MOFCOM loosens registered capital requirements for FIEs

By Jem Li, April Wang and Olivia Yang

On 17 June 2014, the Chinese Ministry of Commerce (MOFCOM) published the Notice of Improvements on Foreign Investment Examination Management, which introduces the capital subscription system into the registration of foreign invested enterprise (FIE) by eliminating the examination and approval of registered capital and capital contribution for most of FIEs.

Before the promulgation of the amended PRC Company Law, companies registered in China including FIEs are subject to the paid-in capital registration system, under which the registered capital must be higher than a certain minimum set forth by laws and regulations and must be paid up within a certain time period. Even though the registered capital can be paid by instalments, the law stipulates the minimum amount of the first instalment and the timeframe within which the registered capital must be paid up in full. All of these legal requirements restrict the flexibility of business operations and are viewed as obstacles for attracting the investment.

With an aim to reduce these restrictions, since November 2013 a series of laws and regulations have been promulgated by the Chinese authorities to introduce the capital subscription system and remove the paid-in capital registration system…

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