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Q: Could you tell us what is the tax rate for a JV or WOFE in accordance with the new PRC tax law?
A:
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Q: Under what circumstances can the Employer claim liquidated damages against the Employee for the breach of the Employment COntract?
A:
According to the Article 25 of the new PRC Law on Employment Contracts, with the exception of the circumstances specified in Articles 22 and 23 hereof, an Employer may not stipulate with a Employee provisions on the bearing of liquidated damages by the Employee.
Article 22 If an Employer provides special funding for a Employee’s training and gives him professional technical training, it may conclude an agreement specifying a term of service with such Employee.
If the Employee breaches the agreement on the term of service, he shall pay liquidated damages to the Employer as agreed. The measure of the liquidated damages may not exceed the training expenses paid by the Employer. The liquidated damages that the Employer requires the Employee to pay may not exceed the portion of the training expenses allocable to the unperformed portion of the term of service.
Article 23 An Employer and an Employee may include in their employment contract provisions on confidentiality matters relating to maintaining the confidentiality of the trade secrets of the Employer and to intellectual property.
If a Employee has a confidentiality obligation, the Employer may agree with the Employee on competition restriction provisions in the employment contract or confidentiality agreement, and stipulate that the Employer shall pay financial compensation to the Employee on a monthly basis during the term of the competition restriction after the termination or ending of the employment contract. If the Employee breaches the competition restriction provisions, he shall pay liquidated damages to the Employer as stipulated.
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Q: We would like to establish a WOFE in China, could you please let us know what minimum amount of the registered capital of the WOFE is required under the PRC law?
A:
In accordance with the Company Law of the PRC, the minimum amount of the registered capital of a limited liability company shall be RMB 30, 000 and that of a joint stock limited company shall be RMB 5,000,000.The amount of the initial investment contributed by all shareholders shall not be lower than twenty percent (20%) of the registered capital or the minimum amount prescribed by the law, the remaining of which shall be fully paid up within two years of the establishment of the company. In the case of a one-person limited liability company (it means a limited liability company with a sole shareholder of either a natural person or a legal person), the minimum amount of the registered capital shall be RMB 100,000 which must be fully paid at the time of incorporation.
In addition, the minimum amount of registered capital shall satisfy the requirements for normal operation and management which shall be demonstrated in your Feasibility Study Report and shall be submitted to the government authority for approval at the same time.
Except for assets forbidden to be used as contribution by laws and administrative regulations, a shareholder may make its capital contributions to a company in currency or by contributing such non-currency property as material objects, intellectual property rights and land-use rights that can be evaluated in the form of currency and transferred in accordance with the law. The amount of the capital contributions in currency shall not be lower than thirty percent (30%) of the amount of the registered capital of the limited liability company.
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