Investigate Shareholders or Actual Controllers of Chinese Companies: Due Diligence on Chinese Companies

This is more important than knowing about the company.

When we conduct due diligence on Chinese companies for our clients, we often find that some Chinese companies have little valuable information to investigate.

Such a company may have little business, few employees, and even only a registered address but no physical office space.

So, is such a Chinese company completely untrustworthy? Not really.

While this is true of many fraudulent companies, it is also true of many honest and trustworthy companies.

Many Chinese businessmen will do business under the name of different companies for various purposes.

For example, for tax planning purposes, some businessmen use multiple companies to split income, or set up new companies at tax-friendly places.

Another example is that some investors may establish a new company for a certain type of business that requires a team composed of them.

The actual performance of a contract depends mainly on the ability of its shareholders and actual controllers to perform the contract .

On the one hand, you need to know the capability of its shareholders and actual controllers. Therefore, the due diligence will involve its shareholders or actual controllers.

On the other hand, you also need the shareholders and actual controllers to be sureties of this company to guarantee its performance of the contract. To this end, you can require the shareholders and actual controllers to sign the contract.

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