ITEM 1. BUSINESS

Overview

We were incorporated on July 19, 2013 in the state of Nevada under the name Greenpro, Inc. On May 6, 2015, we changed our name to Greenpro Capital Corp. Our principal executive office is located at Suite 2201, 22/F, Malaysia Building, 50 Gloucester Road, Wanchai, Hong Kong. Our principal telephone number is + (852) 3111 -7718. Our website is at:  http://www.greenprocapital.com and information contained on our web site is not part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission (“SEC”). 

We currently operate and provide a wide range of business solution services varying from cloud system solution, financial consulting services and corporate accounting services to small and medium-size businesses located in Asia, with an initial focus on Hong Kong, China and Malaysia. Our comprehensive range of services cover cloud accounting solutions, cross-border business solutions, record management services, and accounting outsourcing services. Our cross border business services include, among other services, tax planning, trust and wealth management, cross border listing advisory services and transaction services. We hope to develop a package solution of services (“Package Solution”) that will build a cloud solution into traditional accounting services. By using a Package Solution, we believe that we can assist our clients to reduce their business costs and improve their revenues.

In addition to our business solution services, we also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. Our venture capital business is focused on establishing a business incubator for start-up and high growth companies to support them during their critical growth periods and investing in select start-up and high growth companies. We expect to target companies located in Asia and Southeast Asia including Hong Kong, Malaysia, China, Thailand, and Singapore. We also anticipate our venture capital business to also engage in the purchase, acquisition and rental of commercial properties in the same Asia and Southeast Asia region.

To support our venture capital business, we partnered with QSC Asia Sdn. Bhd., an education and training company that arranges seminars and courses in Malaysia, to provide business and educational and support services. Specifically, we hope to arrange one or more seminars called the CEO & Business Owners Strategic Session (CBOSS) for business owners who are interested in the following:

The objective of the CBOSS seminar will be to educate the Chief Executive Officer or business owner on how to acquire “smart capital” and the considerations involved. We expect the seminar to include an introduction to the basic concepts of “smart capital,” “wealth and value creation,” recommendation and planning and similar topics. We believe that the seminar will synergistically support our venture capital business segment.

We expect to operate our venture capital related education and support services through our subsidiary Greenpro Global Advisory Sdn. Bhd., which was renamed Greenpro Capital Village Sdn. Bhd. on September 23, 2015. On October 1, 2015, QSC Asia Sdn. Bhd., an unaffiliated third party, acquired 49% of Greenpro Capital Village Sdn. Bhd. in consideration of $11,000 (RM 49,000) from Greenpro Financial Consulting Limited. Concurrently with such sale, Greenpro Financial Consulting Limited transferred 51% of Greenpro Capital Village Sdn. Bhd. to Greenpro Holding Limited, our subsidiary.

We operate our business through our subsidiaries. Our corporate structure is set forth below

*49% owned by QSC Asia Sdn. Bhd.

**40% owned by Mr. Cheng Chi Ho and Ms. Wong Kit Yi

***40% owned by Ms. Hui Oi Kuk 

A list of our subsidiaries and affiliates together with a brief description of their business is set forth below:

Name Change

On May 6, 2015, we changed our name from Greenpro, Inc. to Greenpro Capital Corp. to facilitate our re-branding efforts and develop and enhance our business.

Acquisition History

Acquisition of Greenpro Resources Limited

On July 31, 2015, we consummated the acquisition of 100% of the issued and outstanding securities of Greenpro Resources Limited, a British Virgin Islands corporation and affiliate of GRNQ, (“GRBV”). As consideration thereof, GRNQ issued to the shareholders of GRBV 9,070,000 restricted shares of GRNQ’s common stock (valued at $3,174,500 based on the average closing price of the six trading days preceding July 28, 2015 of $0.35 per share) and paid US$25,500 in cash, representing an aggregate purchase price of US$3,200,000. The purchase price was determined based on the existing business value of GRBV, carrying value of GRBV properties, brand names of GRBV and settlement of GRBV founder initial investment.

