Issues Connected with Capital Increases During the Performance of an Investment Agreement

By Qiu Ruyu

What process should a company follow to increase its registered capital during the performance of an investment agreement? Does the company need to obtain prior approval of the investor? What would happen if the company or its shareholders increase its registered capital without knowledge or approval of the investor who is not a shareholder?..........More

Comments on Important Clauses in the Legal Interpretation (II) of Construction Work Contracts (First Part)                             

By Shi Weidong

On 4 January 2019 the Supreme Court of China promulgated the Legal Interpretation (II) of Issues Concerning the Application of Laws Relating to Construction Work Contract Disputes (“Interpretation II”) . 

The promulgation of the Interpretation II marks the first time in the past fourteen years that the supreme court gives a detailed explanation of laws relating to construction work contracts since the Legal Interpretation (I) of Issues Concerning the Application of Laws Relating to Construction Work Contract Disputes (“Interpretation I”) that was carried out on 1 January 2005...........More

1.Announcement on Publishing the Regulations on Overseas Inspection of Medicine and Medical Instruments 

Promulgated by the State Administration for Market Regulation

Document number: No.101 in 2018 by the State Administration for Market Regulation

Promulgation date: 26 December 2018

Effective date: 26 December 2018

The Announcement states that overseas inspections are conducted for medicine and medical instruments that have been marketed or are proposed to be marketed and that overseas inspections do not only include inspections in places where production is being performed but mean inspections in places where research, development or production is being performed. Matters to be investigated are decided by considering risks in registration, supervision, examination, inspection, reporting, adverse effect, etc. of medicine and medical instruments as required for risk control. (Source: Website of the State Administration for Market Regulation)

http://www.nmpa.gov.cn/WS04/CL2138/334163.html 

2.Circular Notice on Grant of the Right to Administer the Anti-Monopoly Law

Promulgated by the State Administration for Market Regulation

Document number: SAMR Anti-Monopoly [2018] No.265

Promulgation date: 28 December 2018

The Notice states that the State Administration for Market Regulation can authorize provincial departments in charge of market regulation to inspect and investigate cases and provincial departments in charge of market regulation should actively work with the State Administration for Market Regulation to administer the anti-monopoly law and can authorize another provincial or lower-level department in charge of market regulation to conduct investigations while administering the anti-monopoly law. (Source: Website of the State Administration for Market Regulation)

http://samr.saic.gov.cn/xw/yw/wjfb/201901/t20190103_279720.html               

3.Circular Notice on Matters Connected with Approvals and Licenses for Foreign Funded Businesses to Carry out Construction Surveys and Explorations 

Promulgated by the Ministry of Housing and Urban-Rural Department

Document number: J.B.S.(2019) No.1

Promulgation date: 10 January 2019

The Notice states that to carry out regulations of the negative list and the national treatment given to a person before they get the market access, further open up the construction survey and exploration market, create a good business environment and follow the principle of treating domestic and foreign funded businesses equally, as from the date of issuing this Notice, relevant authorities should deal with approval or license applications necessary for foreign and domestic businesses (including businesses that are newly established, changed, restructured or formed by amalgamation, merger or other means) to perform construction surveys and explorations based on the same criteria and requirements. (Source: Website of the Ministry of Housing and Urban-Rural Department)

http://www.mohurd.gov.cn/wjfb/201901/t20190116_239197.html               

4.Circular Notice on the Individual Income Tax Policy for Individuals Who Are Partners of Venture Capital Businesses

Co-Promulgated by the Ministry of Finance, the State Administration of Taxation, etc.

Document number: F.T. (2019) No.8

Promulgation date: 10 January 2019

The Notice states that the individual income tax that an individual who is a partner of a venture capital business that keeps its financial records based on one investment fund should pay on his or her earnings obtained from share transfer and dividends that should be paid by the fund should be calculated based on the tax rate of 20%, and the individual income tax that an individual who is a partner of a venture capital business that keeps its financial records on a yearly basis should pay on his/her earnings obtained from the business should be calculated as “operating income” based on progressive rates of 5%-35%. (Source: Website of the Ministry of Finance)

http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201901/t20190123_3131369.html                

5.The Announcement on Including the Registration Certificate for Customs Agents (People Delivering or Receiving Imports or Exports) in the “Certificates that Are Combined into One Certificate”

Co-Promulgated by the General Administration of Customs and the State Administration for Market Regulation

Document number: No.14 Announcement in 2019 by the State Administration for Market Regulation

Promulgation date: 29 December 2018

Effective date: 1 February 2019                                   

The Announcement states that people who apply for the Registration Certificate for Customs Agents (People Delivering or Receiving Imports or Exports) while following the registration procedures of the administration for industry and commerce should choose the option of filing as a person delivering or receiving imports or exports as required and give additional information needed for the filing. Departments in charge of market regulation should follow the registration procedures for “certificates combined into one certificate” and exchange information with the General Administration of Customs for the State Administration for Market Regulation. The customs confirmation of having received business information registered with the administration for industry and commerce and information filed with the business authority should be deemed to have completed the filing for the business. Businesses no longer need to go through the filing and registration process with the customs. (Source: Website of the General Administration of Customs) 

http://www.customs.gov.cn/customs/302249/302266/302269/2176924/index.html                   

6.Arrangements Between Mainland China and Hong Kong for Mutual Acceptance and Enforcement of Court Decisions in Civil and Commercial Cases

Promulgated by the Supreme People’s Court

Promulgation date: 18 January 2019                                

The Arrangements consists of 31 clauses regarding types and details of decisions made in civil and commercial cases by courts in one region that are acceptable to and enforceable by courts in the other region, the process and means by which people in one region can apply for acceptance and enforcement of a decision made in the other region, investigation of powers of the original court, circumstances in which the decision made by a court in one region cannot be accepted or enforced by courts in the other region, ways to seek remedies, etc. (Source: Website of the Supreme People’s Court) 

http://www.court.gov.cn/fabu-xiangqing-139501.html  

Picture of the month:

Photographer: Sun Feiran, lawyer

Caption: A picture taken in Shaoxing in December 2018