The Decision revokes and revises a series of laws mainly affecting on foreign invested companies and registration requirements to keep them in line with the new amendment to PRC Company Law (“Company Law Amendment”), in force since March 1, 2014.
The main contents of the decision are highlighted below:
Amendments affecting on J o i n t V e n t u r e s ( “ J V ” )
- The Decision revokes two relevant regulations concerning equity joint ventures (“EJV”): Certain Provisions on Capital Contribution of the Parties to a Sino -Foreign Equity Joint Venture Enterprise （《 中 外 合 资 经 营 企 业 合 营 各 方 出 资 的 若 干 规 定 》） , promulgated on January 1, 1988, and its supplementary provisions（《中外合资经营企 业合营各方出资的若干规定》的补充规定）, promulgated on September 29, 1997, as the requirements and restriction set out in both regulations on the capital contribution in EJV enterprises are overruled by the Company Law Amendment.
- The detailed rules for the implementation of the laws on EJV and cooperative joint ventures (“CJV”) (《中华人民共和国中外合资经营企业法实施条例》及《中华人 民共和国中外合作经营企业法实施细则》) are slightly amended as follows:
- The Decision newly requires the EJV to specify the composition and timeframe of capital contribution in the articles of association.
- The Decision newly requires the CJV to specify the capital amount subscribed by the parties in the articles of association.
A m e n d m e n t s a f f e c t i n g o n W h o l l y F o r e i g n O w n e d E n t e r p r i s e s ( “ W F O E ” )
The detailed rules for the implementation of the law on WFOEs (《中华人民共和国 外资企业法实施细则》) are amended as follows:
- The Decision removes the requirement for the WFOE to have a registered capital in accordance with its business scale. In combination with the Company Law Amendment, any requirements related to a minimum registered capital have been abolished for WFOEs, unless otherwise provided in other laws for specific industries.
- The Decision newly requires the WFOE to specify the capital amount subscribed by the shareholder(s) and the composition of the capital contribution in the articles of association.
- The Decision lifts the limitation under which capital contributions in the form of industrial property rights or know-how could not exceed 20% of the total registered capital.
- The Decision removes WFOEs’ special rule on the capital contribution timeframe, which requested to disburse at least 15% of the registered capital within 90 days after incorporation and the remaining amount within the 2 years after incorporation .
Amendments affecting on registration procedures
The Decision revises two important regulations: the Regulations of the People's Republic of China on Registration Administration of Companies (《中华人民共和国 公司登记管理条例》) and the Regulations on the Administration of Enterprise Legal Person Registration of the People's Republic of China (《中华人民共和国企业法人登 记管理条例》). The main changes are set out as follows:
- The clauses referring to a minimum registered capital requirement are removed.
- The registration requirement on the paid-in capital is removed.
- Except for the companies limited by shares that are established by way of share offer, the requirement of submitting a capital verification report at the incorporation stage is removed.
- The composition of the contributed capital is no longer subject to statutory restrictions. However, certain prohibitions remain, such as capital contributions
- by way of valuating and pricing labor, credit, names of natural persons, business reputation, franchise right, or secured property.
- The annual check system is replaced with a public online system of company annual report. Companies shall submit to the administration for industry and commerce (“AIC”) the annual report of the previous year within the period from
January 1 to June 30.
- The electronic business license, with legal effect equivalent to the printed version,
will be adopted by the government.
The Decision approves the following amendments to provisions on the registration of partnership enterprises, sole proprietorship enterprises and farmers' specialized cooperatives (《中华人民共和国合伙企业登记管理办法》、《个体工商户条例》及《农民专业合作社登记管理条例》):
- The electronic business license, with legal effect equivalent to the printed version, will also be adopted for partnership enterprises, sole proprietorship enterprises and farmers' specialized cooperatives.
- The public online system of company annual report will also be adopted for the administration of partnership enterprises and sole proprietorship enterprises.