The foreign-invested company is divided into sino-foreign joint ventures, sino-foreign cooperative company company, overseas company (it also called foreign-owned company) and foreign-invested stock company accordingly by virtue of methods of investment, distribution, risks, redeeming investment and assuming responsibilities.
The foreign-owned company refers to foreign company, enterprise, other economic organization or individual whose capital is invested by foreign investors totally in domestic by virtue of Chinese law. In accordance with the regulations of foreign-owned company law, the establishment of foreign-company shall be favorable to our national economy and ought to satisfy one of the following conditions at least: adopting international advanced technology and equipment; the whole or part of the products is exported. Generally, the organizational forms of overseas company are limited liability company or solely-invested company, including but not limited to the branches, including branch, office, representative office, set up by foreign company, enterprise, other economic organizations.
Wholly foreign-owned company, one of overseas companies, is established in domestic whose capital is shelled out by one foreign investor in accordance with Chinese law.
The similarities between the wholly foreign-owned company and individual-invested company:
They are all established in domestic as per Chinese law;
Their investors are sole;
They are all set up to deal in manufacture and operation for peofits.
The differences between the wholly foreign-owned company and individual-invested company:
The investor of the wholly foreign-invested company can be a foreign company, other economy organization or a non-Chinese resident, including foreigner or resident without nationality;
The establishment of wholly foreign-invested company shall be favorable to our national economy, adopt advanced technology and equipment or export the whole or part of its products. The application for establishing the wholly foreign-invested company need approved by competent department of state council foreign economy and trade or organs authorized by state council. After the approval, the foreign investor can apply for registration with the approved materials and obtain Business License. The establishment conditions for establishing individual business is relatively loose and the establishment procedures are relatively easy. As long as there are legal company name, contributions applied by investors, fixed manufacturing office, necessary manufacturing terms and staff, the company registration organs shall approve the registration within the legal term. The company need not submit approval documents except that the individual business is to deal in the business that ought to report toward pertinent organs for approval as per laws and regulations.
The assets of individual business can not be separated from that of investor and the individual business can not bear the company’s debt independently. Therefore, its debt shall be borne by individual’s assets. Thus, all individual business fail to possess legal person’s qualification. According to the regulations of overseas company law, any overseas company who fulfills the conditions of legal person as per Chinese law can possess the qualification of Chinese legal person. The wholly foreign-owned company, one of the overseas company, can obtain the qualification of Chinese legal person.
The wholly foreign-owned company has two types: one refers to the company that is invested and established by one foreign company or other economic organizations in domestic by Chinese law; the other refers to the company that is invested and established by one non-Chinese residents (foreign natural person or the residents without nationality).