ESTABLISHMENT OF A REAL ESTATE DEVELOPMENT ENTERPRISE
According to the “Law of the People’s Republic of China on Administration of Urban Real Estate” (‘‘Urban Real Estate Law’’) promulgated by the Standing Committee of the National People’s Congress in July1994, a real estate developer is defined as an enterprise which engages in the development and sale of real estate for the purpose of making profits. Under the ‘‘Regulations on Administration of Development of Urban Real Estate’’ (the ‘‘Development Regulations’’) promulgated by the State Council on 20 July 1998, in addition to requirements on establishing enterprises, an enterprise which is to engage in development of real estate shall satisfy the following requirements: 1) its registered capital shall be RMB 1 million or more and 2) have four or more full-time professional real estate/construction technicians and two or more full-time accounting officers, each of whom shall hold the relevant qualification certificate. The local government of a province, autonomous region or municipality directly under the central government may, based on local circumstances, impose more stringent requirements on the registered capital and the professional personnel of a real estate developer.
To establish a real estate development enterprise, the developer should apply for registration with the administration for industry and commerce on or above the county level. The real estate developer must also report its establishment to the real estate development authority in the location of the registration authority, within 30 days of the receipt of its Business License.
Under the ‘‘Foreign Investment Industrial Guidance Catalogue’’ promulgated jointly by the Ministry of Commerce (the “MOFCOM”) and the National Development and Reform Commission (the “NDRC”) in November 2004, the development and construction of ordinary residential units falls within the category of industries in which foreign investment is encouraged, whereas the development of a whole land lot and the construction and operation of high end hotels, villas, premium office buildings and international conference centres falls within the category of industries in which foreign investment is subject to restrictions, while other real estate development falls within the category of industry in which foreign investment is permitted. A foreign investor intending to engage in the development and sale of real estate may establish a joint venture or cooperative venture in accordance with the ‘‘Law of the People’s Republic of China on Sino-Foreign Joint Ventures’’ or the ‘‘Law of the People’s Republic of China on Sino-Foreign Cooperative Ventures’’ respectively. Prior to its registration, the parties to the joint venture or cooperative venture shall sign a joint venture/cooperative venture agreement, contract and articles of association, which must be approved by the foreign economic and trade authorities, upon which approval an Approval Certificate for a Foreign-Inv