Can foreign-owned enterprises
apply for listing? This is a question frequently asked by clients. According to Chinese law and relevant regulations, the wholly foreign-owned enterprise of single shareholder cannot apply for listing, it is necessary to change to a non-sole holding company and can apply for listing after meeting certain conditions. In this paper, we study and analyze the listed route and special matters needing attention.
Change of organization form
The restructuring of a limited company (including wholly foreign-owned enterprises) is a prerequisite for the transfer of shares of small and medium-sized enterprises in China.
The question of the qualification of natural persons in China
The sino-foreign joint venture law and the sino-foreign cooperative business enterprise law stipulate that the Chinese partner must be an enterprise or other organization within the territory of China. Therefore, domestic natural persons are generally not allowed to be shareholders of sino-foreign joint ventures or cooperative enterprises, or as the sponsors of sino-foreign joint venture or cooperative joint stock co., LTD. In the process of applying for listing, domestic promoters should be non-natural.
Registered capital and proportion of investment
1. Registered capital
Article 7 of the provisional rules stipulates that the registered capital of foreign-invested joint-stock companies shall not be less than RMB 30 million. The company law (revised in 2013) stipulates that the limited liability companies and joint stock companies with foreign investment are applicable to the company law. As a new law, it does not require the minimum registered capital of foreign-invested companies to be RMB 30 million.
In addition to laws, administrative regulations and the decision of the State Council to specify the minimum amount of registered capital for certain industries, foreign invested enterprises are reorganized into a limited company, whose registered capital does not need to reach RMB 30 million.
2. Proportion of investment
Article 7 of the provisional rules stipulates that foreign ownership of foreign-invested joint-stock companies must be higher than 25%.
But on December 30, 2002, the Ministry of Foreign Trade and Economic Cooperation (now Ministry of Commerce) coordinated the state administration of taxation, state administration for industry and commerce, the State Administration of Foreign Exchange announced "notice concerning the strengthening of approval, registration, foreign exchange and tax management of foreign-invested enterprises". Article 2: according to the current foreign investment laws and regulations, sino-foreign joint ventures, sino-foreign cooperative enterprise with foreign investment in the registered capital of foreign investors, investment proportion is generally not less than 25%. Where the contribution of foreign investors is less than 25%, except as otherwise provided by laws and administrative regulations, the approval and registration procedures for the establishment of foreign-funded enterprises shall be subject to approval and registration. The approval certificate issued by a foreign-funded enterprise with the words "less than 25% of foreign capital" shall be issued. Where the registration is made, the business license of a foreign-invested enterprise shall be issued with the words "less than 25% foreign capital" after "enterprise type". At the same time, in article 3, enterprises with less than 25 percent of foreign capital do not enjoy tax benefits. The regulation actually recognizes that foreign investment in enterprises with foreign investment can be less than 25%.
The company law (revised in 2013) stipulates that limited liability companies and joint stock companies with foreign investment are applicable to the company law. The company law does not require foreign shareholders to hold no less than 25% of their shares in foreign investment companies. The notice of the ministry of commerce on improving the administration of foreign capital audit (business capital letter  no. 314) stipulates that the amount of capital contribution, means of contribution and term of investment shall be agreed upon by the investors (shareholders, sponsors) of the foreign invested enterprise. And it shall specify in the contract of the joint venture (cooperation) and the articles of association of the company. The competent commercial departments at all levels shall make the above-mentioned contents in the approval clear.
Therefore, if foreign-invested enterprises are restructured into a joint stock limited company, the shareholding ratio of foreign shareholders should not be 25%.
The restricted period of stock
Article 8 of the provisional regulations stipulates that "the transfer of the shares of the initiators shall be carried out three years after the company has been registered and approved by the original examination and approval authorities of the company." However, the business rules of the national SME share transfer system (trial) (revised on December 30, 2013) have no provisions on the stock locks of initiators. It only limits the transfer of shares between the controlling shareholder and the actual controller of the listed company. It is clear that the three-year restriction period is not conducive to the circulation of foreign enterprise shares.
The company law (revised in 2013) stipulates that limited liability companies and joint stock companies with foreign investment are suitable for company law. Article 141 of the company law stipulates: "the shares of the company held by the sponsors shall not be transferred within one year from the date of establishment of the company." Shares issued before the company has been publicly issued shall not be transferred within one year from the date of the company's shares listed on the stock exchange. At the same time, the second paragraph of this article has certain restrictions on the transfer of shares of the joint-stock company. Therefore, the author believes that in addition to the sponsor has a period of restriction, as well as the controlling shareholder and actual controller have restrictions on sale, the shares of a foreign-invested joint-stock company shall not be limited to three years. However, after the expiration of the restriction period, the transfer of the shares of the initiator of the foreign investment company shall be approved by the commercial department with corresponding rights.
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