By Art Dicker, Agnes Wang
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The podcast currently has 44 episodes available.
In this episode of the China Business Law Podcast, guest expert Camille Xu from Yingke Law Firm, provided an in-depth analysis of the significant changes to the China company law. With her vast experience in corporate law, Camille offers critical insights into how these amendments will impact businesses operating in China, particularly foreign-invested enterprises.
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Introducing Camille Xu
Camille Xu, a seasoned attorney based in Shanghai, has spent over a decade at top-tier European law firms before joining Yingke as a partner. Her expertise lies in assisting foreign companies with their operations in China, covering areas such as corporate, contract, and labor law. Xu brings a nuanced understanding of the recent changes to the company law that are crucial for businesses to navigate effectively.
Major Changes in Capital Contribution RequirementsOne of the pivotal changes discussed during the podcast is the revised capital contribution requirements. Previously, companies were required to make real contributions of capital within a specified time, but the 2013 reforms allowed for subscriptions of capital with flexible deadlines. However, the new law reintroduces a statutory requirement for capital payment within five years, reverting to stricter control measures to curb market chaos and avoid shell companies with unpaid capital posing as substantial entities.
Xu advises companies to reassess and possibly reduce their registered capital to align with their actual business needs, helping to mitigate risks under the new legal framework.
Enhanced Protections for Minority ShareholdersThe updated law aims to reinforce the rights of minority shareholders, notably extending the right to access accounting documents rather than mere account figures. This change enhances transparency and allows minority shareholders to access essential documents such as invoices and contracts, improving their ability to protect their interests.
The law also includes provisions that enable minority shareholders to challenge invalid resolutions and demand timely profit distributions, along with mechanisms for share buybacks in cases of major strategic changes like mergers.
Fiduciary Duties and Corporate GovernanceXu discusses how the revised law strengthens fiduciary duties, emphasizing the responsibilities of directors and senior management to act with loyalty and diligence. Notably, the law introduces the concepts of de facto and shadow directors, ensuring that those exerting control behind the scenes are held accountable.
The amendments aim to curb the frequent practice of appointing nominal directors who lack real authority or understanding of company affairs, thereby protecting the company and its stakeholders from potential misconduct and negligence.
Introduction of the Audit CommitteeTo streamline corporate governance, the new company law allows companies to establish audit committees instead of traditional boards of supervisors. This move is intended to enhance efficiency by involving professionals with accounting and management expertise to oversee corporate operations.
Xu explains that these changes are poised to simplify company structures and improve oversight by relying on professionals already integrated into the company's board.
Employee Representation on the BoardOne of the significant new provisions is the requirement for companies with over 300 employees to include an employee representative on the board. Although still in its early stages, this change is designed to give employees a voice in corporate governance, although the specifics of implementation remain to be detailed.
Flexibility with Share ClassesThe law now permits greater flexibility regarding share classes, aligning more closely with international standards. Companies can issue shares with varying rights concerning dividends, voting, and liquidation, enhancing the attractiveness of investments and facilitating smoother operations for startups and foreign enterprises.
Advising Clients on Compliance and StrategyCamille Xu stresses the importance of revising corporate bylaws in light of the new company law. Companies need to ensure compliance, particularly regarding capital contribution timelines, appointment of management roles, and equity transfer provisions. She emphasizes the need for companies to adapt their internal governance to align with the stringent requirements introduced by the new law.
ConclusionThe comprehensive changes to China's Company Law present both challenges and opportunities for businesses operating in the region. By updating their internal policies and legal strategies to reflect these changes, companies can position themselves for compliance and growth in China's rapidly evolving business landscape. For more in-depth guidance, Camille Xu is available for consultations via email, with her contact details accessible in the podcast show notes for listeners seeking further advice.
