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If A equals success, then the formula is: A = X + Y + Z. X is work. Y is play. Z is keep your mouth shut.” Albert Einstein.

“By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day.” Robert Frost

Our firm helps aspiring business owners turn ideas into viable business opportunities. We accomplish this by seeking on-going relationships with our clients, advising clients on a variety of business formation issues, and routinely helping clients throughout the course of their business. China Law Blog often takes preventive steps on our clients' behalf to ensure their interests are fully protected.

If you are interested in learning how a lawyer from our firm can help you reach your business formation goals, contact our firm to arrange a consultation. At China Law Blog, we give clients honest assessments regarding attorneys' fees. We also offer evening and Saturday hours to accommodate busy schedules.

Advising New Business Owners on Choice of Entity
Our firm advises new and aspiring business owners on the legal, financial, and contractual issues related to starting a business. We advise clients during the process of choosing an entity such as LLC, corporation, S corporation, non-profit, partnership, and LLC. Determining the appropriate entity under which a business should operate will be based on a variety of factors. We ask clients questions such as the following:

l       Who are the owners?
l       Who will be the members and the managers?
l       Who will be the directors?
l       What are the business's liability limits?
l       Where will you be doing business?
l       With whom will you be doing business?

Depending on the entity chosen, we help clients with other legal aspects of business formation including:

l       State Employer Identification Numbers
l       Shareholder agreements
l       Operating agreements
l       By-laws
l       Employment agreements
l       Employee manual
l       Severance agreements
l       Acquiring Commercial Property

If you are interested in buying commercial property for your new business, China Law Blog can help. We offer experienced representation during the process of acquiring land, offering a full range of services before, during, and after closing.

Our firm also advises clients during on-going business operations including business transactions and business succession planning. We also serve as registered agents for businesses.Contact our firm to arrange a consultation to discuss business formation.



Partnership and Shareholder Disputes

China partnership shareholder

 

The attorneys in our law firm’s Business Trial Group have a proven track record of helping clients obtain significant recoveries in shareholder and partnership disputes. We frequently represent clients in shareholder derivative litigation, including minority owners that have been victimized by shareholder oppression.  The Business Trial Group is experienced at navigating the complex issues involved in disputes between business owners, partners, and shareholders.

If you believe you have a claim arising from a shareholder or partnership dispute, the Business Trial Group may be able to help. We represent clients on a contingency-fee basis, which means you do not pay any legal fees unless there is a recovery in your case. For a free case review, please call or email us.

In any partnership or corporation, conflicts will inevitably arise between partners or shareholders. Most of the time, the partners or shareholders can resolve the disagreement among themselves. Some disputes, however, may involve matters that are integral to the continued operation of the business, or present otherwise intractable differences between the partners or shareholders.

 

China Shareholder Agreement

China shareholder agreement

 

Often the time international business people or investors need to jointly invest with Chinese local business entity or individual to comply with China local laws and regulations. This is why often the time a shareholder agreement is needed before international business enter into China market. In this blog article, we introduce what is a shareholder agreement in China, why you need a shareholder agreement, and why you need a lawyer to draft the shareholder agreement for you.

What is Shareholder Agreement

A shareholder agreement sets out the terms of how corporate shareholders will interact with each other and what happens if one or more want to get out of the business, or something happens that forces exit of a shareholder or shutdown of the company.

The people who buy these shares become the company’s shareholders, but it is important for the company to remember that it cannot simply take money from shareholders without granting rights in return. Because shareholders are investing their money in the shares they purchase, they have rights as investors which need to be protected.

 

Why Partnership Agreement is important to Deal With Business Partnership Disputes in China

China Partnership Lawyer

Business partnerships are like a marriage and disputes are inevitable, and wise partners will anticipate and prepare for them. The best way to handle disputes is to set clear expectations from the beginning and have a clear agreement on how to handle the disputes. Under Chinese partnership related laws, business partners have fiduciary duties and obligations. These fiduciary duties not only touch the business, but also “outside” opportunities that may be only tangentially related to the business. It is important to understand your rights and obligations in relation to your business associates and partners.

How a Partnership Agreement Helps Your Business

A partnership agreement allows you to structure your relationship with your partners in a way that suits your business. You and your partners can establish the shares of profits or losses each partner will take, the responsibilities of each partner, what will happen to the business if a partner leaves, and other important guidelines.

