Investment and Terms
EJV needs a separate legal person to represent them to the
government. Meanwhile, an EJV’s control, risk, and profits are divided in
proportion to the equity shares invested by the parties.
Normally operation of a joint venture is limited to a fixed
period of time from thirty to fifty years. In some cases an unlimited period of
operation can be approved, especially when the transfer of advanced technology
is involved. Profit and risk sharing in a joint venture are proportionate to
the equity of each partner in the joint venture, except in cases of a breach of
the joint venture contract.
Shareholdings in a joint venture are usually non-negotiable
and cannot be transferred without approval from the Chinese government.
Investors are restricted from withdrawing registered capital during the life of
the joint venture contract. Regulations surrounding the transfer of shares with
only the approval of the board of directors and without approval from
government authorities will probably evolve over time as the size and number of
international joint ventures grow.
There are specific requirements for the management structure
of a joint venture but either party can hold the position as chairman of the
board of directors. A minimum of 25% of the capital must be contributed by the
foreign partner(s). There is no minimum investment for the Chinese partner(s).
It is preferable that foreign exchange accounts are balanced
in order to remit profits abroad so that the repatriated foreign exchange is
offset by exports from the joint venture. With the elimination of foreign
exchange certificates and the further opening of the Nanchang market, this
requirement is becoming more and more relaxed.
The permissible debt to equity ratio of a joint venture is
regulated depending on the size of the joint venture. In situations where the
sum of debt and equity is less than US$ 3 million, equity must constitute 70%
of the total investment. In joint ventures where the sum of the debt and equity
is more than US$ 3 million but less than US$ 10 million, equity must constitute
at least half of the total investment. In cases where the sum of the debt and
equity is more than US$ 10 million but less than US$ 30 million, 40% of the
total investment must be in the form of equity. When the total investment
exceeds US$ 30 million, at least a third of the sum of the debt and equity must
be equity.
Equity can include cash, buildings, equipment, materials,
intellectual property rights, and land-use rights but cannot include labor. The
value of any equipment, materials, intellectual property rights, or land-use
rights must be approved by government authorities before the joint venture can
be approved.
After a joint venture is registered, the entity is
considered as a Chinese legal entity and must abide by all Chinese laws. As a
Chinese legal entity, a joint venture is free to hire Chinese nationals without
the interference from government employment industries as long as they abide by
Chinese labor law. Joint ventures are also able to purchase land and build
their own buildings, privileges prevented to representative offices. Kindly contact us for more information on operation.
Tannet Malaysia is an international consultant firm based in Hong Kong, Shenzhen. We do have over 10 branches in China which I believe we are your best choice for your ASIAN investment. We provide one stop business solution from pre-setting up preparation to incorporation, management to operation, market strategics and brand protection and etc. Kindly contact us for more information.
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