If you are interested in company due diligence in China and the reasons why this process is important at a certain point, we suggest you read this article. Our Chinese lawyers are ready to provide legal advice and representation when asking for company due diligence in China.
Table of Contents
Who can ask for company due diligence in China?
Any entrepreneur/businessman who wants to enter a commercial contract or investment and needs to know information about a specific company in China.
Why is due diligence recommended?
To verify:
- company ownership,
- business structure,
- activities,
- debts & liabilities,
- existing business license,
- litigation risks, etc.
Can a management background be verified through company due diligence in China?
Yes.
When is company due diligence in China required?
Before doing business or entering into a partnership with a Chinese company or a foreign one established in China.
What information can be revealed by a company’s due diligence in China?
If there are:
- ownership disputes in the firm,
- concealed liabilities,
- compliance affairs or interests,
- intellectual property problems, etc.
What are the key steps in a company due diligence process in China?
- accessing the Chinese database of companies for information about a specific firm,
- verifying the incorporation information and business licenses,
- reviewing ownership and tax information, etc.
NOTE: Specialists in company due diligence will prepare a report with all the above information and present it to the customers.
What types of authorities can be accessed in a company due diligence process in China?
- Administration for Market Regulation (AMR),
- State Taxation Administration (STA),
- Intellectual property, customs, and court databases in China, etc.
Is there specific information that is verified in a company’s due diligence in China?
- the company tax ID,
- name of the legal representative and shareholders,
- the Unified Credit Score,
- the registered business address and date, etc.
IMPORTANT: The Chinese authorities have intensified the company ownership reporting requirements, meaning that business owners will have to submit relevant information through the company registration platform available in China.
Is there a financial due diligence part of the process?
Yes, to check:
- the registered capital,
- possible debts,
- tax payments,
- financial statement, if disclosed,
- banking interactions, etc.
Are private companies protected against company due diligence in China?
Some company information may not be disclosed. In this case, for company due diligence to be performed, the company will need specific access to be verified.
Do you provide company due diligence services in China?
We can put you in contact with due diligence suppliers in China.
Is company due diligence recommended before mergers & acquisitions in China?
Yes, it is advisable to conduct due diligence on the company in China before merging with or acquiring it.
What are the benefits of company due diligence in China?
- to ensure the company you want to collaborate with presents credibility,
- to enter into an investment partnership without financial risks,
- to avoid possible financial, employment, and environmental risks, among others.
By performing due diligence on a company when doing business in China, you can benefit from a good, long-term relationship with any Chinese business partner. For detailed information on the duration of a due diligence procedure, please contact our law firm in China.