Given the increasing importance of the China market and Chinese
companies, international corporations and investors now encounter
Chinese companies in two very different contexts.
First, they often have Chinese-incorporated companies as
subsidiaries. Because of the very strong authority given by Chinese
law to anyone using a company "chop" and to the
company's "legal representative," there are serious
traps for the unaware in this area.
Second, international companies and investors must often deal with
Chinese companies as counterparties, both inside and outside of
China, and again Chinese corporate procedures for authorizing
contracts are different from those in the West.
In both contexts it is very important to know who in a Chinese
company has authority to act on behalf of the company, and what
procedures are necessary (depending on the context) to restrict
such authority.
Howard Chao, Chair of O'Melveny's Asia Practice, recently
co-authored two articles, "Restricting Contracting Authority
of Chinese Subsidiaries Checklist," and "Executing
Contracts with Chinese Enterprises," published by Practical
Law Company in Practical Law the Journal. The articles
outline some of legal and practice considerations on these
important subjects.
Drawing on his decades of experience advising on complex
China-inbound transactions, Chao lays out the basic information
that all multinationals should know in setting up their subsidiary
operations in China and before entering into agreements with
Chinese counterparties, and offers practical tips for how best to
minimize risk exposure.
Please click below to read each article:
Restricting Contracting Authority of Chinese Subsidiaries Checklist
Executing Contracts with Chinese Enterprises
O'Melveny & Myers LLP routinely provides advice to clients on complex transactions in which these issues may arise, including finance, mergers and acquisitions, and licensing arrangements. If you have any questions about the operation of the applicable statutory provisions or the case law interpreting these provisions, please contact any of the attorneys listed on this alert.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