Common Provisions in a Partnership Agreement

Although some terms depend upon individual circumstances, standard language in a partnership agreement typically includes:

  • Decision-Making Authority Delegation: Who decides day-to-day issues? What about weightier matters? Will you put decisions to a vote? If so, does the decision need to be unanimous or majority rules? If partners have equal say, what happens when there is a tie? Some silent-active partner arrangements allow a silent partner a voice about monumental matters, while giving the active partner authority over daily operations.  In others, a silent partner makes no decisions.  By clearly delegating decision-making authority, you may avoid potential infighting when opposing viewpoints arise.
  • Capital Investments: The amount of money each partner contributes to the business should be unambiguous.  If a partner is investing work equity, make sure the parties know what those duties and talents are and consider setting benchmarks to judge the progress made by the working partner.
  • Profit Distributions and Salaries: Hopefully sooner rather than later, your company will turn a profit. How do you intend to divide the fruits of your labor? How much money should be put back into the business? Will you each receive an income or a percentage of the profits?
  • Valuation: what methods will be used to determine the value of the business in the event of a sale, dissolution, death, disability or withdrawal of a partner?
  • Buy-out clause: What guidelines should be followed if one partner wants to retire, dies or leaves the partnership? Decide if partners who leave have to sign a non-compete agreement.
  • Non-compete clause: the use of such clauses is premised on the possibility that if a partner is expelled or leaves to start another business, he or she could potentially gain competitive advantage by abusing  private information, trade secrets or customer/client lists, business practices, upcoming products, and copying marketing plans. The non-compete clause prevents this from happening.
  • Death and Divorce: You agreed to go into business with your partner, not his/her spouse or child. Yet, a spouse or an heir may claim an interest in the company during divorce or probate proceedings. A partnership agreement can prevent intrusion by an outside party who might otherwise have legal rights to company assets.
  • Dissolution: Make arrangements for dissolution before you or your partner decide to end your relationship. Otherwise, arguing over dissolution terms might burn through the profits you earned while in business together. An organized exit strategy might include buyout options or require distribution of property.

Resolve differences between partners

Going into business with a partner can be a daunting experience, as there are bound to be a number of complex questions running through your head. How well will you work together? What if you find out you have different ways of doing things? What happens if something goes wrong or the business relationship breaks down altogether?

 

Tips of Drafting Purchase and Sales Contract Under Chinese Law

China  lawyer

 

This China lawyer blog shares insights on legal contract writing matter. At this china law firm, we regularly update this blog and please come back if you are interested in our legal service or for your information.

The preparation of legal documents involves difficult or doubtful legal questions which, to safeguard the public, reasonably demands the application of a trained legal mind. Thus, acts and services which constitute the practice of law include drafting, and preparing legal instruments and documents, such as trust documents, real estate contracts, deeds, notes, mortgages, and releases, drafting, preparing, and causing a will to be executed, preparing, or advising in the preparation of, income tax papers and returns, and preparing and prosecuting patent applications.

Our China lawyer's contract drafting service

Drafting Contracts is a textbook designed to teach students how to draft business contracts. It is intended for use in an upper-level drafting course, for which it would be the required text. In addition, many aspects of the textbook can be integrated into other courses—for example, a first-year contracts course, a mergers and acquisitions course, or a transactional clinic. In these courses, the book could be either a required main text, a supplemental text, or a recommended text. A lay person’s preparation of a corporate charter, bylaws, and related documents, which are important contractual documents and legal instruments, also constitutes unauthorized practice of law.

 

Setting up a Limited Liability Company in China

 

For foreign investors, you can set up a wholly foreign owned enterprise in China. This means that the foreign shareholder is the 100% shareholder of the company. The liability of the shareholders can either be limited by shares or the amount of capital contributed. Below we talk about the company with limited liability by capital. As experienced China company lawyer, we provide company registration, company incorporation in China, covering the cities in Shanghai, Beijing, Chengdu, Tianjin, Guangzhou, Shenzhen and other major cities.


The Limited Liability Company (LLC), is a popular legal format for business owners. It's available in all provinces and cities in China. Small business owners are taking advantage of the LLC because it is easier to set up and maintain than a company limited by shares.

ADVANTAGES OF FORMING AN LLC

Limited Liability


Like corporations, LLCs provide their members (owners) with protection from personal responsibility for the company's debt. Members are only liable to the extent of their investments in the company. If a customer slips and is injured on company property, a law suit may still bankrupt the business, but it cannot touch the personal assets of the LLC's members. This limited liability, then, is a great advantage over partnerships. In general partnerships, all members are liable for the company's debts and in a limited partnership, at least one member must still be liable.

 
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The law blog is running by a China lawyer working for a full-service law firm, offering practical, results-driven advice on employment law, divorce, company law, and other legal issues. Our goal is to manage these issues effectively so that our clients can focus on what they could do best.

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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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This China Lawyer Blog is aiming at providing better knowledge and understanding of Chinese law for foreigners. Should you have any legal issue in China, do not hesitate to contact China Lawyer Blog for consultation. Preliminary consultation is free. Further legal service, however, will be charged in due rate and in due course.

You are welcomed to ask for a quotation pursuant to your specific circumstance.

About author

China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.