On The Regulatory Control And Improvement Of Laws And Regulations Regarding Foreign-invested Holding Companies In China

Since the 1990s, more and more multinational corporations appealed to the Chinese government to allow them to establish holding companies in China in order to cater to their onshore businesses. In response to such requests, the Ministry of Foreign Trade and Economic Cooperation ("MOFTEC") issued the Provisional Regulations on the Establishment of Companies with an Investment Nature by Foreign Investors ("Provisional Regulations") in April 1995, which laid a solid legal foundation for the establishment of foreign-invested holding companies. Foreign-invested holding companies now are playing an active role in encouraging multinationals to invest in China and boosting the Chinese economy with foreign funds. From the issuance of the Provisional Regulations to that of the Regulations on the Establishment of Companies with an Investment Nature by Foreign Investors ("Regulations"), the stipulations regarding foreign-invested holding companies have been revised several times in the past ten years. The revised Regulations relaxed regulatory control in many respects related to foreign-invested holding companies, which include methods of contribution, area of investment, business scope, preferential treatment and minimum debt quota, etc. However, there are still quite a few problems in such laws and regulations, such as stringent thresholds, too many restraints, the lack feasibility and conflicting stipulations. Therefore, as argued in this dissertation, it is necessary to further improve our regulatory system in this regard.The dissertation mainly focuses on the legal issues concerning foreign-invested holding companies in China. Research methods such as taxonomy, comparison and induction have been used to analyze current laws and regulations and their evolution in this regard. The paper focuses on the limitation of and suggestions for improvement for relevant laws, regulations and the developmental trend of foreign-invested holding companies. The entire paper is about 48,000 words in length and is divided into 3 chapters.Chapter One is a brief introduction of foreign-invested holding companies in China. It introduces the legal characteristics of foreign-invested holding companies and elaborates on their legal status and impact. The chapter also gives a brief introduction to the developmental history of foreign-invested holding companies in China.Chapter Two elaborates on the current laws and regulations regarding foreign-invested holding companies in China. It gives an introduction of the relevant laws and regulations with an emphasis on the evolution of the laws and regulations in this regard. This chapter also evaluates the achievements and limitations of such laws and regulations.Chapter Three is the key part of this paper, mainly focusing on the improvement and development of the legal system concerning foreign-invested holding companies in China. Based on the analysis of the previous two chapters, Chapter Three sets forth several suggestions for the improvement of relevant laws and regulations, and forecasts the trend of foreign-invested holding companies in China. As is argued in this dissertation, with further fulfillment of Chinese WTO commitments and the further improvement of relevant laws and regulations, the business scope and functions of foreign-invested holding companies will be further expanded, and an increasing number of multinationals will choose to set up their regional headquarters in China.