Corporate Housekeeping, Economic Law and Labor Law

"Corporate Housekeeping" - that is, all the measures necessary to ensure compliance with regulatory requirements for a foreign subsidiary in China - is often neglected or simply overlooked in the day-to-day operations of a Chinese subsidiary.

Exchanging the official Legal Representative, relocating to a new address, increasing the subsidiary's basic capital, or amending your company’s business purpose - just to mention a few examples - may require, depending on the specific case, official notifications, registrations, or special approvals, etc. If these steps are overlooked or not completed in time, this may result in fines and other complications with the Chinese local authorities.

In day-to-day operations, often the management of a foreign subsidiary might need "a quick advice" on a certain legal issue under Chinese laws and regulations, otherwise an executive decision cannot be made. Or, an urgent problem has come up that requires immediate assistance of the Company's legal counsel and local lawyer.

Also in China business transactions are in general fixed through written agreements. However, contract negotiations and the terms of the agreements can sometimes differ significantly from the "Western" or European approach and commercial practice.

Furthermore, also in China there are many tax and accounting requirements that necessitate comprehensive contract documentation. As a result, the contract management practices required in China today do not differ much from the documentation requirements in Europe.

As in many other countries, the Chinese labor law is at large employee-oriented. In China, too, labor law primarily protects the interests of employees. At the same time, employers’ obligations under labor laws and social security regulations are subject to constant change. For example, proper social security coverage for all local employees is nowadays in general mandatory, and therefore circumventing this rule is not advisable.

Foreign subsidiaries in China often require the employment of foreign staff. This can raise complex issues regarding their secondment, residency, and the specific terms of their employment within China.

While the standardization of local employment contracts and internal labor law regulations and processes within a business operation in China comes with leverage advantages, also in China each individual employment still requires amendments depending on the specific employment, by taking the mandatory provisions of the Chinese labor laws and regulations into account.

Also in China labor disputes are finally resolved before local Labor Courts. If, for example, a Chinese employees' labor contract shall be terminated, the mandatory provisions of the Chinese labor laws - in particular those regarding notice periods and severance payments - must be observed. In the event an amicable solution cannot be reached with the employee, the matter shall be finally be resolved through the Chinese Labor Courts. In this case, our long-standing and experienced Chinese partner law firm can represent you before the Chinese Labor Courts.

Addressing all these legal questions and challenges related to corporate, commercial, and labor laws and regulations in the day-to-day operations of your Chinese subsidiary typically requires an experienced Legal Counsel.

This role we can fill for you on the ground in China.