Die Gerichte haben bei der notwendigen Kontrolle den unternehmerischen Entscheid wie nachfolgend zu beurteilen, wobei der Richter nicht sein unternehmensfremdes Wissen und Ermessen anstelle der Unternehmensführung setzen darf.

Voraussetzungen für den korrekten Entscheid sind:

• Formell ordnungsgemässer Beschluss (Einladung, Protokoll);
• Kein Interessenkonflikt (Einhaltung der Ausstandsregelungen);
• Beachtung von Gesetz und Statuten (Compliance);
• Einholung aller zumutbaren Informationen und Abwägung der möglichen Alternativen.

Ein Verwaltungsrat oder Geschäftsführer sollte seine Entscheidungen so vorbereiten dass die notwendigen Beweise vorliegen, um das mangelfreie Zustandekommen des Entscheids zu belegen. Aus diesem Grund ist ein Beschlussprotokoll in der Regel ungenügend und die Erstellung eines Beratungsprotokolls zu empfehlen. Ebenfalls von Wichtigkeit ist die stete Prüfung, ob ein Interessenkonflikt vorliegen könnte.

Als Faustregel gilt deshalb: je grösser das unternehmerische Risiko, umso wichtiger ist die Nachweisbarkeit des korrekten Zustandekommens des Entscheides.

Haben Sie weitere Fragen? Das HütteLAW-Team berät Sie gerne.

Author: Michael Endres

This content appears as a courtesy of HütteLAW, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.huettelaw.ch.

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Moving forward from low-cost manufacturing, China is focused on attracting high-quality foreign investments, especially in industries which support the technological and eco-sustainable movement in China.  Equally, regulation reforms in the last years coupled with the digitalisation of business administrative and taxation procedures require greater management in legal and financial compliance. Companies seeking to enter the China market shall be aware of not only the changing market trends, but the current legal and financial obligations for foreign investors.  Overall, companies should implement an essential China checklist before entering China to ensure the business can thrive and scale in China.

Webinar Focus China

At Horizons Corporate Advisory, we have navigated clients through the regulation reforms and collaborated with the Industrial Federation of Canavese (Italy) this Summer to present an insight. Through a joint webinar “Focus China: the new foreign investment landscape” hosted on 17th June 2021, our experts provided the essential China checklist for Italian investments today.

Dr. Lucia Myriam Netti, Regional Partner in Horizons Italy – Head of the Group’s consulting activities in Europe, and Dr. Pier-Domenico Peirone, Executive Director of Pathways (partner of Horizons Group), were called to lead the webinar. The webinar attracted over numerous local Italian companies from various sectors including packaging, textiles and mechanics with plans to enter the China market.

The successful collaboration also paved a long-term partnership between Horizons and the Industrial Federation Canavese. Specifically, Dr. Gianfranco Franciscono, Head of the Economic Service of Industrial Federation Canavese comments on investing in China.

“We are well aware that investing in a China business project today is the most promising. However, it is never free from risks -the risk shall never be an impediment. On the contrary, the risks are evaluated in a rational way, it can be managed and leveraged sucessfully. Starting your business in an attractive market such as China, we want to provide companies with information and suggestions for the correct approach and expansion strategy.”

China: current investment landscape for Italian companies

“Despite the ongoing pandemic, China did not abdicate the role as economic leader -especially in the manufacturing sector. In 2020, China GDP grew 3%, whilst the rest of world contracted. For Italy, China is an important trade partner, with a commercial exchange of 44 billion euro – noted Dr. Patrizia Paglia, President of the Industrial Federation Canavese.

“In the uninterrupted flow of trade relations with China, the sectors include not only traditional Made in Italy brands fashion, agri-food and mechanical engineering – Dr. Paglia continued – but also innovative companies working environment and sustainable energy. For example, smart urbanisation, infrastructures and transport and space technology. As a result, the current investment landscape is increasingly broadening and offer opportunities for companies to seize with the adequate legal and financial tools to both protect the investment and comply with the local regulations.”

