Q:
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Is it compulsory to disclose the ultimate actual controller when applying for the establishment of a foreign invested enterprise in China?
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A:
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Yes. It is compulsory to report and disclose the ultimate actual controller when applying for the establishment of a foreign invested enterprise in China.
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Q:
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Does the ultimate controller have to be traced to a nature person?
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A:
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Generally, the ultimate controller must be traced to a nature person unless the investor is a listed company, government or public institution, state-owned or collective enterprise.
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Q:
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How the actual control operates?
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A:
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The ways of actual control include:
1.
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directly or indirectly holding 50% or more of the shares, equity, property shares, voting rights or similar rights and interests in the enterprise.
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2.
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directly or indirectly holding less than 50% of the shares, equity, property shares, voting rights or similar rights and interests in the enterprise, but:
(1).
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is entitled directly or indirectly to appoint at least half of the members of the enterprise’s board of directors or similar decision- making body;
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(2).
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can ensure that its nominated people can obtain at least half of the seats on the enterprise’s board of directors or similar decision- making body; or
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(3).
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the voting rights are enough to have a material impact on the resolutions of the enterprise’s shareholders meetings, general meetings, board of directors or similar decision-making bodies.
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3.
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having a decisive influence on the enterprise’s transactions, finance, personnel and technology, through contracts, trust or in other ways.
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Q:
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What will happen if the ultimate actual controller is not disclosed?
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A:
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The foreign invested enterprise will not be established if the ultimate actual controller has not been disclosed.
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Q:
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What should be done if there is a change for the ultimate actual controller?
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A:
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The foreign invested enterprise shall submit an amendment report to the local competent commerce bureau within 20 working days after the change of the ultimate actual controller occurs.
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