How to set up a cooperative joint venture in
China?
A:In
a cooperative venture, the parties involved may
operate as separate legal entities and bear
liabilities independently rather than as a single
entity. A cooperative venture may also be registered
as a limited liability entity resembling an equity
joint venture in operation, structure, and status as
a Chinese legal entity.
There is no minimum foreign contribution required
to initiate a cooperative venture, allowing a
foreign company to take part in an enterprise where
they preferred to remain a minor shareholder. The
contributions made by the investors are not required
to be expressed in a monetary value and can include
excluded in the equity joint venture process can be
contributed such as labor, resources, and services.
Profits in a cooperative venture are divided
according to the terms of the cooperative venture
contract rather than by investment share, allowing a
more flexible schedule for return on investment in
cases where one investor provides cash while the
other party's investment is primarily in kind.
Greater flexibility in the structuring of a
cooperative venture is also permissible including
the structure of the organization, management, and
assets. There is no term for unlimited terms in
cooperative ventures, but also no provisions for the
term of the duration. The term of the cooperative
venture contract may be renewed subject to the
consent of the parties involved and approval from
the examination and approval authorities. The
foreign investor is permitted to withdraw their
registered capital or a portion thereof from the
cooperative venture during the duration of the
cooperative venture contract.
Because of the unique privileges and added
features offered to the foreign party in a
cooperative venture, trade unions must be allowed to
represent the employees in employment matters to
protect the interests of the employees.