Timestamps
00:00 Introduction and Guest Welcome
00:27 Camille Xu's Background and Expertise
01:10 Overview of Changes in Company Law
01:31 Capital Contribution Requirements
04:17 Impact on Small and Foreign Companies
11:48 Protection for Minority Shareholders
19:56 Fiduciary Duties and Legal Responsibilities
26:49 Role of Supervisors and Audit Committees
30:18 Employee Representation on Boards
33:00 Flexibility in Share Classes
37:58 Advising Clients on New Company Law
42:54 Conclusion and Contact Information
Jacob Thomas
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Welcome to another episode of the China Business Law Podcast. In this episode, we talk with Yanqi Qiyan, a seasoned partner at Tahota Law Taihe Tai, one of China's premier law firms. We explore the complex terrain of arbitration awards in China and offer invaluable guidance for companies dealing with cross-border legal challenges.
Connect with Yan
Visit Tahota
Email Yan
Meet Yanqi Qiyan
Yanqi Qiyan brings over 15 years of extensive experience in Chinese and international law. Her journey commenced as a law counsel at a US international law firm in China, eventually transitioning to key in-house roles at multinational corporations. Yan's expertise spans international practices, mergers, acquisitions, and general corporate matters, making her an ideal voice on disputes concerning arbitration awards in China.
Understanding China's Stance on Arbitration AwardsOne of the chief topics addressed in this episode is the importance of arbitration awards for foreign companies dealing with Chinese entities. Art and Yan delve into the mechanisms by which arbitration awards can be recognized in China, emphasizing China's participation in the New York Convention. This treaty, unlike the situation with foreign court judgments, ensures a framework for the enforcement of international arbitration awards within China.
China's Legal Framework: An OverviewYan elaborates on China's legal framework for recognizing foreign arbitral awards, highlighting the significance of the Supreme People's Court's notice and the incorporation of these regulations into China's civil procedure law. Five key issues have been addressed within Chinese law to facilitate the implementation of the New York Convention, ensuring clear guidelines for the recognition and enforcement of commercial arbitration awards.
Comparing Arbitration Awards and Court JudgmentsThe podcast contrasts the relatively straightforward process for arbitration awards with the complexities of enforcing foreign court judgments, which rely on bilateral treaties or reciprocal relations. Yan clarifies how the absence of a treaty between countries like the US and China can impact the enforceability of judgments and emphasizes the value of understanding these distinctions for businesses navigating cross-border disputes.
Practical Steps to Enforce a Foreign Arbitration Award in ChinaYan outlines the procedural steps involved in getting an arbitration award recognized in China, including the need to ensure its effectiveness and the importance of having all relevant documents notarized and consularized. The discussion also touches on China's accession to the Hague Convention, simplifying certain processes for Hague member countries.
Potential Pitfalls: Grounds for RefusalWhile the process is generally smooth, certain grounds can lead to the refusal of recognizing a foreign arbitration award. Yan highlights Article 5 of the New York Convention, which lists potential reasons for refusal, such as the invalidity of the arbitration agreement or procedural irregularities.
New Developments: Foreign Arbitration in ChinaA notable development is Shanghai's recent legal ruling that permits foreign arbitration commissions to conduct ad-hoc arbitrations within China. This change could significantly streamline the enforcement process, rendering foreign arbitral awards more akin to Chinese awards in terms of recognition, thus saving time and reducing costs.
Strategic Considerations and the Role of Public PolicyArt and Yan delve into the strategic considerations for companies deciding between arbitration inside or outside China. Important factors include the need for speed, confidentiality, and how public policy could impact the enforceability of awards. Yan offers insights into how China's public policy considerations are seldom invoked but can influence outcomes in cases dealing with issues like weaponry trading or cryptocurrency.
Conclusion: Evolving Landscape and Future OpportunitiesAs the episode concludes, it is clear that the arbitration landscape in China is evolving, offering new opportunities for foreign companies to navigate the complexities of cross-border enforcement more efficiently. Yan's expertise provides a guiding light for companies seeking to protect their interests in the rapidly changing legal environment in China.
If you have questions, feel free to reach out to Yanqi Qiyan through her firm's website or LinkedIn. Her wealth of knowledge and experience remains an invaluable resource for anyone involved in cross-border legal matters with China.
