We have been consulting with a well known entertainment company in establishing a Wholly Foreign Owned Enterprise with plans to become a performance brokerage institution in Beijing engaging in providing commercial performance services in China.
This is a tricky prospect as commercial performance business is listed as an industry restricted to foreign investment on the Negative List for Access of Foreign Investments. Its presence on this list means that a Chinese party will be required to hold a majority of shares in any such venture.
So should we inform the client the WFOE is a no go?
Not quite. As China lawyers familiar with the latest Chinese laws, regulations and policies, we are refer to the State Council’s Temporary Adjustment for foreign investors in Beijing. This obscure regulation grants a foreign investor special exception to ignore the restriction on foreign investment in connection with a commercial performance brokerage business. This allows our China lawyers to proceed with establishment of the WFOE.
According to the Adjustment, there are four special areas in Beijing, including areas in Shi Jingshan District, Chaoyang District, Shunyi District and Pinggu District, where the registrations and approvals for a WFOEs engaging in commercial performance brokerage business are allowed to be accessed by foreign investors up until May 5, 2018.
Foreign applicants are required to own or rent a business office in any of such special areas, and must complete establishment registration with the local AIC as they would for any other kind of WFOE in Beijing. Additionally, they will be required to acquire a Commercial Performance Operation Permit from the local Culture Bureau and finalize other relevant post-registrations prior to May 5, 2018. This presents a lot of legal procedures for establishment of this kind of company prior to the deadline next spring.
There are now less than 10 months left for foreign investors in Beijing to enjoy the privilege of establishing a commercial performance WFOE. For those international players seeking to engage in commercial performance industry in Beijing, time is of the essence to engage a professional China lawyer and launch your project as soon as possible.