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China - General
Author Topic:   Registred Capital of Foreign Enterprises
Name supplied
 posted 15 December 2004 04:28 PM           
As I know the minimum registred capital for foreign enterprises (production enterprises) is RMB500,000.00. Is this RMB500,000.00 must be kept in bank and can't be used as cash flow during operation?

Moderator
 posted 18 December 2004 10:23 AM           
The capital contributed to the foreign invested enterprise can be used to purchase materials, equipment and for other payments necessary for the operation for the company.

Name supplied
 posted 19 December 2004 02:12 PM           
First, from my knowledge the minimum registered capital for a foreign
invested manufacturing company here is US$140,000 not the amount mentioned in your message.

Second, the registered capital can be used as operation funds of the
manufacturing company immediately after the capital is remitted to the
bank in China.

I work for a foreign law firm here in Shanghai. If you wish to have more information, please email me at llxxj@hotmail.com

Name supplied
 posted 20 December 2004 03:18 PM           
I got information from following link which mention RMB500,000 is
enough for a production activities enterprises / FIE limited company. http://www.shanghaiinvest.net

By the way, if I am going to setup a technology development which need
RMB100,000 for registered capital first. After finishing the product
development, we will outsource the manufacturing activities to other
factories and sell those products to oversea. That's mean this technology development company have to issue invoice to oversea customers. Can this company get the right to do that? And does this compnay have the export right or need to find an export company to handle it?

I am going to set it up in Shenzhen. Do you have any Shenzhen consultant to help out for business registration? Thx. in advance.

Moderator
 posted 22 December 2004 04:16 PM           
Your information about the minimum registered capital requirement of certain types of companies in China are correct.
Since you invested company is a technology development company with no export right, you will have to rely on other companies or the outsourced manufacturers who have such rights to do the exporting for you.
Please contact the 深圳市科技和信息局 for investing and consulting services.

Aaron Wang
 posted 23 December 2004 09:58 AM           
This is Aaron Wang, webmaster of http://www.shanghaiinvest.net
Minimum registered capital for foreign-funded production company is
US$140,000. Minimum registered capital RMB 500,000 is for a company
invested by Chinese nationals.

Name supplied
 posted 23 December 2004 04:11 PM           
Sorry, I didn't mention that I was a guy from Hong Kong. Does that mean that I can take national treatment as China citizen? Is there any minimum regsitered capital requirement between Shenzhen and Shanghai? I got inforamtion form Aaron Wang's web which mention min. regsistered capital is US$2,000,000.00 for development center, and TDC's informantion from http://www.tdctrade.com/chinaguide/index_e.htm say ony RMB100,000 is required for a technology development company.

I wonder it is bit strange about the business policy in China. For example, I am going to set up a company in Shenzhen. Its business activities only involve design, develop and sales of its developed products. That's mean it don't take any production activities and it outsource those procution activities to other manufacturer. This company will be a very high value added business because it has its own intellectual property and sales/marketing channel to oversea. A technology development company which without export right or a production enterprises but actually without any production activities. What should I choose?

Moderator
 posted 24 December 2004 10:53 AM           
Please be advised that the information of minimum registered capital requirement in the TDC website on Guide to Doing Business in China is based on the Company Law of the China adopted at the Fifth Session of the Standing Committee of the Eighth National People's Congress on 29 December 1993. According to that Company Law, the amount of registered capital for a limited liability company should not be less than the amount specified below:
1. for a company mainly engaging in production operation, RMB 500,000
2. for a compnay mainly engaging in wholesale, RMB 500,000
3. for a company engaging in retail sales, RMB 300,000
4. for a company engaging in technology development, consulting and services, RMB 100,000

According to Article 7 of the Measures for the Administration on Foreign Investment in Commercial Fields promulgated as of June 2004, the minimum registered capital of FOREIGN INVESTED companies shall conform to the relevant provisions of the Company Law. There are no separate requirements for Chinese and foreign nationals, or for different regions.

However if the minimum amount of registered capital of a limited liability company of a given trade should be higher than those provided for in the abovementioned, it shall be determined separately by law or administrative decrees.

As regards production and export you may wish to rely on the outsourced manufacturers or to apply export right separately.

Jason
 posted 01 March 2005 08:11 AM           
Information on capital in China seems to change every where. Does
anyone know the registered capital for an education business for 1. A
fully owned foreign company, and 2. A joint venture between a Chinese
citizen and a foreigner. This would consist of corporate English and
education as well as English language schools. Any help is most welcomed.
Thank you

Moderator
 posted 05 March 2005 09:54 AM           
In TDC Guide to Doing Business in China a brief information is listed on the minimum registered capital requirements for certain foreign invested categories. Please note that the figures quoted are the MINIMUM capital requirements of either a limited liability company (according to the Company Law of the PRC) or a joint stock company. These requirements may vary according to different industries or the size of business operation.

Jonathan Zhang
 posted 04 April 2006 08:33 AM           
Details on Registration capital and total investment is quite confusing to foreigners. In fact, there is a range and ration for this. All fixed assets, some liquid cash, and know-how can be considered asm capital. The first capital has to be into your account in 3 months of the business issuance.

