Policy analysis of foreign investment companies limited by shares


University of British Columbia

Date Issued


Document Type



Master of Laws - LLM




China permits foreign investors to establish foreign investment companies limited by shares (FICLBS) together with Chinese domestic investors after 1995. FICLBS are a new form of foreign investment in addition to Sino-foreign Equity Joint Ventures, Sino-foreign Contractual Joint Ventures and Wholly Foreign Owned Enterprises. In the meantime, FICLBS have close relations with and are strictly governed by PRC Company Law. The double nature of FICLBS accounts for many characteristics of FICLBS. As a form of foreign investment, FICLBS are based on the foreign investment regime. FICLBS are governed by the legal provisions relating to foreign investment regime. At the same time, various State and Party policies give various characteristics to FICLBS and make them different from other foreign investment enterprises. As a form of modern company, FICLBS are greatly influenced by both civil law and common law as a result of the policy of joining the world economy. This thesis focuses on the common law influences. The influences of common law on FICLBS are manifest in various respects. On the other hand, various Chinese characteristics are intentionally remained. These Chinese characteristics can be found in many important phases and aspects of FICLBS such as corporate capacity, corporate governance, shares and dividends. The contradicting characteristics of FICLBS are a product of the contradicting State and Party policies underlying them. On one hand, China adopts the opening-up policy and has been making constant efforts to join the world economy. On the other hand, China has always been trying to maintain the so-called Chinese characteristics despite the fact that there is no generally accepted definition of Chinese characteristics. Although China has always been committed to keeping its policies consistent, the unstable nature of the policy basis of FICLBS will inevitably affect the future of FICLBS. However, since the opening-up policy of China will not possibly be reversed in the future, FICLBS will remain available for foreign investors no matter how the specific policies are changed.


Foreign trade regulation - China; Investments, Foreign - Law and legislation - China; Corporation law - China

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