Safer, Better Business in China

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Chinese Company Ownership Chart

Chinese Company Ownership Chart - An Introduction

by Matt Slater 16 May 2018

This article has been written to introduce our Chinese Company Ownership Charts - a popular element of our company verification reports.

Introduced as a feature in our "Pro" & "Full Scope" company verification reports since October 2017, these charts help clients to better comprehend a Chinese company's shareholding structure by providing a visualization of available ownership data.

Understanding whether you are dealing with a solely-owned business or a complex array of stakeholders can be vital information and is easily identified with our Chinese company ownership charts.

What are Chinese Company Ownership Charts?

In each of our Chinese company verification reports we include a table listing the company's direct shareholders. For companies with a simple ownership structure this can be sufficient to give a full understanding.

But what about companies with corporate shareholders? Who owns those companies? Who are the ultimate beneficial owners?

 

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Our ownership charts were developed to address these questions by providing a visualization of the company's ownership structure with multiple degrees of shareholders - allowing clients to dig deeper and get a more complete picture.

They are like a "family tree" of ownership which identify multiple levels of individual shareholders, corporate shareholders, offshore shareholders and even governmental shareholders.

Chinese Company Ownership Chart Examples

The appearance of our Chinese company ownership charts varies markedly depending on the complexity of the Chinese company's ownership structure.

As the saying goes, a picture is worth a thousand words, so let's take a look at some examples.

Simple

  • Individual shareholders only

Simple Chinese Company Ownership Chart

As is shown in this example, many Chinese companies, particularly smaller ones, are simply owned by an individual or a group of individuals.

In such cases there are only "1st-degree shareholders" and the company's ownership chart is very straight forward. 

Low Complexity

  • One or two corporate shareholders

Low Complexity Chinese Company Ownership Chart

In the above example, ownership of the subject company is split between an individual and a corporate shareholder. The corporate shareholder is subsequently owned by two "2nd-degree shareholders".

Medium Complexity

  • Several corporate, offshore or governmental shareholders

Medium Complexity Chinese Company Ownership Chart

For this example the ownership structure is already getting quite complex. This example company has four 1st-degree shareholders, one of whom is a government body.

Included in the 2nd-degree shareholders are two companies registered outside Mainland China - one from Hong Kong, who we can get ownership information for, and one registered offshore, who we can't.

Each of the 3rd-degree shareholders are individuals. To calculate an individual's overall ownership of the subject company just multiply the percentages. E.g. "Zhen Xiansheng" owns 6% (50% * 40% * 30%) of "Beijing Yangpin Baogao Co., Ltd.".

High Complexity

  • A complex web of corporate, offshore or governmental shareholders

High Complexity Chinese Company Ownership Chart

I'm not going to try to explain this example ownership chart as it would take too long and hopefully our system will make sense to you by now.

If not, maybe the two points below will help to clarify.

What are "Degrees of Ownership"?

When a Chinese company is wholly or partly owned by another company the question raised is "well, who owns that company?".

And if that company is also owned by another company, who owns that company?

We quickly realized that trying to explain the different levels of ownership is very complicated so have devised this concept of "Degrees of Ownership".

  • 1st-degree shareholders: entities/individuals directly holding shares in the subject company
  • 2nd-degree shareholders: entities/individuals holding shares in a 1st-degree corporate shareholder
  • 3rd-degree shareholders: entities/individuals holding shares in a 2nd-degree corporate shareholder
  • etc.

Occasionally we come across Chinese companies with extremely complicated ownership structures that would could literally take us days to research.

For this reason we limit the degrees of ownership which we guarantee to include in our Chinese company ownership charts. These vary depending on the report ordered:

  • Pro Verification: 1st and 2nd-degree shareholders
  • Full Scope Verification: 1st, 2nd and 3rd-degree shareholders 

Ownership Chart Colors Key

As you can see our charts often need to include a multitude of information so we have devised a color scheme to identify different types of shareholders.

You can see what the different colors represent in the key below:

Chinese Company Ownership Chart Key

Which Services Include an Ownership Chart?

The Ownership Chart feature is included in our Hong Kong Pro Verification, China Pro Verification and China Full Scope Verification reports.

 




Matt Slater
Matt Slater

Author

Hi there, I'm Matt, the Founder & CEO of China Checkup. Originally from the UK, I am now based in Brisbane, Australia.

Frustrated by the scarcity of concise, high-quality and timely information about Chinese companies, I setup China Checkup whilst living in Shanghai in 2013.

My team are proud that China Checkup's company verification reports have now helped thousands of clients from all corners of the world to do business in China more safely.

  



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