Equity Joint Venture (EJV) refers to a legal person in which foreign investors and Chinese investors jointly invest, operate, share risks, and share profits in proportion to capital contribution in China in accordance with Chinese law. Since the implementation of the Foreign Investment Law of the People's Republic of China in 2020, joint ventures have continued to be an important path for foreign investment to enter China with their unique value of "complementary advantages and resource sharing". In accordance with the Foreign Investment Law and the Company Law of the People's Republic of China (revised in 2023 and effective from July 1, 2024), Finerise provides you with an in-depth analysis of the core points and compliance practices of Sino-foreign joint venture establishment.
➦ The core advantages of Sino-foreign joint ventures
- Resource integration: Chinese parties are familiar with the local market, policies and channels, and foreign parties provide advanced technology, management experience and international brands to form a "1+1>2" synergy.
- Risk sharing: Both parties share operating risks in proportion to their equity, effectively distributing the pressure on a single shareholder.
- Policy support: Encouraged joint venture projects can enjoy tax reductions, land incentives, government subsidies and other support policies.
- Convenient access: For industries other than the negative list, filing management is implemented without pre-approval, greatly simplifying the process.
➦ Establishment conditions and core materials
The following standardized legal documents are required to set up a Sino-foreign joint venture, which vary slightly depending on the industry and location (such as Guangzhou and Foshan):
1. Qualification certificate of the investor
- Chinese investors: A copy of the business license provided by the legal person of the enterprise (with the official seal); Natural persons provide a copy of their ID card.
- Foreign investors: Enterprises need to provide notarized registration certificates, business registration certificates and legal representative identity certificates; Natural persons need to provide a valid passport and visa that has been notarized and authenticated.
- Hong Kong and Macao investors: A simplified version of notarization (notarization by a notary public appointed by China + special seal for forwarding) can be used.
2. Joint venture contract and articles of association
- Joint venture contract: Agree on the core terms such as capital contribution, equity ratio, profit distribution, board composition, and dispute resolution. We provide professional drafting services to ensure clear responsibilities.
- Articles of association: clarify the corporate governance structure, rules of procedure, capital contribution period, etc., which must comply with the requirements of the Company Law and the Foreign Investment Law.
3. Company name and business scope
- Name: Based on the norm of "administrative division + font size + industry + limited company", it is recommended to prepare 3-5 alternatives.
- Business scope: Must be compared with the "Negative List for Foreign Investment Access" (2024 edition), prohibited industries are not allowed to invest, and restricted industries must meet the requirements of equity ratio or senior management. Permitted industries shall implement filing management and enjoy national treatment.
4. Ratio of capital contribution to equity
- Registered capital: There is no unified minimum limit (except for special industries), and the subscription system is implemented, but all shareholders must pay in full within five years from the date of establishment of the company (Article 47 of the Company Law). See Registered Capital Requirements for the detailed contribution rules and the 2024 transition arrangements.
- Equity ratio: Negotiated between China and foreign countries, there is no mandatory ratio requirement (unless otherwise stipulated in the negative list). It is recommended that the foreign equity is not less than 25% to enjoy tax incentives and foreign exchange convenience.
5. Proof of business premises
- Provide proof of commercial office address in China (lease contract, copy of real estate certificate or proof of use of the premises). Guangzhou, Foshan and other places support the "domicile declaration system", which can be registered without submitting a lease contract. See Registered Address Solutions for the accepted address types. For Foshan specifically, the address must be pre-recorded in the Standard Address Database — see the Foshan Address Compliance Guide.
6. Personnel appointment documents
- Clarify the appointment documents and identity certificates of legal representatives, directors, supervisors, and managers. Note: The chairman of the board of directors can be a Chinese or foreign party, and the legal representative is usually the chairman or manager.
➦ Procedures for the establishment of Sino-foreign joint ventures
Follow the path of "pre-approval (negative list restriction only)→ industrial and commercial registration and information reporting→ post-approval (if required)", and the overall cycle is about 1-2 months (no pre-approval) or 2-3 months (involving pre-approval).
- Self-declaration of name: Online submission of name plagiarism check, 1-3 working days, free of charge.
- Pre-access approval (limited to negative list restricted industries): Submit the "Project Application Report", joint venture contract, articles of association, etc. to the commerce or development and reform department to obtain approval documents. Industries outside the negative list go directly to the next step.
- Industrial and commercial registration and foreign investment information report: Submit a full set of materials to the Market Supervision Bureau and complete the information report simultaneously. After passing the review, the business license will be obtained (generally 3-5 working days).
- Post-qualification license application (if applicable): apply for food business license, medical device filing, school license, etc. according to the business scope. See Business Licenses & Permits for the common qualification items.
- Follow-up procedures: Complete tax registration, open a basic bank account, FDI foreign exchange registration, open a capital account, file with customs (if necessary), and open a social security and provident fund account within 30 days after the issuance of the business license.
Before choosing where to register, compare the cost structure, address rules and incentives of Guangzhou, Foshan and Shenzhen in the Guangzhou vs Foshan vs Shenzhen comparison. The city-level analysis applies equally to a JV.
➦ Important notes
1. Negative list and equity ratio restrictions
Before establishment, it is necessary to verify whether the business scope falls into the negative list one by one:
- Prohibited categories: such as news, radio, television, film production, etc., are not allowed to invest.
- Restricted category: Must meet the requirements of Chinese holding or relative control (e.g., automobile manufacturing, value-added telecommunications, etc.).
- Permitted category: enjoy national treatment and no equity ratio limit.
2. Notarization and certification of overseas documents
- Non-Hague Parties: Local notarization → Ministry of Foreign Affairs certification → Chinese embassy or consulate certification.