GRBV provides corporate advisory services such as tax planning, cross-border listing solution and advisory, and transaction services. It also owns real estate in Selangor Darul Ehsan, Malaysia and Kuala Lumpur, Malaysia that are currently being operated as investment properties. Through our acquisition of GRBV, we hope to expand our customer and revenue base as well as broaden the range of services we offer.

As of July 31, 2015, Lee Chong Kuang, our Chief Executive Officer, President and director, is also the Chief Executive Officer, President and director of GRBV. Mr. Lee holds 44.6% of our issued and outstanding securities and 50% of the issued and outstanding securities of GRBV. Gilbert Loke Che Chan, our Chief Financial Officer, Secretary, Treasurer and director, is also the Chief Financial Officer and director of GRBV. Mr. Loke holds 44.6% of our issued and outstanding securities and 50% of the issued and outstanding securities of GRBV. Upon the consummation of the acquisition, Messrs. Lee and Loke collectively received US$25,500 in cash and 9,070,000 shares of our restricted common stock.

Acquisition of A&G International Limited

On September 30, 2015, GRNQ completed the acquisition of 100% of the issued and outstanding securities of A&G International Limited, a Belize corporation (“A&G”). In connection therewith, GRNQ issued to Yap Pei Ling, the shareholder of A&G, 1,842,000 restricted shares of GRNQ’s common stock, representing an aggregate purchase price of $957,840 based on the average closing price of the ten trading days preceding July 31, 2015, the date of the acquisition agreement, of $0.52 per share. The purchase price was determined based on the existing business value generated from A&G.

Ms Yap Pei Ling, the director and sole shareholder of A&G, is the spouse of Lee Chong Kuang, our Chief Executive Officer, President and director.

A&G provides corporate and business advisory services through its wholly-owned subsidiaries as set forth below:

A chart of A&G’s corporate structure is set forth below.

On December 30, 2015, A&G International Limited transferred all of the issued and outstanding securities of Asia UBS Global Limited, a Belize Corporation, and Asia UBS Global Limited, a Hong Kong limited company, to Greenpro Resources Limited to simplify our corporate structure. A&G International Limited, now a corporation with no assets, was subsequently transferred back to Ms Yap Pei Ling.

Acquisition of Falcon Secretaries Limited, Ace Corporate Services Limited and Shenzhen Falcon Financial Consulting Limited

On September 30, 2015, GRNQ completed the acquisition of all of the issued and outstanding securities of Falcon Secretaries Limited, Ace Corporate Services Limited and Shenzhen Falcon Financial Consulting Limited (these companies collectively known as “F&A”). As consideration therefor, GRNQ issued to Ms. Chen Yan Hong, the sole shareholder of F&A, 2,080,200 restricted shares of GRNQ’s common stock, representing an aggregate purchase price of $1,081,704 based on the average closing price of the ten trading days preceding July 31, 2015, the date of the acquisition agreement, of $0.52 per share. The purchase price was determined based on the existing business value generated from F&A.

Ms, Chen Yan Hong, the director and sole shareholder of F&A, is also the director and legal representative of Greenpro Management Consultancy (Shenzhen) Limited, one of the subsidiaries of GRNQ.

F&A provides corporate and business advisory services as set forth below:

Acquisition of Yabez (Hong Kong) Company Limited

On September 30, 2015, GRNQ completed its acquisition of 60% of the issued and outstanding securities of Yabez (Hong Kong) Company Limited, a Hong Kong corporation (“Yabez”), entered into a Sale and Purchase Agreement (the “Yabez Purchase Agreement”). As consideration therefor, GRNQ issued to the shareholders of Yabez 486,171 restricted shares of GRNQ’s common stock, representing an aggregate purchase price of $252,808 based on the average closing price of the ten trading days preceding July 31, 2015, the date of the acuiqistion agreement, of $0.52 per share. The purchase price was determined based on the existing business value generated from Yabez. Yabez provides Hong Kong company formation advisory services, corporate secretarial services and IT related services to Hong Kong based clients.

