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Confirmation Of The Qualification Of Shareholders Of Foreign Investment And Dormant Investment

Posted on:2021-01-24Degree:MasterType:Thesis
Country:ChinaCandidate:M S LiFull Text:PDF
GTID:2416330605969044Subject:legal
Abstract/Summary:PDF Full Text Request
China has made great achievements that attracted worldwide attention in the introduction of foreign capital to promote its economic development since the Reform and Opening up.However,the whole period is not just an easy step forward,it has undergone a transition from a planned economy to a market economy.In the process of China's economic transformation and development,along with the global economic downturn,China still maintained high-speed economic growth.Foreign investment plays a crucial role in sustaining rapid economic growth,increasing fiscal revenue,and re-organizing industrial structure.Therefore,protecting the interests of foreign investors is one of the main concerns of the government either.According to statistics from the Ministry of Commerce,from January to November 2019,36,747 foreign-invested enterprises were established nationwide(excluding data on banks,securities,and insurance),an increase of 6.0%year-on-year;the actual amount of foreign capital used was 845.94 billion yuan(equivalent to US $ 124.39 billion),An increase of 2.4%year-on-year.2 On January 1,2020,the "Foreign Investment Law" and its implementation regulations officially came into effect,providing legal protection for continuously optimizing the internal foreign investment environment and deepening the Reform and Opening up.Although the policy to attract foreign investment has always been advocated and respected by the state and the government,and has been granted a series of preferential treatment,even with "ultra-national treatment",but for the purpose of protecting national security,industrial policies and safeguarding the public interest,the inbound foreign investors still face some limitations in specific industries,or even prohibitions.According to the "Foreign Investment Law",China implements the "pre-entry national treatment and negative list system" for inbound foreign investment.Under the influence of factors such as market economy and laws and regulations,some foreign investors have adopted an anonymous investment method that invests in the name of others in order to avoid various adverse factors that interfere with their profits,while the real beneficiary is the investor himself.Anonymous investment means that the actual investor of the company does not establish the company in its own name for various reasons and entrusts others to hold shares by signing an agreement to establish and operate the company.As a result,many disputes related to the confirmation and transfer of equity have also been triggered.In judicial practice,disputes between dormant shareholders and nominal shareholders have been increasing year by year.Especially among the coastal areas,the shareholder rights disputes caused by foreign investors' anonymous investment are particularly serious.3 Article 25 of the "Provisions concerning the Company Law(?)" and "Provisions of the Supreme People's Court on Several Issues concerning the Trial of Disputes Involving Foreign-Funded Enterprises(?)" have stipulated the rules between these two kinds of shareholders,but it is not clear whether foreign dormant investors in domestic-funded enterprises can refer to the regulations.The "Foreign Investment Law" and its implementing regulations also do not mention related issues.This article aims to sort out the theoretical loopholes and practical difficulties of the abovementioned regulations and rules,combined with the application of the "Foreign Investment Law" and its implementation regulations,and strive to propose a reasonable plan to reduce related disputes,to resolve difficulties in legal practice and judicial practice.
Keywords/Search Tags:Foreign Investment Law, Dormant Shareholders, Provisions concerning the Company Law(?), Equity Transfer, Nominal Holdings
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