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ADVISORY MEMORANDUM
RE: The analysis of the potential EJV partners within the PRC and the direct acquisition of
ACME Inc., stock interest in Laingchu Co.
This document is to be read in conjunction with the latest Foreign Investment Industrial
Guidance Catalogue released in 2015 by National Development and Reform Commission
(NDRC) in association with the Ministry of Commerce (MOFCOM) in China.
1.1 Given the background of your firm, it is very important for us to realize that in the interest of
the parties involved, we will be operating under the jurisdiction of the relevant International
Contracts Law agreed upon at the Geneva Convention et al, Law of the People's Republic of
China.
1.2 Before we delve any deeper into the analysis of your firms position as a potential acquirer
and equity joint venture partner within the People's Republic of China we must understand the
idiosyncrasies of the Chinese Operating System pertaining to Foreign Equity Joint-Venture
Partners. To get a deeper background knowledge of the functioning and the pedigree of Joint-
Ventures in China we must take a brief look at the Law of the People's Republic of China on
Sino-Foreign Equity Joint Ventures. (Doc. no. Order of the President [2001] No.48). Prior to
engaging ourselves in any particular details of your case, I want to make an important note about
a few critical procedural red tapes that must be highlighted to understand the venture. The Article
3 of the Accord, which states that a firm of your stature must be first approved by the approval
authority which is the state foreign economic relations and trade administrative department and
then you must register with the State Administrative Department for Industry and Commerce as
an LLC, in order to obtain a business license before commencing any operations. Given the
important role of the regulatory authorities in the PRC, it is of the utmost importance that you
Draft 1 !2
understand to follow these procedures to the letter in order to gain state approval.
1.3 [Were not in Kansas anymore extension, a further background into why PRC JV arena is
different and commands different focus as compared to the US/Europe]
Implementing Regulations of the Law of the People's Republic of China on Sino-Foreign
Equity Joint Ventures (Revised in 2014)
Article 4. Conditions of non-approval
Article 11. Contract Particulars
Article 13. Articles of Association particulars
1.4 [Discussing the roles and defining the relationship of NDRC, MOFCOM, SAIC, SAFE and
other regulatory authorities to the PRC and Foreign Companies within China.]
Introduce the Foreign Investment Catalogue
Stipulations that affect MNE breeding crop varieties, edible oil etc
2.1 [Outlining the benefits entitled to MNE Corp. as a foreign investor by the Government of
China]
benefits pertaining to foreign intellectual property (innovation) sharing, Neospore
Trademark
2.4 [WFOE]
why is it a bad idea (overview)
business limitations can only
conduct business with licensed
categories, additional taxes
Possible solutionsFICE v.
WFOE