Business Ownership Transfer Form
business ownership transfer form
Establishing a Business Presence Invest in China
Three primary investment forms are commonly used by foreign companies to establish a permanent presence in China — the Sino-foreign Joint Venture, the Wholly Foreign Owned Enterprise, and the Representative Office.
Sino-Foreign Joint Ventures
This investment form requires the foreign company to team up with a Chinese partner. As Chinese companies are typically short on money (particularly hard currency), the foreign partner usually provides the bulk of the funding while the Chinese partner supplies land use rights, deals with the Chinese bureaucracy, and helps recruit employees for the venture.
Sino-foreign Joint Ventures can be divided into two types — (1) Equity Joint Ventures, and (2) Cooperative Joint Ventures (also known as Contractual Joint Ventures). In an Equity Joint Venture, the parties are obligated to divide their respective contributions to the joint venture (whether in cash or in kind) into discrete ratios, which ratios must be strictly adhered to when apportioning profits both during the venture’s operation and after liquidation. In a Cooperative Joint Venture the parties need not calculate a contribution ratio for each partner and thus may freely apportion profits according to the terms of a negotiated Joint Venture Agreement. Cooperative Joint Ventures are often used for Build-Operate-Transfer (BOT) projects.
Wholly Foreign Owned Enterprises
Known affectionately among old China hands as the WFOE (pronounced ‘woofie’), this investment form allows 100% foreign ownership. It is attractive to the increasing number of foreign investors who already have business experience in China and thus don’t need to rely on a local partner to hold their hand as they make their way through the byzantine corridors of the local market. It is also popular among less experienced investors who want to avoid the hassles of dealing with a Chinese partner.
Some industries are off-limits to 100% foreign ownership (there are even a few sensitive industries in which participation by Sino-foreign joint ventures is prohibited), but WFOE regulations have recently been relaxed in compliance with China’s WTO obligations — certain restrictions have been eliminated concerning WFOE export volume and technological capabilities that once forced many investors to choose between either working with a Chinese partner or substantially modifying their business plans to conform to WFOE regulations.
Representative Offices
Although the establishment of a Representative Office (“RO”) is by far the most popular first step for foreign companies seeking a presence in China, it is not an investment vehicle per se. Strictly speaking, it is not even a company. It is barred from carrying out direct business activities — it may not receive fees for its services, and its staff may not even sign contracts (although unfortunately, under certain circumstances it can still be taxed by the Chinese authorities). It is normally used for purposes such as market research, product sourcing, and liaison. The RO is popular among foreign investors as a way of establishing a company presence in China, and as a preliminary step aimed at learning enough about the Chinese market to minimize reliance on local partners in future ventures. The main advantage of an RO is that it is relatively quick, easy, and inexpensive to establish.
The foregoing investment forms are not the only options. Some companies prefer investment in or acquisition of existing Chinese companies, and various cooperative arrangements with Chinese companies (such as compensatory trade, processing and assembling, etc.) are gaining increasing acceptance because they can spare a would-be investor from the risks of establishing a Chinese company from scratch.
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How do I give away my business?
So basically I’m retiring and want to give (yes give not sell) my practice to a friend who currently works with me.
My main concerns are getting it over with cuz I want to move, and obviously making sure I don’t have liability.
Is there any quick reference/website etc you can point me to that will give me some tips on what to do, how to do it. Since there isn’t a sale I’m hoping its a bit easier, less paperwork etc. Do I need to involve a lawyer or can we do this ourselves with the right legal forms? I need to transfer a business credit card into her name but she has no business credit and bad personal credit. With a change of ownership, will this be a problem in putting her name on it and taking my name off?
As much info as you can give me would be great!
TIA!
well, tia
I have no clue where you’re located–but– in the U S A there is a STRONG cause for you to NOT be GIVING this business to your friend without SOME compensation— otherwise she will incur some extremely heavy taxes on the assets that she acquires as it will be viewed by the tax people as a GIFT and gifts of any sizeable amount can very easily be taxed and taxed hard in certain jurisdictions !!!
My suggestion to you would be to do a SALE but to make the compensation — something like twenty dollars or so—a nominal amount but yet— compensation none the less and it removes the GIFT thing from the table !!
Next– you really should get a lawyer– and do a very simple bill of “sale” on this transaction— surely you could find one that is honest within driving distance of you somewhere (??) — This Bill of Sale should be simple but thorough and state that you are releasing all rights and priviledges AND SHE is assuming all liabilities and assets !! The charges for a simple sale like this should also be nominal !!
Major deal here though !! With bad personal credit and no business credit— your friend will have absolute hell on earth assuming YOUR business credit card account—- a much wiser deal here would be for her to approach getting a card on her own for the business once the transfer OF the business is done— for THEN she will have “added value” and “asset” on which a credit card company can bank on the return of the credit that they extend !!!
Hopefully there are things in this that you can use — and I am wishing you a very happy retirement— I’m sure you have earned it !!! And, Good Luck to BOTH of you in your new lives !!!!
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