Interview Report Summary (Jul 22-Jul 28, 2006)

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Officers in HK:                         Mdm. J. Le Roux, Mr. Normand Lemay

Assets

The PA had 4 bank deposit certificates.  It was surprising that the PA told the officer about RMB 7M came from money he/she lent to friends. The officer asked for loan agreements but the PA did not have them during the interview.  It was disappointing because the PA told the lawyer at the briefing it was from dividends or salaries.

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The officer asked many questions about the bank deposit (RMB 1M), e.g. where did it come from, when was it deposited into bank, etc.

The main problem was the PA bought 2 shops (RMB 3.7M) in 2005 (receipts and contract provided).  No title deed, the officer could not recognize the value of the shop.  The PA does not have CAD 800,000 to qualify.

The insurance (claimed to be USD 63,000, no document on hand) was added to the PNW last minute before the interview.  Without this sum the PA does not have enough money.  The officer did not ask during the interview but it could come back as a major problem. 

The officer pointed out that he/she could not be sure if the money is still in the bank accounts.  No bank certificates provided.

The PA has lent money to some friends (RMB 1.9M).  A title deed (under name of the borrower) as security and a lending contract are held by the PA.  The officer said he’s not going to accept such as an asset.  At this point the PA does not have enough assets.  Moreover, the officer pointed out that 90% of the company’s value is account receivables.  It’s indicated as a not in the audit report.  The officer was suspicious about the real value of the company.

Documentation

The officer wants a confirmation by the legal representative on the PA’s income and taxes relating to PA’s income were paid.

No proof of mortgage of the properties was paid and no stamp on the property title deed to confirm mortgage was settled.

The officer could not verify the originals (audit report, business license, reference letter, etc……) during the interview.  It’s mandatory that the PA has to bring his originals.

Financial Report

The audit report 2005 provided is written that the audit is made for immigration only and it seemed that the accountant (CPA firm) did not follow the standard accounting rules.  The PA owns 10% of shares and it’s absolutely needed to qualify the assets requirement.

Management Experience

The PA wanted the PA to explain the company’s revenue variations.  The PA was good (irregular revenue for real estate due to delays to realize the project).  When it came to explain the nature of profits, the PA gave confusing answers.

The officer wanted to know why the inventory (RMB 7M) and account receivables (RMB 6M).  The PA explained well about the production which is seasonal, and credit period of 45 days to collect payments.

The PA was quite good to explain the company’s activities and job duties.  He/She was convincing and talked at length of his/her power in the company.

Some easy questions on the management experience and scope of business were asked.

The officer asked testing questions.  The PA is hired as GM (the company was 100% foreign owned, the Vice GM is the legal representative).

After verifying the identity, motivation and assets, the officer began with questions on business scope.  It seemed the officer made some research and asked quite technical questions (computer, software, global solution).  The PA performed well.

The officer did not think the PA has enough managerial experience.  The lawyer explained to the officer that the PA is a very qualifying candidate.  The PA is managing the department just like a branch.  Some important documents written clearly the PA is fully responsible (HR and finance, etc.) and evidences showing that the PA has to approve everything.  The officer stopped the lawyer and said the file was obviously badly prepared as relevant documents were not provided at the submission.  The officer gave a chance and said another reference letter explaining how things are done could help.

Proof of Income

The officer would have liked to see proof of PA’s income.  The PA did not have many bank history records.

Tax (focus on Enterprise Income Tax EIT)

The officer wanted EIT receipts (RMB 1M) to prove the company’s gross profit (RMB 3M).

The tax receipts did not match with the audit reports.  The PA said he/she could provide all the tax receipts afterwards.

The tax receipts showed 24% but the audit reports stated 12%.  No document regarding refund of tax to the company.

The officer asked for the PA’s personal tax receipts which the PA did not have.  Although it exists, it seemed to be very complicated to provide such document.

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Misc.

The PA is a smart business person but he/she seemed to complicate issue that required very simple answers.

The PA made loan to invest in the company when privatization (1998) and another loan (RMB 15M in 2000) to increase the registered capital to meet the minimum requirement to keep the company’s grade classification.  The financing transactions were complicated.  The lawyer had to give further clarification.  It seemed that the officer did not understand well and could not elaborate why he/she was uncomfortable with the way the loan was structured or set-up.

The PA bought shares from other shareholders not at market price.  The PA gave complicated answer.

The PA was asked to identify his/her consultant because there’s no consultant indicated in the file.  The PA gave a name card to the officer.

Explained why the other shareholders willing to sell shares to let the PA and his/her have the company and why the PA became the official legal representative (Nov 2005).

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