What is the Registered Capital of a Chinese Company
Registered capital ( as well as investment capital ) is a capitalization approved by various Chinese registration authorities ( called: Market and Supervision Departments, as known as: Industrial and commercial Administration Bureaus ).
Setting up registered capital is a mandatory provision you have to comply with that, if you are deciding to establish a Chinese business.
All shareholders as actual contributions ( corporate investors ) have to submit related legal declarations to confirm the final proportion of shares through signing the articles of association and subscription agreement. These signed declarative documents protected in terms of Chinese laws of corporations and enterprises, when corporations having troubles on distribution of profits, sharing risks and losses.
Most Popular Topics of Investment Capital
Certifications of Shares and Registered Capitals
Foreign business entities ( WFOE, LLC, LLP, Joint Venture or other corporate structure ), will be approved to obtain a business license, one certificate of registration of foreign investment enterprise and an official table of capital contribution(s), these official legal files include investors, nationalities, ID types, identification number, ratio of contributions, currency of investment capital, industrial code, and other approved and certificated information of business registration.
The Minimum Requirements of General Industries
It is different from Chinese citizens ( Chinese partnership business needs 30,000 RMB at least and one-person limited corporation needs 10,000 RMB ).
For foreign business entities or individuals ( non residents ), want to establish a Chinese business, generally trading, consulting and services, technologies, import and export business, installation and maintenance, engineering, creative industries, management and consultancy services and other non special or unsupervised commercial industries and business scope. The minimum registered capital is 20,000 USD or Euro for foreign investors. Some encouraged industries, so far as to need 12,000 USD or Euro only.
Here SMEsChina suggests you choose an international circulating currency as the investment capital for transferring it from the shareholder’s oversea account easily and smoothly through the Chinese foreign exchange procedure.
Timeline for Injecting Capital to Own Corporate Account
According to Chinese corporation laws and regulation of business registration, investors ( shareholders ) can be allowed to invest the capital within 30 years once company be approved. So the capital subscription system is helping China attracting more and more foreign entrepreneurs, branding businesses, startups to set up companies here.
This is a popular rule because shareholders can transfer registered capital anytime, how much injecting each time depending entirely on corporate daily operations and situations.
Limitations of Special Industries for Investors
Except for some special industries and business activities need to pre-approval with different requirements of investment capital such as:
1. International freight forwarding agent, the minimum registered capital is 5 million RMB.
2. Stock corporation, 5 million RMB at least.
3. Group company, 50 million RMB.
4. Human resources company, 500,000 RMB.
5. Financial asset management, 10 billion RMB.
6. Security company, 50 million RMB.
7. Trust and investment corporation, 300 million RMB.
8. Fund management company, 100 million RMB.
9. Futures brokerage company, 30 million RMB.
10. Commercial bank, 1 billion RMB.
11. Foreign investment bank, 1 billion RMB.
12. Financial leasing company, 100 million RMB.
13. foreign-funded leasing company 10 million USD.
14. Insurance company 200 million RMB.
15. Insurance agency, 50 million RMB.
16. Foreign invested holding company, 30 million USD.
17. Publication printing company, 10 million RMB.
18. Sino-foreign joint venture in travel agency, 4 million RMB.
19. Basic telecommunications business, 100 million – 1 billion RMB.
20. Level I qualification, real estate development, 50 million RMB.
Explanation of Using of Funds
Payment of investment depends on the registered capital, all Chinese registered corporations, whatever your corporate structure is, WFOE, JV, LLC, LLP or other investment companies from foreign countries.
You have to use investment funds legitimately and reasonably, generally speaking, registered capital can be used as corporate running, daily operations such as purchasing activities, office leasing, salaries, social insurance, market promotion or other running expenses.
You can not embezzle the investment capital for other purposes, for example, transfer a payment to a non relationship, personal account, or use it to buy cosmetics. Do not forget, please, all payments of corporate capital must be used to operate daily transactions of the corporation. All records of transactions will be supervised from local tax authorities.
How Investment Capital Works
Due to the strict foreign exchange controls and complicated regulation and rule for exchanging capital from foreign currencies to Yuan (RMB).
Here, our capital consultants provide an example to explain that the procedure of capital in exchange for a legal registered Chinese business entity.
OK, let’s get started.
This is a true case from one of the customers ( an auto industrial enterprise registered in 2007, from Germany and providing technical supports and anti-collision testing to local market and clients such as Volkswagen, Opel, BMW, Audi, Mercedes, Porsche, etc ). Total investment capital is 600,000 Euro ( deadline of investing capital is 30 years ). This enterprise decided to pay off 50% registered capital in the first year.
This German brand had to complete 4 steps:
1. To transfer the capital amount from the German corporate bank account ( shareholder’s account ) through TT ( telegraphic transfer ) with the international SWIFT Code.
2. Payment had to be kept in a supervision system of foreign exchange department known as verification account.
3. The accountant had to go to foreign exchange department in time, and submitted application forms and certificated documents confirm the information of capital and verify the capital account of Chinese corporation.
4. Went to corporate bank submit a registration certificate of capital and application documents of foreign currency exchange.
That’s it, done capital exchanging process, payment transferred to the basic RMB account, the company can make payments for own operations and transactions.
Whole estimate processing needs 2 – 3 weeks ( 10 – 15 working days ) from our experience.
FAQs: Registered Capital of China Companies