ThereseVera330

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 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 chosen 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 functions of the board are set forth in the Articles of Association and in the Joint Venture Contract.

Number of Directors: The board of directors of both Wholly Foreign Owned Enterprises (WFOEs) and Joint Ventures are essential to appoint between 3 and 13 directors. FIEs with few shareholders might be in a position 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 want not have a Vice Chairman. If both are utilized, nevertheless, then if the foreign investor selects the Chairman, the Chinese party need to choose 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 necessary for amendment of the Articles of Association, enhance or reduction of the Registered Capital, merger or division, and termination and dissolution. The law is considerably much more versatile for Wholly Foreign Owned Enterprises - board meetings and quorum specifications 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 many Western nations. Correspondingly, the market place for directors and officers liability insurance is not particularly nicely-developed either. The Chairmans part 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 cause losses to the firm. Directors, supervisors and senior management personnel can be held liable if they trigger losses to the enterprise by violating laws and/or the Articles of Association.

Management

Equity Joint Ventures should appoint a General Manager, 1 or more Deputy General Managers, and a Finance Manager. Even though not required for other FIEs, this is typical practice for these enterprises as well. If a Chinese investor nominates the Common Manager of an EJV, a foreign investor could nominate the Deputy Common Manager, and vice versa.

Common Manager: The Common Manager is charged with day-to-day operation and may be a foreign national if the enterprise so chooses. The responsibilities of the Basic Manager ought 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 Basic Manager is charged by law with duty for formulating a management method for the enterprise production, operations and management, employment and termination of employees (except those that must be employed and dismissed by the board of directors) and implementing board resolutions and investment and business plans.

Deputy General Managers: A Foreign Invested Enterprise may appoint one particular or a lot more Deputy Basic Managers (EJVs are needed to appoint at least one particular).

Finance Manager: An Equity Joint Venture is necessary to appoint 1 or far more accountants to assist the Basic Manager with finances. This is also typical practice for other FIEs.

Supervisors

LLCs are required to have supervisory boards, though this is frequently ignored in practice by WFOEs and Joint Ventures. website