Acquisition of Greenpro Venture Capital Limited, an Anguilla corporation

On September 30, 2015, GRNQ acquired all of the issued and outstanding securities of Greenpro Venture Capital Limited, an Anguilla corporation, (“GPVC”) from its shareholders, Lee Chong Kuang and Loke Che Chan Gilbert. As consideration thereof, GRNQ issued to the shareholders of GPVC 13,260,000 restricted shares of GRNQ’s common stock (valued at $7,956,000 based on the signed Memorandum of Understanding on July 25, 2015 of $0.6 per share) and paid US$6,000 in cash, representing an aggregate purchase price of US$7,962,000. The purchase price was determined based on the existing business value of GPVC, covering all the customers, fixed assets, investment, cash and cash equivalents, liabilities of GPVC.

As of September 30, 2015, Mr. Lee Chong Kuang, our Chief Executive Officer, President and director, is also the Chief Executive Officer, President and director of GPVC. Mr. Lee holds 43.02% of our issued and outstanding shares and 50% of the issued and outstanding shares of GPVC. Mr. Loke Che Chan Gilbert, our Chief Financial Officer, Secretary, Treasurer and director, is also the Chief Financial Officer and director of GPVC. Mr. Loke holds 43.02% of our issued and outstanding shares and 50% of the issued and outstanding shares of GPVC. Upon the consummation of the Acquisition, Messrs. Lee and Loke received US$6,000 in cash and US$7,956,000 in shares, which equivalent to 13,260,000 shares of our restricted common stock. Mr. Lee Chong Kuang is the sole director of Greenpro Venture Cap (CGN) Limited. Mr. Loke Che Chan Gilbert is the CFO, Treasurer, Secretary & Director of CGN Nanotech Inc and Mr. Lee is the shareholder of CGN Nanotech Inc. Greenpro Resources limited (BVI), which is a subsidiary of GRNQ, is the director of the Forward Win International Limited.

GPVC is an investment holding company with holdings in the following businesses:

A chart of GPVC’s corporate structure and holdings is set forth below.

Description of Business

Our Services

We provide a range of services as a package solution (the “Package Solution”) to our clients. It is our intention to develop the Package Solution, which will build the cloud solution into the traditional accounting services. By offering the Package Solution, we believe that our potential clients can reduce their business costs and improve their revenues. 

Cross-Border Business Solutions/Cross-Border Listing Solution

We provide a full range of cross-border services to small to mid-sized businesses to assist them in conducting their business effectively and generate revenue from such service. Our “Cross-Border Business Solution” include the following services:

Upon our acquisition of Greenpro Resources Limited in July 31, 2015, we also broadened our range of services to include the following:

With growing competition and increasing economic sophistication, we believe more companies need strategies for cross-border restructuring and other corporate matters. Our plan is to bundle our Cross Border Business Solution services with our Cloud Accounting Solution. 

Record Management Services

We believe that it is important to establish a records management solution across the enterprises that offers our clients a convenient and cost effective way to store, categorize and access business records. We offer our clients a cloud record management system to store our future clients’ business information and supplement our cloud product with general bookkeeping services. We intend to use third party accounting software that has been developed in accordance with the accounting principles in Hong Kong and is compliant with tax legislation to deal with day-to-day accounts to ensure that all bookkeeping records are clear and accurate. In addition, we plan to provide a general ledger to a client as well as spreadsheet, income statements, cash flow statements, and balance sheets. We anticipate that by using our record management solutions, our clients will be able to share and make decision quickly and effectively without wasting valuable resources and becoming more competitive.

Accounting Outsourcing Services

We hope to develop a network of relationships with professional firms from Hong Kong, Malaysia and China that can provide company secretarial, business centers and virtual offices, book-keeping, tax compliance and planning, payroll management, business valuation, and or wealth management services to our prospective clients. We also hope to include accounting firms within this network so that they can provide general accounting, financial evaluation and advisory services to our prospective clients that are local to such professional firm. We hope that firms within our professional network will refer to us their international clients that may need our book-keeping, payroll, company secretarial and tax compliance services. We believe that this accounting outsourcing service arrangement will be beneficial to our prospective clients by providing a convenient, one-stop firm for their local and international business and financial compliance and governance needs.

