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From Wildbison
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 energy to legally bind the enterprise and bears considerable responsibility 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 selected 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 duty 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 both Wholly Foreign Owned Enterprises (WFOEs) and Joint Ventures are required to appoint between 3 and 13 directors. FIEs with couple of shareholders could be capable 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 should be proportionate to capital contributions. The board must have a Chairman, but require not have a Vice Chairman. If each are utilised, nonetheless, then if the foreign investor selects the Chairman, the Chinese party have to pick the Vice Chairman, and vice versa.
Meetings: Joint venture board meetings have to be held after a year, and a quorum is two/three of the directors. For Equity Joint Ventures, unanimous consent of the board is essential for amendment of the Articles of Association, enhance or reduction of the Registered Capital, merger or division, and termination and dissolution. The law is drastically more versatile for Wholly Foreign Owned Enterprises - board meetings and quorum requirements are governed by the WFOEs Articles of Association.
Director & Officer Liability: Director and officer liability law and enforcement is not as well-created as in several Western nations. Correspondingly, the industry for directors and officers liability insurance coverage is not especially nicely-created either. The Chairmans part as the enterprises legal representative encumbers him with both 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 result in losses to the company. 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 need to appoint a Common Manager, one particular or far more Deputy Common Managers, and a Finance Manager. Even though not necessary for other FIEs, this is common practice for these enterprises as properly. If a Chinese investor nominates the Basic Manager of an EJV, a foreign investor could nominate the Deputy General Manager, and vice versa.
Basic Manager: The General Manager is charged with day-to-day operation and may possibly be a foreign national if the enterprise so chooses. The responsibilities of the Basic Manager must be listed in the Articles of Association even if Chinese law does not require the appointment of a General Manager (as in the case of WFOEs). The Common Manager is charged by law with responsibility for formulating a management method for the enterprise production, operations and management, employment and termination of employees (except these that need to be employed and dismissed by the board of directors) and implementing board resolutions and investment and company plans.
Deputy General Managers: A Foreign Invested Enterprise might appoint one particular or much more Deputy Common Managers (EJVs are required to appoint at least one particular).
Finance Manager: An Equity Joint Venture is required to appoint 1 or much more accountants to assist the Basic Manager with finances. This is also typical practice for other FIEs.
Supervisors
LLCs are essential to have supervisory boards, even though this is often ignored in practice by WFOEs and Joint Ventures. [ We're Listening To You]
