Yongxing Island Is To Be Registered As A Global Off Shore Company.

In the newly convened "two sessions", Han Fangming, deputy director of the Foreign Affairs Committee of the CPPCC National Committee, submitted a proposal through the CPPCC. He suggested that Yongxing Island, located in Paracel Islands, be set up as a global Off Shore Company registry to develop offshore business.

This will not only promote the development of local economy, but also promote the implementation of China's South China Sea strategy.

In the context of the complicated situation in the South China Sea, this proposal has been discussed frequently about the feasibility of making Yongxing island a global Off Shore Company registry.

From a legal point of view, it is believed that this move is feasible, but this is also the overall project of "pulling the whole body". There are 3 major difficulties to overcome: top-level design, legal risks in the economic field, and practical obstacles.

The author believes that Yongxing island will become a global company's registered place, which is the overall project of "mobilize the whole body".

At the four session of the twelve session of the CPPCC National Committee, Han Fangming, deputy director of the Foreign Affairs Committee of the CPPCC National Committee, submitted a proposal. He suggested that Yongxing Island, located in Paracel Islands, be established as a global Off Shore Company registry to develop offshore business.

In the proposal, he mentioned the economic value of Yongxing island in developing offshore finance and Attracting Wealth repatriation, and also analyzed the political value of Yongxing island as an offshore jurisdiction after declaring sovereignty and stabilizing power. Therefore, he suggested that the central government should introduce special policies and make legislation by the Hainan Provincial People's Congress to allow Yongxing island to become an offshore jurisdiction and become a global Off Shore Company registry and develop offshore finance.

The proposal came out, which was widely reported by the media. It also drew attention in China's maritime sector and jurisprudence.

The proposal of South Korea's members involves the legal concepts of "Off Shore Company", "Off Shore Company registration site" and "offshore jurisdiction", but the proposal does not strictly distinguish the latter two concepts.

"Off Shore Company" refers to a limited liability company or Limited by Share Ltd established in the offshore law area. As a form of business organization, Off Shore Company is not only limited to the company, but also includes the form of trust fund and partnership.

The role played by Off Shore Company is mostly the entrepot trade and its bank account receivables. The "Off Shore Company registration site", known to the world, provides convenient conditions for Off Shore Company and some places for registration and management services. At present, the internationally renowned ones include the British Virgin Islands, the Cayman Islands, Bermuda and so on.

From 2004 to 2014, there were many famous Chinese companies such as Baidu, Alibaba and Qihoo 360 registered in the Cayman Islands, both for listing and tax avoidance and international capital operation. "Offshore jurisdiction" is to foster and develop special economic zones through legislative means, allowing international natural persons or legal persons to engage in various offshore businesses in their territory, and mainly rely on low taxes or tax exemption policies to develop offshore financial industry.

Strictly speaking, there is a difference between the Off Shore Company registration site and the offshore jurisdiction. The latter should be an upgraded version of the former, and can also become an offshore jurisdiction in attracting some global investors.

In view of the limitations of Yongxing island's resources, existing infrastructure, finance and other related supporting services, even if the proposal is passed, the location of Yongxing Island cannot be paged. It should be carried out in stages. The short term target is the offshore registration area and long-term target of the Off Shore Company.

The proposal of South Korea's member of the committee to take advantage of the sword is a breakthrough for safeguarding the maritime rights and interests and breaking the current stalemate of the sovereignty disputes over the South China Sea Islands and reefs.

In territorial disputes, modern international law and ICJ jurisprudence tend to support those who are effective in ruling sovereign acts of islands and reefs.

Evidence that can prove "effective rule" includes civil facilities, related legislation and law enforcement, resident residents, administrative measures, and the recognition of the sovereignty of the third country by a third country on the building of a lighthouse on the reefs.

The act of "effective rule" still needs to be a peaceful, continuous and sovereign exercise by the neighboring countries.