We also plan to engage with strategic partners to assist us in accounting outsourcing services, including Netiquette Software, Xero, and Feng Office.

Cloud Accounting Solution

We intend to develop a cloud accounting system, which can assist small business clients to manage their books and financial records. The cloud accounting system we intend to develop is a device related to book-keeping and accounting through an Internet based platform. It is a program for organizational finance, which we anticipate will allow users to perform accounting-related functions such as making records of money received by a company, billing a company’s clients, managing the inventory, and recording the financial transactions through the cloud platform.

Besides recording a company’s financial data, the cloud accounting system we expect to develop will be able to assist clients to create the financial statements such as the balance sheets, the income statements and statements of cash flow. It is our belief that the cloud based system will enable the potential clients to keep track of their income and expense, create invoices, manage banking accounts, and prepare monthly accounts for management’s review. The designed functions of this system will include reminding the future clients to properly record assets or revenues for its business therefore assisting them to more effectively and economically prepare financial statements and monitor the financial performance of their businesses. We expect that the potential clients could scale at the speed of their businesses, and expand their businesses into larger markets with the assistance of cloud accounting system.

We hope to begin development of our cloud accounting system by the 3  ^rd  quarter of 2016. We may also seek potential partners to jointly develop the cloud accounting system to develop the business.

Our Service Rates

There are two types of fees we expect to charge based on the services described above. One is project-based fees, where we will charge 10% -25% of the revenues of the projects that are completed by assistance of our services. Such projects include the transaction projects, the contract compliance projects, and the business planning projects. Another type of fee is a flat rate fee or fixed fee where our professionals provides expertise to our clients and charge the fees based on the estimation of complexity and timing of the project. For example, for the cross-border business solution, we plan to charge our client a monthly fixed fee.

Our Venture Capital Business Segment

Venture Capital Investment

As a result of our acquisition of Greenpro Venture Capital Limited in September 30, 2015, we entered the venture capital business in Hong Kong with a focus on companies located in Asia and Southeast Asia including Hong Kong, Malaysia, China, Thailand, and Singapore. Our venture capital business segment will focus on establishing a business incubator for start-up and high growth companies to support them during their critical growth periods and investing in select start-up and high growth companies.

We believe that a company’s life cycle can be divided as seed stage, start up stage, expansion stage, mature stage and decline stage.

We expect that most of a company’s funding needs will occur during the first three stages.

We expect our business incubators to provide valuable support to young, emerging growth and potential high growth companies at critical junctures of their development. For example, our incubators will offer office space at a below market rental rate. We will also provide our expertise, business contacts, introductions and other resources to assist their development and growth. Depending on each individual circumstance, we may also take an active advisory role of our portfolio companies including board representation, strategic marketing, corporate governance, and capital structuring. We believe that the future growth of those prospects start-up companies will be our potential investment opportunities

In addition to our business incubator, we have also invested cash and cash equivalents in companies that we believe have high growth potential in exchange for an equity position in such companies. As of the date of this annual report, we have made investments into following companies:

At this time, we do not expect to acquire more than 30% of any single company.

Our business processes for our investing side of the venture capital business segment are as follows:

● IPO (Initial Public Offering): The venture’s shares are offered in a public sale on an established securities market. 

● Trade sale (Acquisition): The entire venture is sold to another company. 

● Secondary sale: The venture capital firm’s sell their part of the venture’s shares only. 

● Buyback or MBO: Either the entrepreneur or the management of the firm buys back the venture capital company’s shares of the firm. 

● Reconstruction, liquidation or bankruptcy: If the project fails the venture capital firms will restructure or close down the venture. 

Our objective for equity investors is to achieve a superior rate of return through the eventual and timely disposal of investments. We expect to look for businesses that meet the following criteria:

Our Venture Capital Related Education and Support Services.