The essential China checklist

Dr. Peirone explains in the webinar “expanding to China today opens very different perspectives compared to the previous years”.  The digitalisation and speed in China offer Italian businesses new perspectives to enter the market, however companies should understand the legal and financial responsibilities and activacte the legal protection, before speeding ahead. In the below, we provide three aspects of the essential China checklist.

Pre-investment stage: trademark and patent protection

Companies should ensure trademark and patent are registered in China before entering the China market. Dr. Netti pointed ‘Despite the preconception in Italy (rooted in prejudice), intellectual property rights (‘IPR’) is strongly recognised in the Chinese Law and enforced. However, many Italian companies do not proactively protect trademarks and patents with the provisions of the Chinese Law.”

For more information on trademark protection, Horizons Partner and IPR Head Dr. Angela SU Qi discusses the IPR reforms in the article  Dr. Angela Su, Horizons Partner and IPRS Head, provides insight on trademark protection for the foreign community in Shanghai

Working with Chinese companies: cultural nuances in contracts

The word ‘contract’ in Chinese is written with the two characters 合同 (hétóng).  合(hé)  means to join and 同 (tóng) means to be the same together. Therefore, the two characters combined signifies the parties to the contract are unified with the same objectives. Contract Law defines a contract as an agreement between equal parties and emphasises that the parties shall be of equal footing.

“At Horizons, we encounter many contracts drafted without the mandatory clauses – notes Dr. Peirone – or drafted in English. In such cases, without taking the reasonable steps to ensure the contacts have be drafted properly and accordingly to the Chinese Law, the contract may not provide significant protection  during a contractual dispute.”

For more information on contracts in China, Horizons penned an article on the Do’s and Dont’ of Contracts in China.

E-commerce; legal and tax obligations for Italian businesses   

“In China, online sales are achieving absolute success – explained Dr. Netti – Already sales have increased by 27.5% in 2020, rising by 21.0% in 2021 and accounting for 52% of retail transactions – demonstrating China leading e-commerce sales.”

For companies selling products through Chinese online retail platforms, there are both legal and tax obligations to observe. Specifically, many companies neglect the withholding tax obligation for the income generated in territory of China. Equally,  E-commerce Law adopted on 1 January 2019, requires companies selling online to be legal entities in China and strengthens consumer protection by forbidding fictitious deals and fabricated user comments.

For more information on withholding tax and the E-commerce Law in China, please see the articles  China business: cross-border withholding tax 101 and China’s first e-commerce law to go into effect from 1 January 2019

Whilst, there are ample opportunities in China for Italian and other companies, legal and tax responsibilities cannot be neglected. Many companies may be tempted to find cost-saving alternatives, but this often lead to larger risks and costly fees. As Dr. Netti mentioned in the webinar, succeeding in China requires an understanding of the laws and regulations in China, if you do not have professional experts in China, it’s impossible to navigate through the legalities or protect your investment.

If you have questions or would like to know more about the corporate services available to you from Horizons, please contact us at +86 21 5356 3400 or email talktous@horizons-advisory.com.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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On 30 January 2020, the World Health Organization declared the 2019-nCoV (COVID-19 aka the coronavirus) outbreak a Public Health Emergency of international concern. From that moment going forward, every nation, more and more, has been forced to cope with a multitude of COVID-19 related problems concerning their population’s health and their country’s economic wellbeing. Throughout this scenario, enterprises have had to act quickly to mitigate the onslaught of dilemmas caused by COVID-19 pandemic and find solutions to keep their operations afloat during such an unprecedented moment.

New challenges, new risks

With COVID-19 come a new set of challenges and risks for enterprises and the advisors they trust to guide them through the global crisis. What are companies to do in the face of mandatory quarantines, large-scale lock-downs and the shutting down of non-essential businesses what is sure to be an abnormally extended period of time?

“At the present moment, we advisors, as law and tax experts, have a duty and obligation to be very concrete in the assistance we provide to entrepreneurs,” says Lucia Myriam Netti, Horizons Corporate Advisory regional partner for Europe, Russia and Belarus (Horizons Italy).

“Now is not the time to delve into philosophical principles or theoretical discourse with clients; what we are now called to do at this time, during this uniquely problematic crisis, is to find practical solutions that support enterprises in ways to safeguard them and their employees now, and for the foreseeable future” adds Gad Matalon managing partner of Milan-based Lawyalty Avvocati Associati (CCG Italy).

