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Registered Capital Registration System Reform

China implements a series of reform measures with regard to the registered capital of FIEs. In this connection, a number of regulatory documents have been promulgated, including the amended Company Law (effective on 1 March 2014), the Circular of the State Council on Printing and Distributing the Reform Plan on the Registered Capital Registration System (Guo Fa [2014] No.7) issued by the State Council on 7 February 2014, and the Circular of the Ministry of Commerce on Improving the Administration of Foreign Investment Approval (Shang Zi Han [2014] No.314) issued by MOFCOM on 17 June 2014.

(a)  The restrictions or provisions on the ratio of initial capital contribution, ratio of monetary capital contribution and time limit for capital contribution to foreign-invested companies (including companies with investment from Taiwan, Hong Kong and Macau) have been removed. The amount of capital contribution subscribed, the method of capital contribution and the time limit for capital contribution are to be agreed by the investors in the company (shareholders and promoter) and written out in the equity joint venture (cooperative joint venture) contract and articles of association. Commerce departments at all levels should affirm the above information in their official reply.

(b)  Restrictions on the minimum registered capital of companies have been lifted, unless otherwise stated in provisions governing the minimum registered capital of specific industries stipulated in relevant laws, administrative rules and State Council decisions.

(c)  For industries provisionally not subject to implementation of the subscription registration system for registered capital listed in Guo Fa [2014] No.7 (see table below), where details concerning the contribution of registered capital are concerned, before the relevant laws, administrative rules and State Council decisions are revised, the existing regulations will continue to apply for the time being.

Table:Industries provisionally not subject to implementation of the subscription registration system
Table:Industries provisionally not subject to implementation of the subscription registration system

Apart from the above mentioned industries to which the subscription registration system for registered capital does not apply for the time being, the payment of the registered capital of companies is no longer subject to examination.

(d)  For foreign investment projects approved before 1 March 2014, investors should continue to perform their duty of capital contribution in accordance with the provisions in the original contract and articles of association. In the event that any changes are necessary, investors can submit an application to the commerce department, and commerce departments at all levels should proceed with examination according to the relevant requirements of existing policies.

(e)  The ratio of a company’s registered capital to its total investment should continue to comply with the Interim Provisions on the Ratio of Registered Capital to Total Investment of a Sino-Foreign Equity Joint Venture and other existing regulations.

Content provided by Picture: HKTDC Research
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