In addition to providing venture capital services through GPVC, we also hope to provide educational and support services that we believe will be synergistic with our venture capital business. Specifically, we hope to arrange one or more seminars called the CEO & Business Owners Strategic Session (CBOSS) for business owners who are interested in the following:

The objective the CBOSS seminar is to educate the Chief Executive Officer or business owner on how to acquire “smart capital” and the considerations involved. We expect the seminar to include an introduction to the basic concepts of “smart capital,” “wealth and value creation,” recommendation and planning and similar topics. We believe that this seminar will synergistically support our venture capital business segment.

We intend to provide these educational services through our subsidiary Greenpro Global Advisory Sdn. Bhd., which was renamed Greenpro Capital Village Sdn. Bhd. on September 23, 2015.

On October 1, 2015, QSC Asia Sdn. Bhd., an unaffiliated third party, acquired 49% of Greenpro Capital Village Sdn. Bhd. in consideration of $11,000 (RM 49,000) from Greenpro Financial Consulting Limited. Concurrently with such sale, Greenpro Financial Consulting Limited transferred 51% of Greenpro Capital Village Sdn. Bhd. to Greenpro Holding Limited, our subsidiary.

Sales and Marketing

We plan to deploy three strategies to accomplish our goal in marketing the brand of Greenpro: leadership, market segmentation, and sales management process development. 

Market Opportunities

It is our intention to assist our potential clients in preparing their financial statements at a lower cost and to provide security based on such financial information since the data is stored on the cloud system. We anticipate a market with growing needs in South East Asia. We believe that today there is an increasing need for enterprises in different industries to maximize their performance with cost effective methods. We believe our services will create numerous competitive advantages for our potential clients. With support from Greenpro, we believe our future clients can focus on developing their businesses and expanding their own client portfolio.

We believe the main drivers for the growth of our business are the products and services together with the resources such as office network, professional staff members, and operation tools to make the advisory and consulting business more competitive.

Customers

Prior to the consummation of the previously described acquisitions, we generated minimal revenue from three clients in Hong Kong in the ordinary course of business. The revenue generated related to our assistance on the clients’ company formation and secretary services. After the consummation of such acquisitions, we expect to generate revenues from clients located globally including those from Hong Kong, China, Malaysia, Singapore, Indonesia, Thailand, Australia, Japan, Korea, Taiwan, Russia, USA, Malta, and France.

We currently provide professional business services to small to mid-size companies from various countries and in various industries. We also plan to serve as support to professional service providers such as auditing firms and law firms. We also provide various professional services to our clients and enable them to focus their resources on their own operational competencies. Depending on a client’s size and capabilities, it has the option to choose to utilize one, some or many of the diverse and integrated services to be offered by Greenpro. Our services will seek to cover the traditional accounting services bundled with cloud accounting solution together with business consulting and advisory. We intend to focus on developing our client base in Hong Kong, China and Malaysia.

Our venture capital business segment will initially focus on Hong Kong and Southeast Asia start-ups and high growth companies. We hope to generate deal flow through personal contacts of our management team as well as through our business incubator.

We generated net revenues of $2,946,164 during the fiscal year ended December 31, 2015. Our venture capital business accounted for approximately 55.6% of our net revenue. We are not a party to any long-term agreements with our customers.

Competition

Our industry is highly competitive. We compete with local and international venture capital, financial advisory and corporate business service companies such as Cornerstone Management Group in Hong Kong, CST Tax Advisor in Singapore and Maceda Valencia & Co in Philippines that provide services comparable to our Packaged Solution. We also compete with numerous local and international financial advisory and corporate business service companies that do not offer our broad range of services but focus on specialized areas such as tax planning, cross-border solutions, and the like. Some of our competitors may provide a broader selection of services, including investment banking services, which may position them better among customers who prefer to use a single company to meet all of their financial and business advisory needs. In addition, some of our competitors are substantially larger than we are, may have substantially greater resources than we do or may offer a broader range of products and services than we do. We believe that we compete on the basis of a number of factors, including breadth of service and product offerings, one stop convenience, pricing, marketing expertise, service levels, technological capabilities and integration, brand and reputation.

