Charltons provides high impact advice to clients on legal issues arising during all stages of filmmaking, from development, pre-production, and financing through production, distribution, and exploitation. We represent film studios, producers, distributors, financial institutions and investment funds involved in major transactions in the film sector. We advise on all aspects of traditional and emerging broadcast technologies. Our services include film, radio and digital media entity formation, negotiation of development and production agreements, distribution agreements, intellectual property and licensing issues, content acquisition, joint ventures and shareholder agreements, strategic alliances, and acquisitions and financings. Our lawyers have broad experience in capital markets, M&A, corporate finance and commercial transactions, and can provide an insightful and highly personalised service to clients.
As demand for Chinese content in the movie industry grows and the opportunities for foreign producers to access the Chinese film market increases, Charltons has been involved in cutting edge co-production deals involving major foreign and Chinese production companies. We have a particular expertise in advising on investments, joint ventures and strategic alliances in China. We have [almost two decades] of experience in China and have offices in Shanghai and Beijing, as well as long established relationships with top Chinese law firms in all of the major Chinese cities. Our deep local knowledge and international perspective allow us to provide smart and practical advice to foreign investors negotiating joint ventures and other investments and alliances in the Chinese movies sector. We have direct experience of regulators in the Mainland and can guide our clients through the regulatory framework affecting film production and distribution in the PRC.
We also advise on Hong Kong regulatory and compliance-related issues in connection with transactions in the film and entertainment sectors, in particular for companies with obligations under the Hong Kong Listing Rules. Our lawyers have considerable experience in dealing with the Hong Kong Stock Exchange, the SFC and other regulatory and governmental bodies in Hong Kong
According to the Motion Picture Association of America, box-office receipts in China in 2019 grew 5.4% year-over-year to over US$9.2 billion, accounting for approximately 22% of the total global sales. Although the United States and Canada accounted for 27% of global box-office receipts in 2019, such box office receipts actually experienced a negative growth of 0.5% in 2019. Potential for future growth in the Chinese film market is huge. According to Research and Market’s China Cinema and Market Report, China’s box office is expected to surpass North America as the world’s largest by 2022.
The film industry in China is under strict control by the government. The department responsible for overseeing the industry is the State Administration of Press, Publication, Radio, Film and Television (the “SARFT”).
According to the Foreign Investment Industrial Guidance Catalogue (2019 revision) (which classifies industry sectors into encouraged, restricted and prohibited, and any sector not included therein is permitted for foreign investment), foreign investors are prohibited from investing in film-making companies as the Chinese film market is categorised as a restricted sector and is limited to contractual joint ventures.
Therefore, in general, a Sino-foreign co-production joint ventures (i.e. a contractual arrangement between foreign parties and Chinese parties to conduct filming in the PRC) is allowed provided that the lead Chinese party or parties is a production entity or entities and applicable Film Production Licenses from SARFT have been obtained. For the purposes of Sino-foreign co-production, investors or producers from Hong Kong and Macau and the territory of Taiwan are considered as overseas parties. A Sino-foreign co-production film project may only formally commence upon obtaining SARFT’s approval, which is in the form of the issuance of a Permit for Chinese-foreign Co-Production of Film.
Once post-production is completed, the completed film must be submitted to SARFT for censorship review. Films that pass this censorship review may be released within and/or, outside of the PRC. However, if the completed film fails to the pass censorship review, the film cannot be released anywhere in the world.
Charltons advises companies in the film and entertainment sector on legal issues arising during all stages of film making. Charltons has been involved in cutting edge co-production deals involving major foreign and Chinese production companies in the Chinese film market. We have a particular expertise in advising on investments, joint ventures and strategic alliances in China.
