China Law Update : China Business Law Lawyers & Attorneys : Sheppard Mullin Law Firm : Direct Investment, Dispute Resolution, Intellectual Property, Antitrust, Venture Capital

By Becky Koblitz 

Since the Anti-monopoly Law (“AML”) has come into effect in August 2008, MOFCOM has issued 16 conditional approvals requiring certain structural or behavioral remedies in order to prevent the anticompetitive consequences that, from MOFCOM’s perspective, could arise as a result of the transaction. On March 27, 2013, the Ministry of Commerce (“MOFCOM”) requested public comments by April 26, 2013 on draft provisions (for unofficial translation by SMRH, please see here) concerning the evaluation, negotiation, implementation, monitoring, reconsideration of the remedies used in the conditional approvals issued as a result of the pre-merger review process as well as related sanctions. Once the draft provisions are finalized, they will replace the 2010 interim provisions on the acquisition and divesture of assets.

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By Xinlan Liu

The most important issue for foreigners working in China is to apply for work and resident permits with Chinese authorities. Compare with the procedures and documents required for foreigners who work for a foreign enterprise’s representative office in China, those for the foreigners working for foreign invested enterprises are more complicated and time consuming. Let’s take the latter as an example to provide some general and useful information on the work and resident permit applications for foreigners working in China.

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By Sharon Xu 

Employers need be aware of a recent interpretation issued by the PRC Supreme Court which clarifies a number of employment issues related to service year, non-competition, amendment to employment contract and employment relationship of foreign individual. The PRC Supreme People’s Court issued the Interpretation on Several Issues concerning the Application of Laws in Labor Dispute Case (IV) (the “Interpretation”) on January 18, 2013 which became effective on February 1, 2013.

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By Gloria Li

The first batch of cross-border RMB loan agreements were signed on January 28, 2013. A total of 15 lenders, including HSBC Holding Plc and Industrial & Commercial Banks of China (Asia) Ltd., will provide about RMB 2 billion ($321 million) of cross-border RMB loans to companies in Qianhai (前海 in Chinese, a financial pilot zone in Shenzhen, Guangdong Province, China).

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By Emily Tsai

The People’s Supreme Court issued a Judicial Interpretation on December 28, 2012, made effective on January 7, 2013, regarding the application of the Law of the People's Republic of China on Application of Laws to Foreign-Related Civil Relationships (the “Law on Application of Laws”, or the “Law”). The Law determines the rules of the application of foreign laws under different scenarios as well as when Chinese law, as opposed to foreign law, applies to specific disputes.

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By Bryan Pereboom

Comity among US and Chinese regulators may top this New Year’s wish list for United States-listed companies in China. After a failed six-month pursuit of a diplomatic solution, the SEC revived its federal court petition to force the PRC accounting member firm of Deloitte Touche Tohmatsu CPA, Ltd (“DTTC”) to produce audit working papers supporting its China-based audit of Longtop Financial Technologies.

If unresolved, the continued conflict between the mortar of Chinese privacy laws and the pestle of US regulatory pressure raises the possibility of fewer accounting firms that are willing or able to perform public company audits in China.

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By Russell Leu 

Employers in China who intentionally default on making payment to their workers beware. It is no coincidence that China's People's Supreme Court issued a Judicial Interpretation on January 22, 2013, made effective on January 23, 2013, which further clarified the 2011 amendment to the criminal law making the intentional failure to pay wages a crime. With the coming of Chinese New Year and Spring Festival holidays, the Judicial Interpretation is particularly targeted at employers who default on making wage payments to migrant workers who are often victims.

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By Harris Gao 

On November 12, the State Intellectual Property Office (SIPO) released the Draft Measures on Service Invention《职务发明条例草案(征求意见稿)》(the “Draft Measures”) for public comments. Generally speaking, the Draft Measures enhance the rights of employee inventors, but create some uncertainty for employers.

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By Carol Xu

Recently, MOFCOM issued the regulation permitting the use equity interest as capital contribution in FIEs (“the Provisions”).

According to PRC’s Company Law (amended in 2005), investors are only allowed to make capital contributions in cash, in kind or in such intangible property rights as intellectual property rights, land use rights or other transferable non-cash property with appraisable value. A pilot scheme permitting equity interest as capital contribution was launched in 2009 by the State Administration of Industry and Commerce (“SAIC”)[1], which stipulated that equity interest contributed as capital shall be registered with SAIC or its local counterparts. However, such measures fell short on giving a clear guidance on how equity interest can be contributed as capital in FIEs. Therefore, the issuance of the Provisions filled the gap and provided clearer guidance in this area.

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