Relationship between Capital and Investment Amount

Registered Capital of Foreign-Invested Enterprises is defined as the registered capital registered in the Industrial and Commercial Administrative council, at the time of its incorporation.    It is the aggregate amount of the subscribed capital contributed by all investors.     In other words, it is the entrepreneur risk and profit-sharing basis for investors.

Total Investment of Foreign-Invested Enterprises refers to the aggregate capital commitment in accordance with the production scale and liquidity needs for daily operation, which states clearly in the contract or articles of association of an enterprise.    Total investment, in addition to the registered capital, also includes borrowed funds.

According to the February 1987, SAIC promulgated "Sino-Foreign Joint Venture Enterprise Registered Capital and Total Investment proportion of Interim Provisions", the relationship between Total Investment and Registered Capital:-

For Joint Venture, its registered capital and total investment should maintain and keep at a certain ratio.   The ratio between them is as follows:

  • (A)    For the total investment of USD 300 million (including USD 3 million) , the registered capital to the total investment should be at least 7/10 ;
  • (B)   The total investment is in between: more than USD 3 million but less  than USD 10 million (including USD 10 million), the minimum registered capital to the total investment amount should be 1/2, where for the total investment is USD 4.2 million, the registered capital should not less than USD 2,100,000 ;
  • (C)   For the total investment is more than USD 10 million but less than USD 30 million (including USD 30 million), its registered capital should attribute to the total investment for at least 2/ 5, for the total investment is USD 12.5 million, the registered capital should not less than USD 5,000,000 ;
  • (D)   For the total investment is more than USD 30 million, the registered capital to the total investment should be at least 1/3, if the total investment is less than USD $ 36 million, the registered capital should not less than USD 12 million.