The Judicial Committee of the Supreme People’s Court has passed a notice regarding overdue fines on unpaid taxes of a bankrupt enterprise. This came into effect on 12 July 2012.
- Background
Company A is a foreign enterprise whose business is the production of certain specialist machinery. In China, only approved entities which are on a list compiled by the department in charge are permitted to manufacture such machinery. Company B, a Chinese enterprise, is one such entity. To enter the Chinese market, company A signed a joint venture agreement with company B in 2007. Each company agreed to contribute capital to establish a joint venture to manufacture such machinery.
A mandatory bid (or a mandatory general offer obligation) ("GO Obligation") will be triggered if a controlling block in a listed company ("Controlling Block") changes hands.
The chain principle summarised
On December 29, 2008, the State Administration for Taxation (SAT) and the Ministry of Finance (MOF) jointly promulgated the Circular on Several Deed Tax Policies Concerning Enterprise Reorganization and Restructuring, (Cai Shui (2008) 175, Circular 175). Circular 175 took effect on January 1, 2009, and will be effective through December 31, 2011.
New tax rules relating to the tax treatment of certain corporate restructuring transactions are expected to be finalized soon by the PRC Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”).
Many multinational corporations ("MNCs") are either restructuring or actively considering restructuring their China operations, given the current economic conditions and forecasts. Restructuring efforts often include consolidating legal entities, business units, and operations; closing down operations and factories; and workforce reductions. Implementing such restructuring efforts often raises complicated legal issues, many of which require careful analysis in light of recent legislation and policy considerations.
Consolidating Operations
Throughout the global economic meltdown, the number of bankruptcy cases in China has risen considerably. To shed light on bankruptcy proceedings and stabilize the domestic economy, the Supreme People’s Court of the PRC issued Opinions on Several Issues Regarding the Proper Adjudication of Enterprise Bankruptcy Cases to Provide a Judicial Safeguard for Maintaining Order in the Market Economy on June 12, 2009. The Opinions direct courts at all levels to properly apply the Enterprise Bankruptcy Law (EBL) to assist insolvent enterprises, maintain market order, and stabilize the economy.
El nuevo Decreto 560 de 2020 prevé una serie de medidas de flexibilización y celeridad en los procesos de reorganización, con el fin de afrontar el escenario de alto riesgo de insolvencia que se presenta en el país como consecuencia del Estado de Emergencia Económica, Social y Ecológica.
Estas medidas tendrán una duración de hasta 2 años y se resumen en las siguientes:
Creación de procesos extrajudiciales
Trámite de negociación de emergencia
En el marco de la emergencia sanitaria, el Ministerio de Comercio, Industria y Turismo expidió el Decreto Legislativo No. 560 del 15 de abril, por medio del cual se adoptaron medidas transitorias en materia de procesos de insolvencia. Holland & Knight le presenta la información qué debe tener en cuenta sobre este tema.
¿A quién aplica?
En términos generales aplica exclusivamente a las empresas que se han afectado como consecuencia de la emergencia sanitaria declarada por el Gobierno Nacional (Deudores Afectados).
The Bankruptcy Law, applicable to FIEs and most other companies in China, will come into effect on 1 June 2007.
The Bankruptcy Law sets out a dual test of insolvency: inability to pay debts as they fall due ("cash flow insolvency") and insufficient assets to pay off all debts ("balance sheet insolvency"). Either a debtor or a creditor may apply to the court for reorganization or liquidation of the debtor. Court assistance may also be sought to conciliate.