The Company Law and Foreign Investment Enterprises in the People’s Republic of China: Parallel Systems of Chinese-Foreign Regulation

Abstract:     
Chinese law relating to companies and corporate regulation has developed significantly since Chinese-foreign joint ventures were first permitted in 1979. For foreign investors, however, changes and improvements in the Company Law regime, have not necessarily improved their position. Despite moves by the State Council in 2004 to simplify the approval regime (now a 'verification' regime) for investment, foreign investors are still tied to the traditional forms of foreign investment entity. The intention of Chinese regulators is clearly to maintain the traditional differentiation between Chinese companies and foreign investment enterprises even though many of the advantages accorded to foreign investment enterprises have been eroded over time. This article examines moves by Chinese authorities to bring foreign investment enterprises more comprehensively within the regulatory scope of the Chinese Company Law by such measures as requiring them to appoint supervisors and the question whether these constitute a real move towards convergence of fully Chinese companies and foreign investment enterprises.

Number of Pages in PDF File: 12

Keywords: China, companies, corporate governance, foreign investment law, convergence of legal regulation, supervisors, government regulation, comparative law

JEL Classification: K1, K22, K3

Accepted Paper Series