Starting with the amendment of the Company Law at the end of 2013, the Chinese government has revised a significant number of laws and regulations to implement the reform of the company registration regime in full, which (i) removes limitations on minimum registered capital, (ii) removes registration requirements on paid-in capital, and (iii) replaces annual inspection mechanisms with annual online reporting procedures.
However, several requirements on company registration are still scattered in specific administrative regulations that prevail over the general rules unless specifically abolished; this implies that different local authorities have not consistently implemented the reform but rather have applied different criteria and even continued to implement abolished requirements to the detriment of reliability.
To strengthen the reform, the Ministry of Commerce (“MOFCOM”) recently issued a decision through Order  No. 2 to explicitly extend the reform to foreign-invested enterprises (“FIEs”) by expressly removing the limits on minimum registered capital and capital contribution timeframes that remained applicable to special types of FIEs.
The decision highlights:
- Most minimum registered capital requirements for companies limited by shares are removed, as well as for FIEs in certain sectors (investment companies, venture capital companies, financial leasing companies, commercial companies operating retail shops; freight forwarding agencies and logistics companies).
- Timeframe requirements for capital contribution for FIEs in general, foreign-invested companies limited by shares and foreign-invested unincorporated venture capital are removed. The minimum cash contribution requirement is removed.
- FIEs are no longer prevented from (i) carrying out mergers and divisions, (i) reinvesting within China, (iii) opening new stores or (iv) using their own equity to make capital contributions, before having their own capital fully contributed.
- Annual inspections, which used to be conducted jointly by commerce, tax, finance, foreign exchange and statistical authorities, are replaced by a new nationwide annual reporting regime.
Date of issue: October 28, 2015. Effective date: October 28, 2015