Timestamps
00:00 Introduction and Guest Welcome
00:58 Guest Background and Experience
02:04 Understanding Arbitration Awards in China
02:40 New York Convention and Enforcement
05:37 Practical Steps for Enforcing Arbitration Awards
07:04 Challenges and Grounds for Refusal
12:20 Recent Developments in Arbitration
14:54 Injunctions and Enforcement
17:41 Choosing Between Arbitration and Court
19:24 Enforcing Foreign Arbitration Awards in China
21:06 Preparing for Recognition of Foreign Awards
23:01 Public Policy Considerations in China
24:26 Examples of Denied Awards
25:49 Impact of International Relations on Enforcement
27:33 Chinese Court's Approach to Enforcement
30:11 Remedies for Denied Recognition
31:46 Choosing Arbitration Location
35:31 Conclusion and Contact Information
Jacob Thomas
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Connect with Yin Ge
Visit Han Kun
Connect with Art Dicker
Examining Financial Services Liberalization in China: Insights from Yin Ge of Han Kun Law Firm
Welcome to another vibrant episode of the China Business Law Podcast! In this episode, host Art Dicker sits down with Yin Ge, a partner at the renowned Han Kun law firm, to discuss the ongoing liberalization of the financial services and asset management industry in China. Yin Ge, with her extensive experience and accolades in the field, shares her expert insights on the evolving regulatory landscape and what it means for both foreign and domestic players.
Introduction to Yin GeYin Ge is a distinguished partner at Han Kun, one of China's leading law firms. With a rich background that includes stints at Clifford Chance and Allen & Overy, and an impressive academic resume featuring Huazhong University of Science and Technology, Wuhan University, and an LL.M. from Cornell, Yin is a powerhouse in the realm of financial law. She has advised various international asset managers, trading houses, financial institutions, and sovereign wealth funds on cross-border investments and regulatory issues in China.
Key Areas of FocusYin begins by examining the particular types of clients she works with, delving into asset management and financial services sectors. Her clients range from large asset managers and sovereign wealth funds to hedge fund managers and trading firms. What stands out in her practice is the diverse nature of asset management in China, which spans secondary and primary markets, and covers distinctive fiduciary duties.
Asset Management ClientsYin explains that her asset management clientele includes major players like BlackRock and sovereign wealth funds, as well as hedge fund managers like Bridgewater and trading firms such as Citadel. These firms operate on both secondary and primary markets, managing investments entrusted by clients in a manner that aligns with both local and international regulations.
Financial Services LandscapeIn the financial services sector, Yin highlights her focus on innovative financial services rather than traditional banking transactions like loans. Her clients include global financial institutions, custodian banks, prime brokers, and financial infrastructure operators. Notably, she advises exchanges, both local and foreign, enhancing their operational frameworks to ensure compliance with local regulations.
Realities of Financial Sector LiberalizationOne of the focal points of the discussion is China's genuine effort to open up its financial sector. Over the past few years, the Chinese government has introduced numerous policies allowing greater foreign participation. For instance, several wholly foreign-owned mutual fund management companies and securities firms have been established, reflecting this liberalization. Yin confirms that this trend is very much real, with the government not only making promises but also delivering on them through the issuance of approvals and licenses.
Navigating the JV vs. WFOE DilemmaYin elaborates on the strategic decisions facing foreign firms—whether to establish wholly foreign-owned enterprises (WFOEs) or joint ventures (JVs). While there is a historical preference for WFOEs to ensure maximum control, she points out that JVs can offer significant advantages, particularly by leveraging local partners' distribution channels and market knowledge. The shift in regulations now allows foreign firms to hold controlling stakes in JVs, which makes this option more attractive than in the past.
Why China is Evolving Its Regulatory EnvironmentArt raises an insightful question about why the Chinese government has opted to liberalize the financial services sector. Yin explains that this shift aligns with China’s goal of becoming a 'nation with a strong financial sector.' The government is keen on attracting foreign capital and expertise, which can elevate domestic standards and integrate China more deeply into the global financial ecosystem.
Importance of Compliance and TalentYin emphasizes that the future of China's financial sector lies in higher quality, transparency, and robust compliance. She predicts that financial regulation will only strengthen, and foreign firms must be prepared to navigate this complex landscape by adhering to stringent compliance measures.