Compared with the stationing of military installations and military personnel stationed in islands and reefs, China's adoption of the above measures is less likely to conflict with the relevant countries, and it can achieve the evidence effect of "effective rule".

If you want to locate Yongxing island as a global company registration site, you need not only the corresponding laws and regulations, administrative support matching, but also attracting foreign countries, including Southeast Asian countries, Off Shore Company.

From the perspective of safeguarding national maritime rights and interests and reef sovereignty, it is necessary to build Yongxing island into a global company registry.

It is feasible to build Yongxing island into a global Off Shore Company registry.

However, to build Yongxing island into a global company registration site is the overall project of "mobilize the whole body". I think we need to consider some problems such as top-level design, legal risks in the economic field and practical obstacles.

Difficult one: top-level design.

Yongxing island is now the military, political and cultural center of the three archipelago of Xisha, Nansha and China. There are three people's governments of Shasha and many senior dispatched offices, municipal units and "Yongxing Working Committee".

In view of the tense situation in the South China Sea, military deployment at this stage plays an important role in safeguarding the South China Sea islands such as Yongxing island. However, there are many civil and military needs in practical issues such as land allocation.

And coordination.

Therefore, it is suggested that the top-level design of the central "civil military integration" be included in the relevant research on the global Off Shore Company registration site of Yongxing island.

Difficulty two: legal risk.

It should be noted that the Off Shore Company mode is on the one hand becoming an effective channel for enterprises to avoid tax, invest abroad, provide operational platform for financing, and avoid risks. On the other hand, Off Shore Company is also accompanied by

There are negative problems such as loss of state assets, money laundering, avoidance of listing policy and loopholes in supervision.

In 2015, the Central People's Bank of China jointly launched the special action of the Ministry of public security, the supreme law, the Supreme Procuratorate and the State Administration of foreign affairs to crack down on the pfer of illicit money by Off Shore Company.

In terms of legislative cooperation and concrete operation, he put forward some useful suggestions: "Yongxing island as a special zone in the Special Administrative Region, and make a preliminary examination in the field of financial reform; suggest that the central government should issue special policies and legislate by the Hainan Provincial People's Congress; authorized by the national people's Congress and Hainan Provincial People's Congress to the offshore jurisdictions, and make systematic provisions on the registration of Off Shore Company, and delegate the right to management in the light of the general rules of international offshore jurisdictions in terms of Taxation, commercial registration, etc.".

However, for the Yongxing island's legislation on the establishment of a global Off Shore Company registry and the legal risks foreseen, the above recommendations can be refined: first, whether the status of global Off Shore Company registration in Yongxing island can be promoted to an international strategic level similar to that of the Shanghai Free Trade Zone, so that special legislation can be carried out; secondly, because of the "civil military integration", the level of legislation needs to be balanced between the upper legislative body and the next legislature. Finally, in view of the above legal risks and the need to attract foreign companies to register, the legislative categories of "special duties" for Yongxing island can be foreseen in terms of company law, securities law, tax law, and foreign trade law.

Difficulty three: realistic obstacles.

Yongxing island is under the jurisdiction of Sasha City, Hainan Province, with an area of about 2.6 square kilometers after expansion. It is the largest island in Paracel Islands.

At present, in addition to government departments entering Yongxing Island, the infrastructure and supporting projects such as port terminals, airport runway and livelihood projects have been promoted and completed.

However, from the practice of offshore construction, there is still a big gap between the capital construction and matching of Yongxing island and the goal of building a global Off Shore Company registry.

Secondly, Off Shore Company's registration business and management have great demand for relevant management and practitioners, and derivative service industries.

According to the Provisional Regulations on household registration management in the city of San Sha, "except those who have registered in the local work and registered in the residents' committees, they can apply for the relocation of their accounts into the three sand areas, and invest in enterprises in the city of San Sha, with a larger investment and a floating population with special contributions to the state. They can apply to move into the three cities."

Therefore, the reform of the household registration system in San Sha City will also create obstacles to the goal of establishing a global Off Shore Company registry.