(“Notice”) (商务部关于改进外资审核管理工作的通知), issued by the Ministry of Commerce (“MOFCOM”)
Since the new Company Law took effect on March 1, 2014, companies, except those in special sectors, are relieved from many restrictions, including minimum registered capital, ratio of capital contribution by cash, and statutory deadline of capital contribution. These reforms have been partially implemented for foreign- invested enterprises (“FIE”) through several amendments to existing regulations (see our legal flash of February 2014). However, the Notice introduces for the first time the new policies in a comprehensive way for FIEs, the main points being as follows:
- It removes the provision on the percentage of initial capital contribution, percentage of capital contribution in monetary form and contribution term.
- It follows the principle, as specified in the new Company Law, that the subscribed capital, the capital contribution method and the capital contribution timeframe must be described by the shareholders of the FIE in the joint venture contract, in case of applicable, and the FIE’s articles of association.
- It removes the restriction on the minimum registered capital of FIEs, except as required by law, administrative regulations and the State Council’s decisions for specific industries. For FIE-related matters approved before March 1, 2014, shareholders will continue to perform their obligations according to the original contracts and articles of association.
- It confirms that FIEs must comply with the ratio of registered capital to total investment, as specified under the Interim Provisions of the State Administration for Industry and Commerce on the Ratio of the Registered Capital to the Total Investment of a Sino-Foreign Equity Joint Venture Enterprise and other relevant regulations.
- It requires that the FIE specifies in the Capital Contribution Certificate (to be issued to the shareholders after each capital disbursement) the company’s name, date of establishment, registered capital, shareholders' name, disbursement method (in kind or in cash), amount of disbursed capital (or cooperation conditions in the case of contractual joint ventures), capital disbursement date, serial number of the Certificate and its date of issuance.
- Under the Notice, within 30 days of issuance of the Capital Contribution Certificate, FIEs must send to the corresponding commerce department a copy affixed with the official corporate stamp, along with documents verifying the capital disbursement. According to the Notice, this communication is for statistical purposes only.
Date of issue: June 17, 2014; Date of effectiveness: June 17, 2014.