- Contracting States to the Hague Convention: The process can be simplified with an additional certificate (Apostille).
- Hong Kong and Macau: Notarization by a notary public appointed by China + China Legal Services (Hong Kong/Macau) Co., Ltd. forwarding seal.
- All foreign language documents must be accompanied by a Chinese translation issued by a professional translation agency and stamped with the official seal.
3. Joint venture contract and governance structure
- The shareholders' meeting is the highest authority of the company; a board of directors or an executive director may be appointed for daily management.
- Clearly stipulate the composition of the board of directors, rules of procedure (general major matters need to be unanimously approved by all directors), appointment of general managers, profit distribution, etc., to avoid future disputes.
- The capital contribution period must comply with the provision of "full payment within five years", and failure to contribute capital within the time limit will bear the liability for breach of contract.
4. Technology transfer and intellectual property rights
If the foreign party invests in technology, it must provide an evaluation report and ownership certificate of the patent or know-how, and go through the formalities for transferring property rights. Technology transfer agreements should be signed separately to avoid confusion with joint venture contracts. For the registration process, see China Patent and China Trademark Registration.
5. Ongoing compliance obligations
- Information report: Report the change within 20 working days; The annual report is submitted from January 1 to June 30 each year. See Annual Return Filing.
- Tax and social security: complete tax registration within 30 days after receiving the business license; Apply for social security and provident fund account opening within 30 days from the date of employment. See Bookkeeping & Tax Filing and Payroll & Social Insurance.
6. Precautions for real-name authentication of legal representatives
According to the regulations of the State Administration for Market Regulation, the company's legal representative needs to complete real-name authentication. The foreign legal representative can be completed in the following two ways:
- Online authentication: Use the "Registration and Identity Verification" APP or "Guangdong Business Connect" for face recognition (you need to hold valid Chinese visa or residence permit information, and the system will verify it online). If the authentication fails, please try the offline window.
- Offline window authentication: Bring the original valid passport to the commercial registration window of the Guangzhou Municipal Affairs Service Center or the administrative service center of each district, and the staff will verify the identity and complete the authentication on the spot. No residence permit is required.
7. Common compliance requirements for legal representatives to perform their duties
According to the current laws and regulations and the practical operation of banks, tax and other institutions, the legal representative (regardless of nationality) needs to cooperate in completing the following matters:
- Bank account opening usually requires personal presence: When opening a basic deposit account of a company, the legal representative usually needs to bring the original valid identity document (passport for foreigners) to the bank branch in person to sign in person (very few banks support remote video interviews, subject to the requirements of the bank opening bank).
- Tax real-name authentication: The legal representative needs to complete real-name authentication through the electronic tax bureau or tax service hall before he can handle invoice application, declaration and other businesses. Foreigners can bring their original passports to the tax counter for on-site processing.
- Signing important legal documents: Key documents such as articles of association, registration of changes, equity transfers, bank loan contracts, etc., usually require the legal representative's personal signature (or use a reliable electronic signature that complies with the Electronic Signature Act).
- Cooperate with industrial and commercial spot checks: The Market Supervision and Administration Bureau may conduct "double random, one open" spot checks on enterprises, and the legal representative is obliged to cooperate in providing materials or accepting inquiries.
- Annual report publicity: The legal representative is responsible for the authenticity of the annual report of the enterprise, which needs to be confirmed and publicized (it can be operated through an electronic business license or personal real-name account).
We will provide detailed guidance at each stage to assist the legal representative in successfully completing the above requirements and ensuring the company's compliance operations.
➦ Why choose Finerise to act as an agent for Sino-foreign joint ventures?
The establishment of a joint venture involves cross-border legal documents, multi-departmental approvals, and cultural integration, so it is crucial to choose an experienced professional organization.
✔ Accurate policy interpretation and architectural design
We are well versed in the Foreign Investment Law, the Company Law and the practice of the negative list, and can design the optimal equity structure and governance plan according to your industry, capital contribution method, and strategic objectives to avoid the risk of long-term disputes between Chinese and foreign parties.
✔ Efficient service network and localization experience
It has offices in Guangzhou, Foshan and other places, and is familiar with the approval standards and operating habits of the local Commerce Bureau, Market Supervision Bureau, and State Administration of Foreign Exchange. He is particularly good at handling complex matters such as technology transfer filing, profit remittance, and reinvestment in Sino-foreign joint ventures.
✔ One-stop service for the whole life cycle
From early joint venture contract negotiation, notarization and certification guidance, to industrial and commercial registration, tax reporting, bank account opening, customs filing, to follow-up agency bookkeeping, annual audit, and foreign investment information report, we provide "0-1" full-cycle companion services.
✔ Transparent fees and strict risk control
Phased quotation with no hidden fees. At the same time, we provide compliance physical examination services to ensure that the establishment and operation of joint ventures comply with the latest laws and regulations, and avoid legal risks caused by defects in capital contribution and loopholes in the articles of association.
Service Quote & Consultation
The exact fee varies depending on the city, industry, and service scope (e.g., whether pre-approval, address hosting, expedited processing are required). For an accurate quote and a free initial consultation, please contact us:
- ✆ Guangzhou Hotline: +86 20 8732 3100
- ✆ Foshan Hotline: +86 757 8312 2090
- ✉ Email: info@finerise-hk.com
Finerise Consultants can help you
Founded in 2005, Finerise Consultants has been committed to company registration management, offshore company registration, overseas investment services, foreign investment services, financial and tax agency consulting, intellectual property agency and other fields. Provide relevant professional, fast, intimate, thoughtful, safe, cost-effective services, and be your trustworthy partner! Welcome to consult!
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