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Online CBA: What are the Capital Requirements of Establishing General Trading Companies in China?

Photo: Foreign-invested enterprises
Photo: Foreign-invested enterprises

Q: What are the Capital Requirements of Establishing General Trading Companies in China?

A: According to the Circular of the Ministry of Commerce on Improving the Administration of Foreign Investment Review (the Circular) issued in June 2014, the requirements for minimum registered capital and proportions of initial capital contribution for foreign-invested enterprises (the “FIEs”) (including those funded by investors from Taiwan, Hong Kong or Macau) are scrapped.

The Circular also stipulates the following:

1. Requirements for or provisions on proportions of initial capital contribution, proportions of monetary contribution and fulfilment periods of capital contribution for FIEs are scrapped. Investors (shareholders and initiators) of the company should independently agree on the amounts of capital subscription and the methods and fulfilment periods of capital contribution, which should be specified in the contract and articles of association of the equity (or cooperative) joint venture concerned.

2. The requirements for minimum registered capital of a company will be cancelled unless it is otherwise provided by laws, administrative regulations or decisions of the State Council for the minimum amount of registered capital for specific industries.

3. Except for industries that are not implementing the registered capital subscription registration system for the time being, the payment of a company’s registered capital will no longer be reviewed.

4. For foreign investment matters approved before 1 March 2014, the investors concerned should continue to undertake their funding obligations according to the terms of the original contracts and articles of association. If changes are required, the investors concerned can file an application with the competent commerce department and all levels of commerce authority should review the application in accordance with relevant requirements.

(The HKTDC provides one-on-one China Business Advisory Service free of charge to assist companies in resolving problems encountered when doing business in China. For enquiries and appointments, please call (852) 1830 668 or register online.)

Content provided by Picture: HKTDC Research