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Digg It - Corporate Governance for Foreign Investors in China
Most Foreign Invested Enterprises (FIEs) are governed by a
board of directors and senior management. An exception exists
for Cooperative Joint Ventures that the parties have chosen not
to incorpo
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
rate (these are governed by a management committee).
Powers: The Chairman, as the legal representative of the enterprise, has the power to legally bind the enterprise and bears significant respon
Powers: The Chairman, as the legal representative of the enterprise, has the power to legally bind the enterprise and bears significant respon
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
sibility for its acts and
omissions. Most of the powers and functions of the board are
set forth in the Articles of Association and in the Joint
Venture Contract.
Number of Directors: The board
Number of Directors: The board
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
of directors of both Wholly
Foreign Owned Enterprises (WFOEs) and Joint Ventures are
required to appoint between 3 and 13 directors. FIEs with few
shareholders may be able to convince the examin
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
ation and
approval authority to dispense with the board of directors and
use an executive director.
Membership: In an Equity Joint Venture (EJV), board membership must be proportionate to capita
Membership: In an Equity Joint Venture (EJV), board membership must be proportionate to capita
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
contributions. The board must
have a Chairman, but need not have a Vice Chairman. If both are
used, however, then if the foreign investor selects the
Chairman, the Chinese party must select the
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
Vice Chairman, and
vice versa.
Meetings: Joint venture board meetings must be held once a year, and a quorum is 2/3 of the directors. For Equity Joint Ventures, unanimous consent of the board is
Meetings: Joint venture board meetings must be held once a year, and a quorum is 2/3 of the directors. For Equity Joint Ventures, unanimous consent of the board is
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
required for
amendment of the Articles of Association, increase or reduction
of the Registered Capital, merger or division, and termination
and dissolution. The law is significantly more flexibl
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
e for
Wholly Foreign Owned Enterprises - board meetings and quorum
requirements are governed by the WFOE’s Articles of
Association.
Director & Officer Liability: Director and officer liability
Director & Officer Liability: Director and officer liability
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
law and enforcement is not as well-developed as in many Western
nations. Correspondingly, the market for directors and officers
liability insurance is not particularly well-developed either.
The
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
hairman’s role as the enterprise’s legal representative
encumbers him with both civil and criminal liability for the
acts and/or omissions of the enterprise. Directors can be held
liable for boar
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
d resolutions that are illegal or that
contravene the Articles of Association and cause losses to the
company. Directors, supervisors and senior management personnel
can be held liable if they ca
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
use losses to the enterprise by
violating laws and/or the Articles of Association.
Management
Equity Joint Ventures must appoint a General Manager, one or more Deputy General Managers, and a Fin
Management
Equity Joint Ventures must appoint a General Manager, one or more Deputy General Managers, and a Fin
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
ance Manager. Although
not required for other FIEs, this is common practice for these
enterprises as well. If a Chinese investor nominates the
General Manager of an EJV, a foreign investor may no
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
minate the
Deputy General Manager, and vice versa.
General Manager: The General Manager is charged with day-to-day operation and may be a foreign national if the enterprise so chooses. The respo
General Manager: The General Manager is charged with day-to-day operation and may be a foreign national if the enterprise so chooses. The respo
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
sibilities of the General Manager should be
listed in the Articles of Association even if Chinese law does
not require the appointment of a General Manager (as in the
case of WFOEs). The General
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
Manager is charged by law with
responsibility for formulating a management system for the
enterprise; production, operations and management, employment
and termination of staff (except those that
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
must be employed
and dismissed by the board of directors) and implementing board
resolutions and investment and business plans.
Deputy General Managers: A Foreign Invested Enterprise may appoin
Deputy General Managers: A Foreign Invested Enterprise may appoin
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
t one or more Deputy General Managers (EJVs are required
to appoint at least one).
Finance Manager: An Equity Joint Venture is required to appoint one or more accountants to assist the General Ma
Finance Manager: An Equity Joint Venture is required to appoint one or more accountants to assist the General Ma
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
nager with
finances. This is also common practice for other FIEs.
Supervisors
LLCs are required to have supervisory boards, although this is often ignored in practice by WFOEs and Joint Ventures
Supervisors
LLCs are required to have supervisory boards, although this is often ignored in practice by WFOEs and Joint Ventures
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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