Intellectual Property

We intend to protect our investment in the research and development of our products and technologies. We intend to seek the widest possible protection for significant product and process developments in our major markets through a combination of trade secrets, trademarks, copyrights and patents, if applicable. We anticipate that the form of protection will vary depending upon the level of protection afforded by the particular jurisdiction. Currently, our revenue is derived principally from our operations in Hong Kong and Malaysia, where intellectual property protection may be limited and difficult to enforce. In such instances, we may seek protection of our intellectual property through measures taken to increase the confidentiality of our findings.

We intend to register trademarks as a means of protecting the brand names of our companies and products. We intend protect our trademarks against infringement and also seek to register design protection where appropriate.

We rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. Our policy is to require some of our employees to execute confidentiality agreements upon the commencement of employment with us. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive property of our company. There can be no assurance, however, that all persons who we desire to sign such agreements will sign, or if they do, that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets or unpatentable know-how will not otherwise become known or be independently developed by competitors.

Government Regulation

We intend to provide our Package Solution initially in Hong Kong, China and Malaysia, which we believe would welcome outsourcing support services. Further, we believe these markets are the central and regional markets for many customers doing cross border businesses in Asia. We plan to target those customers from South East Asia doing international business and plan to provide our Package Solution to meet their needs. Our planned Packaged Solution will be structured in Hong Kong but services may be outsourced to lower cost jurisdictions such as Malaysia, which encourage and welcome outsourcing services.

The following regulations are the applicable laws and regulations that may be applicable to us:

Hong Kong

Our businesses located in Hong Kong are subject to the general laws in Hong Kong governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws. Because our website is maintained through the server in Hong Kong, we expect that we will be required to comply with the rules of regulations of Hong Kong governing the data usage and regular terms of service applicable to our potential customers. As the information of our potential customers is preserved in Hong Kong, we will need to comply with the Hong Kong Personal Data (Privacy) Ordinance (Cap 486).

The Employment Ordinance is the main piece of legislation governing conditions of employment in Hong Kong since 1968. It covers a comprehensive range of employment protection and benefits for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual Leave, Sickness Allowance, Maternity Protection, Statutory Paternity Leave, Severance Payment, Long Service Payment, Employment Protection, Termination of Employment Contract, Protection Against Anti-Union Discrimination.

An employer must also comply with all legal obligations under the Mandatory Provident Fund Schemes Ordinance, (CAP485). These include enrolling all qualifying employees in MPF schemes and making MPF contributions for them. Except for exempt persons, employer should enroll both full-time and part-time employees who are at least 18 but under 65 years of age in an MPF scheme within the first 60 days of employment. The 60-day employment rule does not apply to casual employees in the construction and catering industries.

We are required to make MPF contributions for our Hong Kong employees once every contribution period (generally the wage period). Employers and employees are each required to make regular mandatory contributions of 5% of the employee’s relevant income to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly-paid employee, the minimum and maximum relevant income levels are $7,100 and $30,000 respectively.

Malaysia

Our businesses located in Malaysia are subject to the general laws in Malaysia governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws including the Computer Crime Act 1997 and The Copyright (Amendment) Act 1997. We believe that the focus of these laws realize it is an issue of censorship in Malaysia. But we believe this issue will not impact our businesses because the censorship focus on media controls and does not relate to cloud based technology we plan to use.

Our real estate investments are subject to extensive local, city, county and state rules and regulations regarding permitting, zoning, subdivision, utilities and water quality as well as federal rules and regulations regarding air and water quality and protection of endangered species and their habitats. Such regulation may result in higher than anticipated administrative and operational costs.

China

A portion of our acquired businesses is located in China and subject to the general laws in China governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws.

