What is the
difference between a Company and an
enterprise?
Legally there
are several differences between the two. An enterprise means
foreign investment enterprises (FIE) in China. There are state
owned enterprises in China but we do not include them into the
comparison here.
A PRC company is incorporated under the PRC
company law, or the "Tentative Provision for the Establishment
of the Foreign Investment Joint Stock Limited Liability
Company". There are two types of companies: one is limited
liability company;the other is joint stock limited liability
company; An enterprise is incorporated under one of the
following laws:-
1. The PRC Law for Sino-foreign Equity
Joint Venture Enterprises;
2. The PRC Law for Sino-foreign
Cooperative Joint Venture Enterprises;
3. The PRC Law for
Wholly Foreign Owned Enterprises.
The three types of
enterprises are called foreign investment enterprises.
A company may have perpetual continuity
while an enterprise must have a definite period of operating
life in years, as stated in the Articles of Association.
A PRC company must have at least 2
shareholders (5 in the case of a joint stock limited liability
company) with the exception of a wholly state owned company. A
wholly foreign owned enterprise can have one shareholder.
A company has a status of a legal person
while a Sino-foreign cooperative joint venture may not possess
the status of a legal person if the joint venture parties
agree to have such arrangement. Each party assumes its own
legal responsibility independently.
A company is not required to have a
shareholder agreement while the law requires that an equity
joint venture or a cooperative joint venture must have a
shareholder (or JV) agreement, as a pre-requisite for
incorporation.
Except in certain cities, the FIE laws do
not allow Chinese citizens to become the shareholder of an FIE
in the capacity of natural persons. Chinese citizens are
allowed to be shareholders of a company. In contrast, foreign
nationals can act as the shareholders in an FIE.
The highest authority is the board of
director for a foreign investment enterprise. For a company
the highest authority is the general meeting of the
shareholders, who make the decision on the appointment of
directors.
What is something in common between a
company and an enterprise?
1. Both of them must
have a legal representative.
2. The PRC Company law shall
apply to a foreign investment enterprise in the absence of any
provision in the applicable FIE laws.
3. Both the company
and an FIE have share capital, except that for Sino-foreign
cooperative joint venture enterprises in certain cases.
4.
Both a foreign investment enterprise and a company can be
converted into a joint stock company under the PRC Company
Law. | 
