Continuation on changes in China's company registration system

We will hereby go over some of the recent changes made to the Registration Administration System of Foreign Invested Enterprises.

First, let me state that this article is complementary to the previous article “Major improvements for FIEs registration in PRC as from March 1st of 2014”. I invite you to have a look at it in order to have the full picture.

That being said, let us talk about some new changes to the “Administrative Regulation on Company Registration” and the “Implementing Rules for the Law on Wholly Foreign-owned Enterprises”. Two main rules have been abolished.

First, the provision that "Foreign investors may contribute their capital in installments, provided that the final installment is made within three years of the date of issue of the enterprise business license” is abolished. Also abolished is the rule dictating that "where the equity joint venture contract stipulates that capital shall be fully contributed in one go, the various joint venture parties shall pay up their contributions within 6 months since the day of issuance of the business license”.

Under the new system, a Sino-foreign equity joint venture, cooperative joint venture or wholly foreign-owned enterprise can handle the whole process and are therefore free to decide of the total investment amount, subscribed capital contribution and time of capital contribution in its Articles of Association.

Another rule subject to change is the one governing the situation where a foreign investor makes its capital contribution with certain industrial property or technology. The previous limitation, which is now abandoned, was that such property or technology was not to be valued for more than 20% of the registered capital of the wholly foreign-owned enterprise.