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| - | + | Most Foreign Invested Enterprises (FIEs) are governed by a board of directors and senior management. An exception exists for Cooperative Joint Ventures that the parties have selected not to incorporate (these are governed by a management committee). | |
| + | |||
| + | Powers: The Chairman, as the legal representative of the enterprise, has the power to legally bind the enterprise and bears significant duty for its acts and | ||
| + | |||
| + | omissions. Most of the powers and func... | ||
| + | |||
| + | Board of Directors | ||
| + | |||
| + | Most Foreign Invested Enterprises (FIEs) are governed by a board of directors and senior management. An exception exists for Cooperative Joint Ventures that the parties have chosen not to incorporate (these are governed by a management committee). | ||
| + | |||
| + | Powers: The Chairman, as the legal representative of the enterprise, has the energy to legally bind the enterprise and bears substantial responsibility for its acts and | ||
| + | |||
| + | omissions. Most of the powers and functions of the board are set forth in the Articles of Association and in the Joint Venture Contract. | ||
| + | |||
| + | Quantity of Directors: The board of directors of each Wholly Foreign Owned Enterprises (WFOEs) and Joint Ventures are required to appoint among three and 13 directors. FIEs with few shareholders may be able to convince the examination and approval authority to dispense with the board of directors and use an executive director. | ||
| + | |||
| + | Membership: In an Equity Joint Venture (EJV), board membership have to be proportionate to capital contributions. The board have to have a Chairman, but need to have not have a Vice Chairman. If each are utilized, even so, then if the foreign investor selects the Chairman, the Chinese party must pick the Vice Chairman, and vice versa. | ||
| + | |||
| + | Meetings: Joint venture board meetings need to be held when a year, and a quorum is 2/three of the directors. For Equity Joint Ventures, unanimous consent of the board is essential for amendment of the Articles of Association, increase or reduction of the Registered Capital, merger or division, and termination and dissolution. The law is substantially far more flexible for Wholly Foreign Owned Enterprises - board meetings and quorum needs are governed by the WFOEs Articles of Association. | ||
| + | |||
| + | Director & Officer Liability: Director and officer liability law and enforcement is not as well-developed as in numerous Western nations. Correspondingly, the marketplace for directors and officers liability insurance is not particularly properly-created either. The Chairmans role as the enterprises legal representative encumbers him with each civil and criminal liability for the acts and/or omissions of the enterprise. Directors can be held liable for board resolutions that are illegal or that contravene the Articles of Association and lead to losses to the organization. Directors, supervisors and senior management personnel can be held liable if they result in losses to the enterprise by violating laws and/or the Articles of Association. | ||
| + | |||
| + | Management | ||
| + | |||
| + | Equity Joint Ventures should appoint a Common Manager, a single or more Deputy Basic Managers, and a Finance Manager. Even though not essential for other FIEs, this is widespread practice for these enterprises as properly. If a Chinese investor nominates the Basic Manager of an EJV, a foreign investor may nominate the Deputy Basic Manager, and vice versa. | ||
| + | |||
| + | General Manager: The General Manager is charged with day-to-day operation and could be a foreign national if the enterprise so chooses. The responsibilities of the Basic Manager need to be listed in the Articles of Association even if Chinese law does not demand the appointment of a Basic Manager (as in the case of WFOEs). The General Manager is charged by law with responsibility for formulating a management technique for the enterprise production, operations and management, employment and termination of employees (except those that need to be employed and dismissed by the board of directors) and implementing board resolutions and investment and organization plans. | ||
| + | |||
| + | Deputy Basic Managers: A Foreign Invested Enterprise could appoint one or more Deputy General Managers (EJVs are required to appoint at least one). | ||
| + | |||
| + | Finance Manager: An Equity Joint Venture is essential to appoint one particular or much more accountants to assist the General Manager with finances. This is also frequent practice for other FIEs. | ||
| + | |||
| + | Supervisors | ||
| + | |||
| + | LLCs are necessary to have supervisory boards, even though this is typically ignored in practice by WFOEs and Joint Ventures. [ We're Listening To You] | ||
Revision as of 01:40, 31 March 2013
Most Foreign Invested Enterprises (FIEs) are governed by a board of directors and senior management. An exception exists for Cooperative Joint Ventures that the parties have selected not to incorporate (these are governed by a management committee).
Powers: The Chairman, as the legal representative of the enterprise, has the power to legally bind the enterprise and bears significant duty for its acts and
omissions. Most of the powers and func...
Board of Directors
Most Foreign Invested Enterprises (FIEs) are governed by a board of directors and senior management. An exception exists for Cooperative Joint Ventures that the parties have chosen not to incorporate (these are governed by a management committee).
Powers: The Chairman, as the legal representative of the enterprise, has the energy to legally bind the enterprise and bears substantial responsibility for its acts and
omissions. Most of the powers and functions of the board are set forth in the Articles of Association and in the Joint Venture Contract.
Quantity of Directors: The board of directors of each Wholly Foreign Owned Enterprises (WFOEs) and Joint Ventures are required to appoint among three and 13 directors. FIEs with few shareholders may be able to convince the examination and approval authority to dispense with the board of directors and use an executive director.
Membership: In an Equity Joint Venture (EJV), board membership have to be proportionate to capital contributions. The board have to have a Chairman, but need to have not have a Vice Chairman. If each are utilized, even so, then if the foreign investor selects the Chairman, the Chinese party must pick the Vice Chairman, and vice versa.
Meetings: Joint venture board meetings need to be held when a year, and a quorum is 2/three of the directors. For Equity Joint Ventures, unanimous consent of the board is essential for amendment of the Articles of Association, increase or reduction of the Registered Capital, merger or division, and termination and dissolution. The law is substantially far more flexible for Wholly Foreign Owned Enterprises - board meetings and quorum needs are governed by the WFOEs Articles of Association.
Director & Officer Liability: Director and officer liability law and enforcement is not as well-developed as in numerous Western nations. Correspondingly, the marketplace for directors and officers liability insurance is not particularly properly-created either. The Chairmans role as the enterprises legal representative encumbers him with each civil and criminal liability for the acts and/or omissions of the enterprise. Directors can be held liable for board resolutions that are illegal or that contravene the Articles of Association and lead to losses to the organization. Directors, supervisors and senior management personnel can be held liable if they result in losses to the enterprise by violating laws and/or the Articles of Association.
Management
Equity Joint Ventures should appoint a Common Manager, a single or more Deputy Basic Managers, and a Finance Manager. Even though not essential for other FIEs, this is widespread practice for these enterprises as properly. If a Chinese investor nominates the Basic Manager of an EJV, a foreign investor may nominate the Deputy Basic Manager, and vice versa.
General Manager: The General Manager is charged with day-to-day operation and could be a foreign national if the enterprise so chooses. The responsibilities of the Basic Manager need to be listed in the Articles of Association even if Chinese law does not demand the appointment of a Basic Manager (as in the case of WFOEs). The General Manager is charged by law with responsibility for formulating a management technique for the enterprise production, operations and management, employment and termination of employees (except those that need to be employed and dismissed by the board of directors) and implementing board resolutions and investment and organization plans.
Deputy Basic Managers: A Foreign Invested Enterprise could appoint one or more Deputy General Managers (EJVs are required to appoint at least one).
Finance Manager: An Equity Joint Venture is essential to appoint one particular or much more accountants to assist the General Manager with finances. This is also frequent practice for other FIEs.
Supervisors
LLCs are necessary to have supervisory boards, even though this is typically ignored in practice by WFOEs and Joint Ventures. [ We're Listening To You]
