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Procedures for Establishing Chinese-Foreign Equity Joint Ventures (EJV), Chinese-Foreign Cooperative Joint Ventures (CJV) and Wholly Foreign Owned Enterprises (WFOEs)
(1) Project Verification and Approval. Joint ventures and cooperative joint ventures established within China's territory must be able to promote the development of China's economy and the improvement of its science and technology for the benefit of socialist modernization. Businesses and industries in which the establishment of joint ventures is encouraged, prohibited or restricted by the State shall be decided in accordance with Provisions of the State Council for the Encouragement of Foreign Investment and the Catalogue of Industries for Guiding Foreign Investment.
If an investment project is subject to verification and approval, the application for verification and approval procedures should be submitted to the development and reform department, and the relevant documents should be obtained from the relevant departments of urban and rural planning, land resources and environmental protection based on the actual situation of the project.
(2) Name Pre-registration. Application for company name pre-registration should be submitted to the registration authority, the State Administration for Industries and Commerce (SAIC) or its local subsidiaries. Then the Notification of Company's Name Pre-Approval will be issued.
(3) Examination and Approval of Contracts and Articles of Association; Applying for and Obtaining a Certificate of Approval for the Establishment of Enterprises with Foreign Investment
Upon the approval of the project, the Chinese investor(s) shall submit the contract and articles of association and other legal documents to the examination and approval authority (commerce departments). The examination and approval authority shall decide whether or not to approve the establishment of the EJV within 90 days (or the establishment of the CJV within 45 days) of receiving a feasibility study report, contracts, articles of association and other documents. Upon approval, the commerce department will issue a certificate of approval.
(4) Applying for and Obtaining a Business License. Upon obtaining a certificate of approval for the establishment of enterprises with foreign investment, the Chinese and foreign investors shall register at and obtain the business license from the State Administration for Industries and Commerce (SAIC) or its local subsidiaries within 30 days. The signing date of the business license is regarded as the date of establishment of the EJV/CJV.
(5) Post-establishment Registrations. Joint ventures and wholly foreign-owned enterprises shall go through other registration formalities at relevant departments within 30 days upon obtaining the business license in order to conduct daily operations. The post-establishment registrations include tax registration, customs registration, forex registration and opening foreign exchange and RMB bank accounts.
One-Stop Examination and Approval Services
To facilitate the examination and approval procedures for Chinese and foreign investors and to improve government efficiency, many local governments require commerce and other relevant departments to provide One-Stop Examination and Approval Services by handling matters concerning foreign investment in a centralized manner. All provinces, autonomous regions and municipalities directly under the Central Government and separate-planning cities have established Foreign Investment Service Centers to provide one-stop services for foreign investors. The services provided include the following:
A. at the earlier stage, the Center can help foreign investors select partners and sites, prepare and submit project proposals, register the enterprise's name, prepare a feasibility study report, draft contracts and articles of association, and apply for a business license;
B. at the mid-stage, it can help foreign investors handle construction-related procedures, e.g. planning and design, engineering construction, land use, environmental protection, fire protection, and utilities;
C. at a later stage, it can help foreign investors recruit employees and provide relevant information and other services.
In addition, consulting firms, law firms, accounting firms and other intermediary agencies can also provide investors with efficient and effective services.