China has formulated clear guidelines governing the minimum registered capital of foreign-invested enterprises or companies and the time limit for capital contribution.

1. Minimum Registered Capital Requirement

Under the Company Law, companies are mainly incorporated in the form of limited liability companies or joint-stock limited companies.

For limited liability companies, the minimum registered capital varies with business nature. For instance, the minimum for production enterprises is Rmb500,000; commodity wholesale enterprises Rmb500,000; commodity retailing enterprises Rmb300,000; technology development, consulting and services enterprises Rmb100,000; and other forms of legal entity Rmb30,000.

For joint-stock limited companies, the minimum registered capital requirement is Rmb10 million.

According to the existing rules of government authorities overseeing different sectors, the following requirements are applied to FIEs concerning minimum registered capital:

(a) The minimum registered capital of a JV retail enterprise is Rmb50 million, while in the central and western regions the requirement is lower, at Rmb30 million;

(b) The minimum registered capital of a JV wholesale enterprise is Rmb80 million, while in the central and western regions the requirement is lower, at Rmb60 million.

(c) The minimum registered capital of a foreign or JV bank is Rmb300 million worth of freely convertible currencies;

(d) The minimum registered capital of a foreign or JV financial institution is Rmb200 million worth of freely convertible currencies;

(e) The minimum registered capital of a JV travel agency is Rmb5 million;

(f) The minimum registered capital of a JV advertising agency is US$300,000;

(g) The minimum registered capital of a JV foreign trade company is Rmb100 million;

(h) The minimum registered capital of a JV international freight forwarding agency is US$1 million;

(i) The minimum registered capital of a foreign-invested printing company engaged in the printing of publications and printed materials for packaging is Rmb10 million, while the minimum registered capital of a foreign-invested printing company engaged in the printing of other printed materials is Rmb5 million;

(j) The minimum registered capital is Rmb2 billion for a company engaged in trans-provincial basic telecom business; Rmb200 million for a company engaged in provincial basic telecom business; Rmb10 million for a company engaged in trans-provincial value-added services; and Rmb1 million for a company engaged in provincial value-added services;

(k) The minimum registered capital of a foreign-invested insurance company is Rmb200 million or its equivalent in freely convertible currency;

(l) The minimum registered capital of a foreign-funded investment company is US$30 million;

(m) The minimum registered capital of a foreign-funded investment shareholding company is Rmb30 million.

2. Ratio of Registered Capital to Total Investment Amount According to the Interim Measures Concerning the Ratio of Registered Capital to Total Investment Amount of Sino-Foreign Equity JV Enterprises promulgated by the State Administration for Industry and Commerce (SAIC), it is stipulated that:

(a) For JVs with a total investment of US$3 million or less, the registered capital should account for at least 70% of the total investment;

(b) If the total investment is over US$3 million but less than or equal to US$10 million, the registered capital should account for at least 50% of the total investment; the registered capital should not be less than US$2.1 million if the total investment is under US$4.2 million;

(c) If the total investment is over US$10 million but less than or equal to US$30 million, the registered capital should account for at least 40% of the total investment; the registered capital should not be less than US$5 million if the total investment is under US$12.5 million;

(d) If the total investment exceeds US$30 million, the registered capital should account for at least one-third of the total investment; the registered capital should not be less than US$12 million if the total investment is under US$36 million;

(e) If an FIE is unable to fulfill the above requirements due to exceptional circumstances, it may apply for special treatment to the Ministry of Commerce, which will approve the case jointly with SAIC.