China Law Advisory
China Allows Foreign Investment in the Production
of Television Programs
By R.Z.
Margaret Lu
[December 2004]
A new regulation published by the State Administration of Broadcasting,
Movies and Television and the Ministry of Commerce of the People’s
Republic of China (“China”) came into effect on Nov.
28, 2004. The new regulation allows, for the first time since the
beginning of China’s “Open Door” policy, joint
investment, ownership and operation by foreign and Chinese investors
in companies engaging in the production and broadcasting of television
programs in China (“JV Company”). Pertinent points of
interest under the new regulation are summarized as follows:
- The foreign investor to the JV Company must be a professional
broadcasting and television business in good corporate standing
and without prior record of violating Chinese laws or other bad
conducts
- The Chinese investor must have the status of an enterprise legal
person without prior record of violating Chinese laws or other
bad conducts. At least one of the Chinese investors to the JV
Company must be the holder of a “Permit for Producing, and
Operating the Business of, Broadcasting and Television Programs”
or a “Permit for Producing Television Series (Category A)”
- The JV Company shall be organized as a limited liability company
with a registered capital of no less than $2 million U.S. dollars.
For those joint venture companies intending to engage exclusively
in cartoon production, the registered capital can be lower, but
must be no less than $1 million U.S. dollars
- More than one qualified foreign investor can form a JV Company
together with more than one qualified Chinese investor, but the
aggregated maximum amount of equity interests foreign investors
are allowed to own in the JV Company is limited to 49 percent,
and 51 percent of equity interest must be owned by one of the
Chinese investors
- The position of the Legal Representative of the JV Company (i.e.,
the position of the Chairman of the Board under Chinese laws)
must be held by a representative of the Chinese investors, and
the operation of the JV Company cannot be leased or contracted
out to the foreign investors or off-shore companies
- Foreign investors must make their equity contributions in cash,
but Chinese investors are allowed to use cash or in-kind contributions
such as existing facilities, buildings, equipment, industrial
properties, know-how or land-use right
- The television programs to be produced by the JV Company must
comply with the industry development plans formulated by the government
and their content is strictly regulated. JV Companies are not
allowed to produce programs on current affairs or news, or featured,
special programs of similar topics
- Distribution in China of broadcasting or television programs
produced by a foreign company outside of China must comply with
pertinent laws and regulations of China regarding importation
of foreign broadcasting and television programs
- Matters concerning application and approval for the establishment
of a JV Company are governed by the “Sino-Foreign Equity
Joint Venture Law of the People’s Republic of China,”
“Cooperative Joint Venture Law of the People’s Republic
of China” and “Administrative Measures on Broadcasting
and Television”
- Qualified investors of Hong Kong, Macao or Taiwan are treated
as investors from a foreign country under the new regulation
Published by DWT's China Practice Group
For more information, please contact:
This China Practice Alert is a publication of the China Practice/Shanghai
Office of Davis Wright Tremaine LLP. Our purpose in publishing this
Alert is to inform our clients and friends of recent legal developments
in China. It is not intended, nor should it be used, as a substitute
for specific legal advice as legal counsel may only be given in
response to inquiries regarding particular situations.
Copyright © 2004, Davis Wright Tremaine
LLP.
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