Q: Are foreign investors permitted to jointly invest with Chinese natural persons to establish Chinese-foreign equity joint ventures? Or is an established Chinese-foreign equity joint venture permitted to introduce new domestic natural person shareholders when the established Chinese-foreign equity joint venture increases its registered capital?
A: Foreign companies, enterprises, other economic entities or individuals are permitted to incorporate themselves into equity joint ventures with Chinese companies, enterprises or other economic entities pursuant to Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures and Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures. Chinese natural persons are not permitted to jointly invest with foreign investors to establish Chinese-foreign equity joint ventures and established Chinese-foreign equity joint ventures are not permitted to introduce new domestic natural person shareholders when increasing registered capital. But in the case of partial equity merger and acquisition (establishment), the original Chinese natural person shareholders may hold un-acquired equity.