Understanding Director Liabilities to the Company and Managing Directors' Authority

20 February 2011
An American company recently learned this lesson the hard way. After hiring a Chinese general manager without outlining the limits on her authority, the GM proceeded to inappropriately use company funds for the benefit of a third-party. Without the evidence that is provided by clear delineation of authority within the articles of association, the employee […]
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Planning for the End: Protecting Your Interest in a Joint Venture before the Worst Happens

20 February 2011
Joint Ventures (JVs) between Chinese and foreign companies have been a prevalent source of dispute and frustration. While these ventures provide advantages to both parties, at some point in the time the interests of the partners often begin to diverge, with at least one of the parties having less incentive to compromise its own interests […]
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Court Rules on Employment Disputes

20 February 2011
Recently, the Supreme People’s Court issued the Third Interpretation on Several Issues on the Applicable Law of Judging Employment Dispute (“Interpretations”), effective 14 September 2010. The Interpretations can have a great impact on how certain kinds of employment disputes will be handled; when managing their human resources, employers should carefully consider the following points in […]
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Tax Official Empowered to Tackle Export VAT Refund Fraud

20 February 2011
With new and potentially onerous requirements for exporters, the Chinese State Administration of Taxation issued Bulletin No.11 Administrative Measures for the Verifications of Taxation on Export Goods by Sending Letter Confirmations (“Bulletin No.11”) on August 30, 2010. Designed to combat and prevent export tax refund fraud, Bulletin No.11 adjusts the procedures for export tax refund […]
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Foreign Investment Encouraged Once More

20 February 2011
Opening its economy to foreign investment has been one of the cornerstones to China’s economic policy over the past decade. Foreign capital has contributed, and in some cases has been the main drive, to development of countless industries, and as such as been an integral part of China’s economic success story. In recent years however, […]
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Legal Concerns of Foreign Companies in China

20 February 2011
I have been frequently asked about the major legal concerns that foreign companies in or entering in the Chinese market must deal with. In surveys, foreign businesses operating in China often identify legal issues as among their biggest challenges; while many are idiosyncratic, what concerns are most frequently encountered? Commercial Transactions - the Need for […]
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SPC on Foreign-Invested Company Disputes

20 February 2011
In response to the rapid increase in the number of disputes involving equity transfers, equity pledges, and other similar transactions for foreign-invested enterprises, the Supreme People’s court recently released the Interpretations of the Supreme People’s court on Several Issues Concerning the Trial of Disputes Involving Foreign-Invested Enterprises (“Interpretations”) – effective as of 16 August 2010. […]
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Cost of Litigation

20 February 2011
Common risks to Chinese litigation (and to a certain extent, arbitration) are local protectionism, evidentiary rules, and enforcement challenges, but just as important in many smaller disputes is the cost of litigation. Companies should carefully consider whether the legal costs are worth the potential benefits, especially since not all these costs are recoverable. 1. Pre-litigation […]
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Effective Corporate Governance in China

20 February 2011
Foreign investors generally presume that management problems are inherent to Chinese-foreign joint ventures, but not to companies of which they are the sole shareholder. Unfortunately, this perspective does not take into account the rights and responsibilities of directors and senior managers. Clients frequently ask us about the rights and responsibilities of directors and senior managers […]
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Trends in Company Investigations

20 February 2011
Common is the story of the foreigner who thought he was buying from a Chinese company, only to find out later that the company never existed – making any claim for repayment futile. This extreme example serves to illustrate the need to know one’s Chinese business partner beyond the rituals of exchanging name cards and […]
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