Projections for Future LiberalizationLooking ahead, Yin foresees continued liberalization, albeit within a framework of more rigorous regulation. The emphasis will be on incremental reforms that build on existing structures, ensuring stability while fostering growth and innovation.
ConclusionThis illuminating conversation with Yin Ge sheds light on the transformative changes underway in China's financial services sector. For entities eyeing opportunities in this dynamic market, understanding the evolving regulatory landscape and strategic options is crucial. Yin’s expert insights provide a roadmap for navigating this complex yet rewarding terrain.
Timestamps
00:00 Introduction and Guest Welcome
00:21 Yin Ge's Background and Expertise
01:43 Client Types and Common Issues in Asset Management
03:52 Financial Services and Innovative Programs
05:54 Liberalization of China's Financial Sector
11:58 Joint Ventures vs. Wholly Foreign-Owned Enterprises
16:00 Regulatory Environment and Future Trends
24:26 ESG Standards and Challenges
27:52 FinTech and Blockchain in China
30:07 Future of Financial Services in China
33:30 Conclusion and Farewell
Jacob Thomas
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In the latest episode of the China Business Law Podcast, host Art Dicker sits down with Tracey Tang, a partner at AnJie Broad, to discuss the potential relaxation of value-added telecom services regulations in China and its implications for foreign internet companies. This conversation is especially timely, given the evolving regulatory landscape and the increasing interest of foreign businesses in the Chinese market.
Introduction to Tracey TangTracey Tang, a well-known partner at AnJie Broad, has extensive experience navigating the complex regulatory environment in China. Her insights into the recent reforms of the value-added telecom services regulations are crucial for understanding what changes may lie ahead.
Overview: The Big Change for Foreign ParticipationArt kicks off by introducing the topic: the latest developments in the reform of telecom service regulations that may allow for more foreign participation. This is a significant change for foreign internet companies interested in investing in China.
Historical Context and Current ChallengesTracey provides an overview of how e-commerce and other value-added telecom services, like internet data centers, content distribution networks, and commercially-oriented websites, have historically fallen under various regulatory categories. She emphasizes the hurdles foreign companies face in obtaining the necessary licenses.
New Guidelines and Potential ImplicationsArt and Tracey discuss the new guidelines anticipated from local governments and how these will impact foreign investment. "Whenever a specific license has been granted, that's the timing we should celebrate,” says Tracey, highlighting that while there is a clear trend toward openness, each license is typically granted on a case-by-case basis.
The Reality on the GroundAs Art notes, China aims to project an image of welcoming foreign investment, but the reality is nuanced. The podcast dives deep into the implications of the potential regulatory changes, particularly concerning the value-added telecom services that have been tightly controlled over the past 20 years.
The Complex Web of LicensesThe duo explore the intricate web of licenses required for internet businesses to operate in China. This includes the distinctions between ICP (Internet Content Provider) licenses and other essential regulatory clearances, and the historical limitations that prevented wholly foreign-owned enterprises from obtaining these licenses.
Practical Advice for Foreign CompaniesArt and Tracey agree on the challenging nature of navigating China’s regulatory environment but offer practical advice for foreign companies. Tracey suggests a "wait and see" approach while remaining proactive by consulting local authorities and being prepared to adapt as new guidelines and pilot programs are rolled out.
Real-World Examples and Case StudiesThe podcast also highlights specific examples, such as the liberalization of app store licenses in pilot areas like the Shanghai Free Trade Zone. Despite the opportunities, there remains caution, as only a few licenses have been granted to foreign companies.
The Dual Structure StrategyTracey introduces the concept of a dual structure where companies maintain their existing structures while also applying for new licenses. This strategy helps mitigate risk and enhances operational flexibility.
Conclusion: Navigating Uncertainty with Expert GuidanceArt wraps up the discussion by emphasizing the importance of understanding both the written regulations and the unwritten rules that influence regulatory decisions in China. He thanks Tracey for her detailed and candid insights, acknowledging the importance of expert guidance for companies looking to enter the Chinese market.
