Set up a Joint Venture

How to Set up a JV Company in Mainland China

Evidently, the meaning of joint venture is sino-foreign joint venture, it is not like a partnership wholly owned by foreign enterprises or wholly owned by domestic citizens. The major difference is that the structure of company is wholly owned by Chinese partners and foreign companies with 2 or more shareholders with a joint business agreement and set up a board of directors appointed by contributors ( investors ).

1. Requirements of Chinese Shareholders: legally business entities ( local registered companies such as LLC, LLP, WFOE, WOFE, FICE and other legal corporations ), or Chinese legal citizens ( individual shareholders ).

2. Requirements of foreign shareholders: legally oversea entities ( foreign registered enterprises such as LLC, LLP and other approved certificates of registration issued by foreign countries ), or non residents ( foreign individuals ).

3. Requirements of the board of directors, set up a joint venture you have to sign a joint business agreement to guarantee the proportion of shares and ownership interest and all members ( shareholders, investors ) need to appoint 3 individuals at least to be the directors ( no restrictions of nationality ).

Process of Registering a Joint Venture

  • Prepare legal files for shareholders, investors.
  • Verify authenticated and notarized documents.
  • JV company name approval for both languages.
  • Appoint executive director ( legal representative ).
  • Set up a list of board members, sign appointment files.
  • Sign Joint business agreement and articles of association.
  • Appoint an independent supervisor and a financial executive.
  • Courier documents to SMEsChina and submit in time.
  • Once you have above everything, whole process needs 20 workdays.

We help you starting up a joint venture easily and quickly

Why Choose Us. All-round guidance for preparing required documents and filling in legally files and paper, application forms, joint venture business agreement.

What JV Does. Business activities such as: engineering, construction management, international trading, consulting and services, IT, technologies, e-commerce etc.

Online Registry. Whole process do not need you coming Mainland China in person with our readily comprehensible assistance without special terminologies by online.

Tax Returns. Each Chinese local registered company needs to register taxpayer in time within 30days once license be approved and report income, VAT, profits.

Views of Chinese Joint Venture

View 1. Business Advice

Collaboration between foreign business entities and Chinese partners can provide more opportunities and innovative products, technologies, ideas to Chinese customers and market. And when foreign brands and Chinese local partners to work together can grow up businesses faster and better. Due to partially restricted industries that foreign investors, shareholders must comply with Chinese laws and regulations on joint ventures to own 49% shares or less. Suggest you contacting our teams to check the related rules.

View 2. Structure of JV Corporation

Basically, the structure of a joint venture includes 4 parts:

1. Board of shareholders ( from Chinese or foreign countries ), can be the individuals or corporations.

2. Board of directors ( appointed by the board of shareholders, can be Chinese or non residents ), the minimum board of directors is 3 persons.

3. Legal representative ( known as executive director ), as a legal person can be a Chinese or a non resident ( this position can be from board of directors or external person, for example, a senior manager, employee or a management member ). But legal representative can not be the supervisor ).

4. Supervisor, as an executive secretary is responsible for daily supervision and management for board of shareholders. Similarly, supervisor also can not be the legal representative.

View 3. Adding or Removing Shareholders

First you have to understand, once you changing structure of shareholders, you must submit application procedure to change the corporate type to WFOE ( Wholly Foreign Owned Enterprise ) or DIE ( Domestic Invested Enterprise ). And handle debts, share profits and labor relations in terms of the previous agreement of joint business venture.

Same way, add a new shareholder or more also need board of shareholders to sign joint business agreement and articles of association, if need you may reset up a list for board of directors.

View 4. Changing Procedure for Key Members

This is an universally situation for joint venture registered in any countries, maybe you need to hire a local foreign citizen or Chinese as a salesman or major manager to operate daily businesses to expend market, however sometimes you must change information of registration for these positions when they leaving your company. So why shareholders prefer to set up key corporate structure through choosing from the board of shareholders or families for avoiding troubles because the complexly changing procedure and process.

Although changing process for key positions ( major manager, supervisor, directors and legal representative ) and information of registration is easily completing through Chinese business registration system or SMEsChina’s assistance and only need the board of shareholders to sign related legal documents ( removal and reappointment ).

However you have to apply for a new business licence and certificate of registration for your Chinese joint venture from local government office, this procedure needs approximate 20 workdays ( around 1 month ), and bad news is whole process will affect your corporate operations such as invoicing, importing and exporting businesses and bank transactions ( legal representative changing needs to reset up import and export permits and corporate bank permit and internet banking etc. ).

Ultimately, whole changing planing depends on your decision, you can reset up company structure anytime if you have everything.

View 5. How to start the process for JV

1. If you have decided starting registering a China company as joint venture, you can contact SMEsChina teams to get details Proposal and standard quotation first, later you will receive one EXCEL form , you have to fill it by yourself and confirm the JV structure and key positions for company.

2. Then, our consultants will list required documents you have to collect and prepare in your home country.

3. Download model articles and ask all members to sign with black ink pen.

4. Courier these signed documents to SMEsChina offices.

5. Be patient waiting for 20 workdays to obtain business licenses.

FAQs of Registering a Joint Venture in China

As an oversea corporation or a foreign citizen, if you want to register a Chinese JV with a Chinese company or individual, the minimum shareholdings is 25% for foreign shareholders in terms of Chinese corporate laws and regulations on sino-foreign joint venture. If your shares less than 25% your application of registration will not be approved.

All corporate shareholders can inject registered capital within 30 years once company be approved, all Chinese enterprises whatever company type is, all of them have the discretion to decide the timeline and how much amount for transferring registered capital.

Its easy to understand, here you may refer to the calculation:

Example: If the total registered capital is 100,000 USD for setting up a new joint venture in Mainland China. Foreign shareholder(s) own 70% and Chinese shareholder own 30%.

Calculation as below:

1. Foreign cooperator shareholdings: 100K USD * 70% = 70K USD. The capital amount will be injected from foreign shareholder’s oversea account to corporate bank account of joint venture with USD ( common international currency, like Euro, GBP, JPY, HKD, AUD, KRW, CAD ).

2. Chinese cooperator shareholders is 30K USD. Company registered capital will be injected from Chinese local bank account to corporate bank account of joint venture with RMB. How to calculate exchange rate? Depends on foreign exchange prices on the day quoted by the PBOC ( People’s Bank of China ).

Legal representative ( executive director ), because in China, legal person be appointed by the board of shareholders, and his or her full name will be printed on all public certifications, such as certificate of registration of foreign invested enterprises, business license, import and export permits or other special permits, corporate bank permit and internet banking, food business permit, liquor sales license, etc. Once changing legal representative, means whole process will affect daily operations for your company ( WFOE, Joint Venture, or other company types ).

You should apply for change procedure for company structure, like board of shareholders, board of directors, executive director ( legal representative ) if your employee or Chinese partner intends leaving your registered joint venture, if shareholders leave the enterprise you have to change corporate type to wholly owned company or domestic owned business.

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We Help You Setting up Joint Venture in China

Check if setting up a private company is right for you, how you launch a corporation depends on what business activities your company does. It can also affect the processes of registration and different requirements for your preparation.

SMEsChina focus on the growth of enterprise and providing a variety of business solutions in the area of strategy consultancy, business registration, company formation, incorporation of domestic invested enterprise, joint venture services, finance and audit services, HR and payroll, corporate bank account, resident permit, immigration and visa, trademarks and legal compliance. If you have everything to set up a private business in Mainland China, you can get in touch with our teams to get more useful information and online guidance.

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