Ratio of Registered Capital of WOFE

Foreign Investment – Registered Capital Ratio Requirements

The notice of "Foreign Trade and Economic Cooperation, State Administration of Taxation, the State Administration for Industry and Commerce, the State Administration of Foreign Exchange on Strengthening the Enterprises with Foreign Investment, Approval, Registration, Foreign Exchange and Tax Management Related Issues” under the "Foreign Trade Law Fa [2002] No. 575” documents provide :-

1. For joint ventures, Sino-foreign cooperative enterprises with foreign investment, in its registered capital, the foreign investors’ fund ratio is generally not less than 25%. For those the foreign investors contributed less than 25%, exceptional to laws and administrative regulations as provided otherwise, shall be in accordance with an existing the foreign-Investment enterprise approval and registration procedures applying for approval and registration. Through the approval, an approval certificate note with "less than 25%" such kind of character will be issued and registration obtained, and there will be such kind of word "Type of Business" after the phase "foreign capital ratio of less than 25%" appeared on the foreign investment enterprise business license.

2. For those foreign investments with its proportion less than 25%, exception to laws and administrative regulations as otherwise provided, the total investment on self-use equipment imported under the quota and goods do not enjoy the tax relief benefits. And other tax treatment, this foreign-invested enterprise cannot enjoy.

3. For the foreign-invested enterprises which have been enjoying the treatment, after increasing their investment or transference of ownership of foreign investors, it can be able to enjoy the relevant provisions of foreign-invested enterprises treatment.

4. For foreign-invested enterprise with its foreign investment proportion is less than 25% and investments in cash, it shall obtain a business enterprise license within three months from the date of full payment of all contributions; should the investments is in kind, upon the industrial property and other capital contribution, shall obtain a business enterprise license within six months from the date of full payment.

5. For the acquisition of domestic enterprises by foreign investors, upon the equity foreign investment enterprise business license is issued, within three months from the date thereof, arrange purchase payment in full.  For special circumstances, should it require an extension to pay, given by the approving authority, it shall, from the date of issuance of the business license, within six months to pay purchase consideration for more than 60% of the total amount and in one year, arrange full payment. According to the actual paid-up capital contributions paid on pro rata share of income benefits. Investors, before making full payment, shall not make business decisions that may not be in the interests of the enterprise.  Assets are included in the consolidated financial statements and in the manner of the investor's financial statements. Equity transferor of local foreign exchange administration department will issue State-owned Foreign Exchange Registration certificate to prove foreign investors has paid the consideration in full.