Connect with Tracey TangFor more in-depth consultation, Tracey Tang can be reached through LinkedIn, despite its restriction in mainland China. She actively publishes articles and stays connected with industry professionals and clients.
Timestamps
00:00 Sponsorship Acknowledgements
00:59 Introduction to Telecom Services Reform
01:15 Implications for Foreign Internet Companies
01:24 E-commerce and Licensing Challenges
01:47 Potential Changes and Government Trends
03:07 Regulatory Landscape and Licensing
06:18 Navigating the Complex Regulatory Environment
08:38 Case-by-Case Approach and Pilot Zones
16:13 Foreign Companies and VIE Structures
19:34 Conclusion and Contact Information
Jacob Thomas
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Tracey Tang
https://www.linkedin.com/in/tracey-tang-9b294920/
Art Dicker
https://www.linkedin.com/in/art-dicker/
Navigating China's New App Filing Requirements: Key Insights from Tracey TangWelcome to another insightful episode of the China Business Law Podcast! In this episode, host Art Dicker is joined by Tracey Tang to discuss the recent changes to app filing requirements in China and their implications for foreign companies. Tracey, an expert in TMT (Technology, Media, and Telecom) law, offers a thorough overview of the new regulations, the compliance challenges, and practical advice for navigating this complex landscape.
Introduction to Tracey TangTracey Tang is a seasoned attorney specializing in content licensing and digital entertainment industries. With over 20 years of experience, particularly in China, she provides a wealth of knowledge on the evolving regulatory environment for foreign companies operating in the digital space.
Understanding the New App Filing RequirementsWhat’s New?
As of April 1st, new rules mandate that apps in China must undergo a filing process. An app without a filing number could face significant difficulties on both Apple's App Store and various Chinese Android app stores.
The Implications for Developers
Developers must have a company registration in China, host their app on a China-based server, and ensure the app uses a domain name registered in China to complete this filing. This regulatory move aims to bring more stringent control over app distribution and ensure compliance with local laws.
Android vs. Apple App Stores
While the Android app stores have already started enforcing these rules strictly, Apple's enforcement has been more gradual. This leniency from Apple is not expected to last long, and developers should prepare for stricter compliance checks soon.
Impact on Foreign Developers
For many foreign developers, the new requirements present a significant hurdle, as they often lack the infrastructure and partnerships in China to meet these new demands. Tracey explains that foreign developers will either need to set up a local entity, which can be time-consuming and costly, or partner with a Chinese company that already meets the regulatory requirements.
Work with Chinese Partners
One practical approach is to collaborate with a Chinese partner who can navigate the regulatory landscape and manage compliance issues. This partnership can also help expand the app's user base in China.
Set Up Local Entities
For companies keen on maintaining direct control, setting up a wholly foreign-owned enterprise (WFOE) in China is another route. While this provides more control, it comes with higher costs and regulatory scrutiny. Tracey advises that setting up a company is relatively straightforward; the challenges arise in obtaining the necessary licenses and permissions specific to the type of business.
Heavily Regulated Sector
The gaming sector faces even stricter regulations. To publish a game in China, companies need an ISBN approval—a process that can only be carried out by a Chinese publisher with an Internet Content Provider (ICP) license. Foreign companies can’t publish games directly and must work with local entities.
Extended Compliance
Tracey highlights that even non-gaming apps can fall into heavily regulated categories, making it crucial to understand the specific requirements for different types of apps.
Anticipating Enforcements
Despite the staggered enforcement, Tracey suggests not to delay compliance efforts. Apple is likely to ramp up enforcement in the near future, and developers should use this time to ensure they are fully compliant.
Long-Term Solutions
Looking ahead, Tracey advises companies to evaluate their long-term strategy in the Chinese market. For some, partnering with a local entity is the best route; for others, especially those with significant operations in China, setting up a local entity might be more beneficial despite the initial hurdles.
The tightening of app filing requirements in China is a significant development for foreign app developers. Tracey Tang provides invaluable insights into navigating these new regulations. Whether through local partnerships or establishing a local presence, compliance is key to sustaining operations in this vital market.
