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Letter of General Office of the Ministry of Commerce on Issues Concerning Transformation of Chinese-Foreign Equity Joint Ventures and Other Types of Enterprises into Foreign-Funded Joint Stock Companies
Promulgation Date:2014-06-24  Promulgation Number:S.B.Z.H [2014] No.516  Promulgation Department:General Office of the Ministry of Commerce

Letter of General Office of the Ministry of Commerce on Issues Concerning Transformation of Chinese-Foreign Equity Joint Ventures and Other Types of Enterprises into Foreign-Funded Joint Stock Companies

S.B.Z.H [2014] No.516

         

The competent commercial departments of all provinces, autonomous regions, municipalities directly under the central government, municipalities with independent planning status and the Xinjiang Production and Construction Corps:

In accordance with the provisions of Article 15 of the Interim Provisions on Several Issues Concerning the Establishment of Foreign-Funded Joint Stock Companies (Order [1995] No. 1, MOFTEC), the established Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly foreign-owned enterprises, if applying for transformation into foreign-funded joint stock companies, shall keep the profit-making records for the last three consecutive years. The Company Law of the People’s Republic of China revised in 2005 cancelled such requirements for companies as they must make profits in the last three consecutive years for issuance of new stocks or they must make profits in three consecutive years for application for the listing of their stocks, etc. Recently, the competent commercial authorities in some localities made consultation through letters: whether the transformation of Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly foreign-owned enterprises into foreign-funded joint stock companies still need to comply with the provision that they should make profits in the last three consecutive years.

After study, an explanation is made for some problems as follows: if Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly foreign-owned enterprises apply for transformation into foreign-funded joint stock companies, approval authority can carry out the Company Law of the People’s Republic of China, no longer requiring them to “keep the profit-making records for the last three consecutive years”. Next, the ministry will solve the above problems by revising relevant laws and regulations.

General Office of the Ministry of Commerce

June 24, 2014

         

(All information published in this website is authentic in Chinese. English is provided for reference only. )

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