For more details, please view this link: http://www.ohiti.com/news/list1.asp?t_id=3
Or, contact me directly: jonzhang@ohiti.com

Daniel
 posted 06 April 2006 11:03 AM           
Overseas investors are often confused about the registered capital when they are setting up companies in China. It's true that Chinese Company Law regulates the minimum registered capital, but in practice the minimum registered capital of WFOE or JV is far above that level and even varies a little bit in different places. WFOE or JV can be set up everywhere.
For more professional advice regarding setting up company in Shanghai,
please contact at danielteng@capitallaw.cn

Arthur
 posted 14 April 2006 10:57 AM           
Further to the question posed above, I am curious to know the registered capital requirements for a business engaged in English instruction as a WFOE and JV. I am not clear what effect the new Chinese Company Law as of Jan 1 2006 has, and would appreciate clarification.

Moderator
 posted 21 April 2006 04:50 PM           
Under the existing Company Law, the minimum registered capital of a limited liability company is Rmb500,000 for companies engaged in production and commodity wholesaling, Rmb300,000 for companies engaged in commercial retailing, and Rmb100,000 for companies engaged in technology development, consultancy and services. Also, companies are required to inject in one go the full amount of their registered capital.

The Chinese Government has recently reviewed draft amendments to the Company Law. Not only will the threshold for enterprise registered capital be lowered from Rmb100,000 to Rmb30,000, but the registered capital can also be injected by instalments according to a stipulated ratio within two years, or five years in the case of investment companies.

On the other hand, according to the consultation paper released earlier, one-man limited liability companies are allowed to be set up with a minimum registered capital of Rmb50,000, but under the latest amended version of the draft the minimum registered capital has been lowered to Rmb30,000.

Arthur
 posted 22 April 2006 03:32 PM           
Yes, I read this too, but it seems those amounts apply only to domestic Chinese companies, not WFOEs or JVs. Am I incorrect in my interpretation? I have heard from several sources that WFOEs have a minimum requirement of USD140,000.

Moderator
 posted 06 May 2006 04:56 PM           
The minimum registered capital requirements apply to limited liability companies formed by both domestic or foreign investors for general business operations, e.g. trading services, wholesale and retail, etc. The capital requirements can be higher in joint stock companies and other business sectors. You should note that the threshold of capital requirements have lowered in recent years and might be difference from one municipality to another.

Jonathan Zhang
 posted 09 May 2006 08:30 AM           
Moderator, I should say I partially agree with you.
1: There is no rule for minimum capital requirment, unless your firm is going to lease land, which has a strong investment density demand. In case of renting a ready-made factory, there is basically no written rule;
2. Registration capital mainly consist of fixed assesst investment,
machines, buildings, and land, etc. It can not be taken out as long as
registered; If the registration contribution is in the form of foreign
currency, this money can be wired out for purchasing equipemts, land,
buildings, construction, etc. But after the verification from a Chinese registered CPA.
Anyway, it all depends on how the Artical of Association states.
For more details, please find out from " Updage Knowledge" of our website: www.ohiti.com

Moderator
 posted 22 May 2006 10:11 AM           
According to Article 10 of the amended measures governing the registration of capital of companies adopted by the China State Administration of Industry and Commerce to become effective from January 1, 2006, the minimum level of registered capital of a LIMITED LIABILITY COMPANY is RMB 30,000, that of a one-person limited liability company is RMB 100,000, and that of a company limited by shares being RMB 5 million. In cases where laws or administrative regulations have had higher requirements for the registered capital of a limited liability or company limited by shares, such provisions shall apply.

K Tsang
 posted 24 May 2006 10:09 AM           
Is cash the only item that constitutes main part of the registered capital? If no, what are the other items?

Jacky
 posted 30 May 2006 10:13 AM           
The regulations about registered capital has been changed since
2006.
For the Minimum Registered Capital it depends on your business scope and your location.
For example:
1. You could register a consulting company with a Min. Registered Capital USD 140,000 in Shanghai.
2. You could register a Trading company (domestic wholesale; retail, no import & export licence) with a USD 65,000 registered capital.

Feel free to consult us. Before you make decision how much you would
invest your WFOE in China, especially Shanghai:

Jacky with PathToChina http://www.pathtochina.com/reg_wfoe.htm

Moderator
 posted 12 June 2006 03:05 PM           
According to the amended Measures governing the registration of registered capital of companies adopted by China General Administration of Industry and Commerce to be in force as of 1 January 2006, shareholders or initiators may contribute in the form of cash, or kind, intellectual property right, land use right, and other non-cash property that may be evaluated in the form of cash.

Shareholders or initiators are not allowed to contribute in the form of labour, credit, name of natural persons, business reputation, franchise, or property on which pledge had been made.

Simon
 posted 03 August 2006 10:57 AM           
The min. registered capital of a WFOE depends on the business
scope and location you register your Business. You could find the
information about register capital of WFOE here: http://www.pathtochina.com/regcompany.htm
simon with PathToChina.com



      
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