Stay tuned for part two of this episode, where Tracey Tang and Art Dicker delve into the liberalization of the value-added telecom services (VATS) sector in China and explore the various structures available for foreign investors.
Timestamps
00:00 Introduction and Guest Welcome
02:15 Overview of App Filing Requirements
07:13 Challenges for Foreign Developers
07:54 Setting Up a Company in China
11:30 Navigating Regulatory Compliance
13:20 Options for Foreign App Companies
18:14 Current Industry Reactions
25:00 Conclusion and Teaser for Part Two
Jacob Thomas
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Ying Song
https://www.linkedin.com/in/ying-song-66742526/
Iris Yuan
https://www.linkedin.com/in/irisjlyuan/
Art Dicker
https://www.linkedin.com/in/art-dicker/
Welcome to another enlightening episode of the China Business Law Podcast! In this episode, co-hosts Art Dicker and Iris Yuan sit down with a special guest, Song Ying, to delve into the intricate world of Anti-Monopoly Law (AML) enforcement in China. As an absolute expert in this field, Ying offers a comprehensive overview of current trends, key cases, and practical advice for companies navigating the complexities of AML.
Introduction to Song Ying
Ying is a leading authority on anti-monopoly law, currently an executive partner at AnJie, Ying brings a wealth of knowledge and experience to the podcast.
AML Enforcement in China: A Comparative OverviewYing kicks off the discussion by outlining the three main types of behaviors regulated under China's AML:
1. Monopoly Agreements: Horizontal and vertical agreements that restrict competition, such as price-fixing, market partitioning, and output restriction.
2. Abuse of Dominance: Actions by dominant companies that exploit their market position, including excessive pricing, exclusionary practices, and refusal to deal.
3. Merger Control: Pre-transaction filings required for large deals to prevent anti-competitive consolidations.
Ying emphasizes the differences between China's approach and that of the EU and the US, noting China's post-regulation stance for monopoly agreements and abuse of dominance, versus its pre-regulation approach for mergers.
Key Cases and Their ImpactThe Alibaba and Meituan CasesThese landmark cases highlight the hefty penalties imposed on tech giants for anti-competitive behaviors:
Ying notes a recent shift in enforcement priorities to the pharmaceutical sector, where excessive pricing and anti-competitive practices have drawn significant attention.
Hitachi Metals Case: A Landmark DecisionThe Hitachi Metals case serves as a crucial example of private enforcement actions. Chinese firms accused Hitachi of refusing to license essential patents, sparking a decade-long legal battle. The case underscored the delicate balance between IP rights and anti-monopoly regulations.
Gun-Jumping ConcernsCompanies must be cautious about pre-transaction behaviors that might violate AML provisions. Ying discusses recent stricter enforcement against gun-jumping and advises businesses to thoroughly assess their compliance strategies.
Practical Advice for CompaniesRisk ManagementTo mitigate AML risks, Ying advises companies to:
Ying underscores the importance of considering China's merger control regime for global deals. Foreign-to-foreign transactions are not exempt, and timely filings are crucial to avoid delays and hefty penalties.# Insights from the China Business Law Podcast: Unpacking Anti-Monopoly Law Enforcement in China
Welcome to another enlightening episode of the China Business Law Podcast! In this episode, co-hosts Art Dicker and Iris Yuan sit down with a special guest, Song Ying, to delve into the intricate world of Anti-Monopoly Law (AML) enforcement in China. As an absolute expert in this field, Ying offers a comprehensive overview of current trends, key cases, and practical advice for companies navigating the complexities of AML.
Timestamps
00:00 Introduction and Guest Welcome
00:29 Ying's Background and Expertise
03:19 Overview of China's Anti-Monopoly Law
03:52 Types of Regulated Behaviors
07:15 High-Profile Cases and Penalties
14:58 Pharmaceutical Sector Focus
30:54 Private Enforcement and Notable Cases
34:46 Conditional Approvals and Gun Jumping
Jacob Thomas
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The podcast currently has 44 episodes available.
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