Employment Contracts

The Employment Contract Law was promulgated by the National People’s Congress’ Standing Committee on June 29, 2007 and took effect on January 1, 2008. The Employment Contract Law governs labor relations and employment contracts (including the entry into, performance, amendment, termination and determination of employment contracts) between domestic enterprises (including foreign-invested companies), individual economic organizations and private non-enterprise units (collectively referred to as the “employers”) and their employees.

a. Execution of employment contracts

Under the Employment Contract Law, an employer is required to execute written employment contracts with its employees within one month from the commencement of employment. In the event of contravention, an employee is entitled to receive double salary for the period during which the employer fails to execute an employment contract. If an employer fails to execute an employment contract for more than 12 months from the commencement of the employee’s employment, an employment contract would be deemed to have been entered into between the employer and employee for a non-fixed term.

b. Right to non-fixed term contracts

Under the Employment Contract Law, an employee may request for a non-fixed term contract without an employer’s consent to renew. In addition, an employee is also entitled to a non-fixed term contract with an employer if he has completed two fixed term employment contracts with such employer; however, such employee must not have committed any breach or have been subject to any disciplinary actions during his employment. Unless the employee requests to enter into a fixed term contract, an employer who fails to enter into a non-fixed term contract pursuant to the Employment Contract Law is liable to pay the employee double salary from the date the employment contract is renewed.

c. Compensation for termination or expiry of employment contracts

Under the Employment Contract Law, employees are entitled to compensation upon the termination or expiry of an employment contract. Employees are entitled to compensation even in the event the employer (i) has been declared bankrupt; (ii) has its business license revoked; (iii) has been ordered to cease or withdraw its business; or (iv) has been voluntarily liquidated. Where an employee has been employed for more than one year, the employee will be entitled to such compensation equivalent to one month’s salary for every completed year of service. Where an employee has employed for less than one year, such employee will be deemed to have completed one full year of service.

d. Trade union and collective employment contracts

Under the Employment Contract Law, a trade union may seek arbitration and litigation to resolve any dispute arising from a collective employment contract; provided that such dispute failed to be settled through negotiations. The Employment Contract Law also permits a trade union to enter into a collective employee contract with an employer on behalf of all the employees.

Where a trade union has not been formed, a representative appointed under the recommendation of a high-level trade union may execute the collective employment contract. Within districts below county level, collective employment contracts for industries such as those engaged in construction, mining, food and beverage and those from the service sector, etc., may be executed on behalf of employees by the representatives from the trade union of each respective industry. Alternatively, a district-based collective employment contract may be entered into.

As a result of the Employment Contract Law, all of our employees have executed standard written employment agreements with us. We have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.

On October 28, 2010, the National People’s Congress of China promulgated the PRC Social Insurance Law, which became effective on July 1, 2011. In accordance with the PRC Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Fund and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. An employer shall pay the social insurance for its employees in accordance with the rates provided under relevant regulations and shall withhold the social insurance that should be assumed by the employees. The authorities in charge of social insurance may request an employer’s compliance and impose sanctions if such employer fails to pay and withhold social insurance in a timely manner. Under the Regulations on the Administration of Housing Fund effective in 1999, as amended in 2002, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.

The Ministry of Human Resources and Social Security promulgated the Interim Provisions on Labor Dispatch on January 24, 2014. The Interim Provisions on Labor Dispatch, which became effective on March 1, 2014, sets forth that labor dispatch should only be applicable to temporary, auxiliary or substitute positions. Temporary positions shall mean positions subsisting for no more than six months, auxiliary positions shall mean positions of non-major business that serve positions of major businesses, and substitute positions shall mean positions that can be held by substitute employees for a certain period of time during which the employees who originally hold such positions are unable to work as a result of full-time study, being on leave or other reasons. The Interim Provisions further provides that, the number of the dispatched workers of an employer shall not exceed 10% of its total workforce, and the total workforce of an employer shall refer to the sum of the number of the workers who have executed labor contracts with the employer and the number of workers who are dispatched to the employer.

