Legal Policies Towards Investment Of Offshore Companies In China

Because of the loosen supervision of the government of offshore financial center, all the offshore company can keep their important information secretly and get rid of heavy tax in that place, many domestic enterprises choose to establish an offshore company while carry on their business in another country in fraud of law. As a matter of fact, offshore company is a company which is incorporated according to a special company law in the offshore financial centre and outside the jurisdiction of its primary operations. Actually, it is a special purpose vehicle for escaping the regulation of internal law, many investors coming to invest in China by using it may influence the effectiveness of the foreign investment policy of the government in large extent while also reflects that a few legal loopholes really exist in our legal system.In this thesis, the content of operating import and export trade, and investing overseas through offshore companies is not included. The thesis is on the base of the analysis of offshore companies investing in China. To start with the theories involved in offshore company, the thesis analyses the special characters and the functions of the offshore company comparing to the Chinese Company Law, while at the same time, analyses the positive and passive effectiveness of the offshore company. At last, integrating with some legal experience in other countries and existing legal regulation in China, some suggestions and strategies for regulating the investment from offshore companies will be supplied.In addition to the introduction and conclusion, the main body of thesis is divided into three chapters.Chapter one is "the Analysis of Basic Characters and Functions of Offshore Company". Section one gives a detailed description of the basic characters of offshore company comparing to Chinese Company Law for its specialty. In this section, it analyses three legal systems of offshore company comparing with Chinese corporation——the system of establishment, capital and management, proving that offshore company is made as an business tool for the controlling shareholders gaining profit. After that, Section two discusses the reason of using offshore company to invest in China, and classifies the offshore company into three different type according to their purposes. The first is overseas fund raising through special purpose vehicle and round trip investment. The second is a real domestic company protecting to be a foreign-invested company for round trip investment. The last one is real foreign company investing through offshore company.Chapter two is "Analysis of the Positive and Passive Effectiveness of the Offshore Company". Section one demonstrates the positive side of the offshore company investing in China, as the special purpose vehicle can help domestic companies enlarge the overseas investment while offshore company can help foreign corporations enhance the capital liquidity. Section Two analyses passive effectiveness of the offshore company, including losing state-owned assets, revenue; badly influencing the order of currency market; inducing illicit competition, company fraud, etc.Chapter three is "Theories and Practices of Several Countries for Regulating Offshore Companies." The first one is using the special regulations of lex personalis, the second is the sanction of legal person, and the last one is particular measures for particular behaviors of companies, like tax avoidance, mergers and acquisitions, etc.Chapter four is "Suggestions and Strategies for Regulating the Investment from Offshore Companies". Section one explains and analyses existing laws and other regulations involved in China. But the key point in Chapter three lies in Section two, which put forward the reasonable measures to regulate the investment of offshore companies. It includes the improvement of lex personalis of legal person, anti-tax avoidance measures and supervision of offshore company investment.In the conclusion, the thesis summarizes the basic feature of offshore company and point out harm of the offshore financial centre and offshore company. In the end, it concludes that offshore company is a special subject that effective measures should be taken to avoid its drawbacks.