Malaysia Hotline: +603- 2141 8908
One
interesting feature of a Wholly Foreign Owned Enterprise is that your
Registered Capital investment can be in the form of a deposit, the balance
being made over 2-years.
Registered Capital and Total
Investment Quota
(I)
Registered and paid up capital
Despite
the fact you may be reading many times about a minimum investment of RMB 1M (~
+/- USD 160K), reality is, it varies greatly, though, a Registered Capital of
US$ 140,000 is a decent investment capital for almost every type of WFOE.
The
registered capital is the amount that its required to run the business until it
can break even - the minimum registered capital is a guideline only. If, for
instance, you look at a minimum registered capital RMB 30,000 (which, unlike
Hong Kong, is impossible to establish a WFOE in Shenzhen) this means you will
run out of money pretty soon, which leads to increased costs in reapplying for
permission to increase capital, additional licensing fees and renewals of
business Licenses and so forth. A WFOE needs and draws funding via it’s
registered capital until it is able to support itself from its own cash flow.
However
the amount of registered capital needed is also dependent upon factors like
scope of business and location. In reality, local authorities will review the
feasibility study report (and check the lease contract) approve the investment
on a case-by-case basis; reduced registered capital can be negotiated in some
cases.
The
minimum registered capital guides for various industries and locations in
Shenzhen are available upon application through Shenzhenbiz21. This does
however not indicate that certain larger economic zones call for either larger
or smaller (minimum) registered capital. The minimum registered capital numbers
as below for instance: Beijing, Shanghai, and Guangzhou, are a guide only and
indicate already great differences between zones:
Beijing:
RMB 100 000
Shanghai:
RMB 500 000 - 1 million
Guangzhou:
RMB 500 000 - 1 million
Paid-Up Registered Capital
One
great WFOE feature is the fact that your Registered Capital needn’t to be paid
in full with your WFOE registration initial. It can be made up by paying a
Paid-up Capital upon your WFOE registration with the rest being invested over a
period of time.
The WFOE
Paid-up Capital could be as little as 20% of the registered capital. The
balance may be remitted within 2 years after the WFOE registration. You should
note, however, that the greater the WFOE registered capital and the faster you
are prepared and planning to fully Pay-Up your registered capital installments,
the greater your chances of securing a smooth WFOE set-up and successful
operation.
Paid-Up Registered vs. Investment
Quota
Registered
Capital is the amount of funding that the Chinese government requires foreign
investors to contribute to their projects in Shenzhen (e.g. WFOE’s). The
Chinese government sets requirements for the minimum amount of registered
capital to start a business.
Registered
Capital must be of an amount greater than the minimum requirement of the
Shenzhen Company Law (currently set at RMB 100,000). The Registered Capital can
only come from the foreign investors. It must be actually paid into the company
bank account before being verified by an independent certified accounting agency
in Shenzhen. The amount of registered capital can be increased but official
procedures will be required. Registered Capital must be no less than 70% of the
Total Investment Quota. However, this ratio may be decreased when the amount of
Registered Capital exceeds US$ 3 million.
The
actual amount of Registered Capital required is subject to the final approval
of the regulatory authority. These Chinese officials have the right to require
a business to increase the amount of Registered Capital if they deem the
minimum Registered Capital amount as insufficient for the requirements of the
start-up business as detailed in the project description, and as written in the
application documents. The final amount of Registered Capital required is
sometimes a result of negotiations with the appropriate officials during the
registration process.
Important Note:
Registered
Capital can be paid by installments of up to two years. This does not conflict
with the above statement, as it applies to the WFOE set-up stages only.
Since
the Total Investment Quota is the total amount of funds planned to be
contributed to the project over its life-span, it is therefore not necessary to
have it fully deposited in the bank. The excess amount of a Total Investment
Quota over the Registered Capital can come from sources other than the foreign
investors listed in the Articles of Association; for example, it can be
borrowed from banks or other sources either inside Shenzhen or from overseas.
This amount can be increased but the relevant Chinese authorities must approve
any additional amounts of Total Investment Capital.
Contact
us
If
you have further queries, please contact Tannet
24
hours Malaysia hotline：603-21418908;
24
hours Hong Kong hotline：852-27837818;
24
hours Hong Kong hotline：86-755-
36990589;
Email:
mytannet@gmail.com
TANNET GROUP : http://www.tannet-group.net, http://en.tannet.com.my