Through a collaborative effort between the Horizons Group and the CCG Association, whose advisory membership represents 20-plus countries, CCG advisors have created and implemented a crisis plan to support China-invested enterprises.

“Our plan provides enterprises with the right instruments to mitigate the disorder brought upon by the coronavirus, continues Ms. Netti. “Along with crisis best-practices advice for their operations, our team has laid out a plan for responding to and benefit from the many measures put forth by the State Council of the People’s Republic of China to assist companies through this difficult period.”

The fight against COVID-19

It has been asserted that China was the first country hit by the COVID-19 outbreak and, consequently, has been the first to implement concrete, step-by-step methods for combating the coronavirus. It has been a multipronged response designed to take direct action on both medical and economic front simultaneously. Therefore, one of the pillars of the Horizons-CCG crisis plan is to have China-invested enterprises mimic the China response as part of their crisis management effort.

“Beyond the nuts and bolts of our plan, it calls for enterprises to be wholly disciplined, driven to be aggressively proactive and diligent in carrying out the plan”, says Ms. Netti. “This effort will best position workforces for a return to full operations and profitability, at a time when many other countries, and their own workforces, are stuck in the lock-down phase of their fight against COVID-19.”

According to Mr. Matalon, safety is the path to success.

“The first action for managing one’s China investment in a ‘profitable way’ — at this particular time — is to implement a ‘correct’ safety management system to handle the workplace and operations involving employees of the foreign-invested company in China. There are some procedures and actions that companies constituted in China have to implement mandatorily; though these should not be confused with government investigations activated by the Chinese municipalities for the consent and approval of the resumption of the operations.”

CCG in action

For the past three weeks, the CCG Association and Horizons Italy have worked side-by-side with enterprises who have one or more subsidiaries in China. The effort has supported, particularly in Italy, a total of 285 enterprises in their return to full operational mode through the establishment of appropriate policies and instruments. According to statistics provided by Horizons’ Ms. Netti and fellow CCG member Gad Matalon, these businesses have recovered an estimated €855,224,357 (approximately €3million per company). Among the enterprises include companies active in the automotive, mechanical, chemical, luxury, machinery, food and beverage sectors.

Non-compliance with COVID-19 safety measures in China can have serious consequences in terms of legal responsibility for a company; the penalty can be substantial. What’s more, the legal representative of the company will be fully responsible for the inaction. Also, it will be considered the liability of the foreign employer to oversee detached employees (In the matter of Italy, there are large numbers of Italian national serving as detached employees Italian company’s Chinese subsidiaries.)

“The need to comply with Chinese rules and implement the necessary safety procedures is essential for protecting employees and avoiding running afoul of the authorities in both China and in Italy,” adds Ms. Netti. “However,  legal compliance is not the ‘only one reason’ to comply with such rules, even if it appears to be the most important. This aspect of safety — compliance with recent laws reforms and their implementations in the workplace — is the natural precondition and the first step for companies to achieve profitability in China.”

In the battle against COVID-19, some China foreign-invested companies who are committed to tackling the crisis in their country might ask, “How can act in China, when I have so much to face here in my own country.”

Working locally to achieve global results

To conduct and succeed in business today means to manage one’s operations in a wholly efficient way — be they at home or abroad. And while western countries struggle economically with the deluge COVID-19 has brought upon, in China, companies, with the help of the State Council, are moving fast-forward in their recovery by accepting the responsibility for safety, following a strict programme to avoid risk and remaining unified in their effort.

CCG Association and Horizons Group support enterprises with investments in China by carefully aligning their China-based operations with best practices governance and compliance with the rules of the State Council of the People’s Republic of China, and their own countries being the best bridge to abide by both laws regulations.  

The Horizons Group has been operating for more than 30 years in China. And in cooperation with the members of the CCG Association, we are intent on a future of cross-border bridgebuilding worldwide, where for us — and for you — safety is the first step success.

If you have questions or would like to know more about the COVID-19 corporate crisis services available to you from Horizons, please contact us at +86 21 5356 3400 or email crisis.services@horizons-advisory.com.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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