Already when the amended PRC Company Law took effect on 1 March 2014, the requirements in respect of registered capital were relaxed for companies in China including foreign invested enterprises (“FIEs”). The requirements on minimum registered capital were abolished. The two years deadline for capital contribution was cancelled and the requirements on a minimum cash contribution of 30% were abolished, unless laws, administrative regulations or decisions of the State Council provided otherwise.
So far FIEs could not fully benefit from the above registered capital reform due to various administrative rules and regulations (collectively “Administrative Rules”) imposing restrictions on FIEs.
To further deepen the registered capital reform and unify the regulations in this area, on 28 October 2015, the PRC Ministry of Commerce ("MOFCOM") published the Decision on Revising Several Administrative Rules and Normative Documents ("MOFCOM Decision"). It took effect on the same day. The MOFCOM Decision revised provisions concerning registered capital requirements in 29 Administrative Rules.
We summarise the most significant changes brought by the MOFCOM Decision in the below table:
Click here to view table.
Following the amended PRC Company Law, the Chinese authorities have also issued a series of policy statements calling for comprehensive registered capital reform. However, foreign investors found it confusing that in practice various registered capital requirements were still applicable to FIEs. By clearly invalidating the restrictions in various Administrative Rules and making requirements for FIEs consistent with the PRC Company Law, the MOFCOM Decision will optimise the legal environment in China for foreign investment.