Foreign Exchange Control and Administration

Foreign exchange in China is primarily regulated by:

Under the Foreign Currency Administration Rules, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreign exchange conversion bank, the RMB will be convertible for current account items, including the distribution of dividends, interest and royalties payments, and trade and service-related foreign exchange transactions. Conversion of RMB for capital account items, such as direct investment, loans, securities investment and repatriation of investment, however, is subject to the approval of SAFE or its local counterpart.

Under the Administration Rules for the Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from SAFE or its local counterpart.

As an offshore holding company with a PRC subsidiary, we may (i) make additional capital contributions to our PRC subsidiaries, (ii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, (iii) make loans to our PRC subsidiaries or consolidated affiliated entities, or (iv) acquire offshore entities with business operations in China in offshore transactions. However, most of these uses are subject to PRC regulations and approvals. For example:

On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or “Circular 142”. On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange Concerning Reform of the Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or “Circular 19”, which became effective on June 1, 2015, to regulate the conversion by foreign invested enterprises, or FIEs, of foreign currency into Renminbi by restricting how the converted Renminbi may be used. Circular 19 requires that Renminbi converted from the foreign currency-dominated capital of a FIE shall be managed under the Accounts for FX settlement and pending payment. The expenditure scope of such Account includes: expenditure within the business scope, payment of funds for domestic equity investment and Renminbi deposits, repayment of the Renminbi loans after completed utilization and so forth. A FIE shall truthfully use its capital by itself within the business scope and shall not, directly or indirectly, use its capital or Renminbi converted from the foreign currency-dominated capital for (i) expenditure beyond its business scope or expenditure prohibited by laws or regulations, (ii) disbursing Renminbi entrusted loans (unless permitted under its business scope), repaying inter-corporate borrowings (including third-party advance) and repaying Renminbi bank loans already refinanced to any third party. Where a FIE, other than a foreign-invested investment company, foreign-invested venture capital enterprise or foreign-invested equity investment enterprise, makes domestic equity investment by transferring its capital in the original currency, it shall obey the current provisions on domestic re-investment. Where such a FIE makes domestic equity investment by its Renminbi conversion, the invested enterprise shall first go through domestic re-investment registration and open a corresponding Accounts for FX settlement and pending payment, and the FIE shall thereafter transfer the conversion to the aforesaid Account according to the actual amount of investment. In addition, according to the Regulations of the People’s Republic of China on Foreign Exchange Administration, which became effective on August 5, 2008, the use of foreign exchange or Renminbi conversion may not be changed without authorization.

Violations of the applicable circulars and rules may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and the concurrent private placement and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Seasonality

Our businesses are not subject to seasonality.

Insurance

We do not current maintain property, business interruption and casualty insurance. As our business matures, we expect to obtain such insurance in accordance customary industry practices in Malaysia, Hong Kong and China, as applicable.

Employees

As of the date of this Current Report, we have 28 employees, including our Chief Executive Officer and Chief Financial Officer, located in the following territories:

As a result of the Employment Contract Law, all of our employees in China have executed standard written employment agreements with us.

We are required to contribute to the Employees Provident Fund under a defined contribution pension plan for all eligible employees in Malaysia between the ages of eighteen and fifty-five. We are required to contribute a specified percentage of the participant’s income based on their ages and wage level. The participants are entitled to all of our contributions together with accrued returns regardless of their length of service with the company. For the years ended December 31, 2015 and 2014, the contributions are $3,378 and $1,211 respectively. 

We are required to contribute to the MPF for all eligible employees in Hong Kong between the ages of eighteen and sixty five. We are required to contribute a specified percentage of the participant’s income based on their ages and wage level. For the years ended December 31, 2015 and 2014, Greenpro Resources Limited and its subsidiaries did not have employees in Hong Kong. For the years ended December 31, 2015 and 2014, the MPF contributions by Greenpro Capital Corp. were $11,627 and $489 respectively. We have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.

We are required to contribute to the Social Insurance Schemes and Housing fund Schemes for all eligible employees in PRC. For the years ended December 31, 2015 and 2014, the contributions were $1,772 and $1,876 respectively.