| 
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.
return to Advisory
Bulletins main page |
