Company Registered Capital

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

From above explanation, once a Chinese company received the registered capital from oversea account ( parent company’s corporate account or individual shareholder’s account ), the investment capital will be kept in the foreign exchange control system with a verification account, and then provide a registration certificate of foreign exchange to your Chinese bank to submit exchanging procedure. Registered capital will be transferred your corporate basic RMB ( Yuan account depending on the exchange rate on the day.

You may use 2 useful links to check the exchange rate:

1. State Administration of Foreign Exchange, link of the website is http://www.safe.gov.cn/en/.
2. The People’s Bank of China (Central Bank), the link is http://www.pbc.gov.cn/en/.

This is a conceptual error, or is a misunderstanding, according to Chinese companies’ laws, take responsibility for limited liabilities is the primary function which through setting registered capital of local corporations. 1 RMB means the first injecting amount, Chinese government modified the regulations of business registration since March 1st, 2014, corporate capital requirements changed from paid-in institution to subscribed system. That is the real reason, why shareholders can invest or inject 1 Yuan RMB to his or her corporate bank account.

According to our experience, SMEsChina teams suggest you transfer 500 USD as investment capital first time for activating the banking functions, in the future, how much amount injecting each time depending on your decision and situations of operation. You can choose to invest registered capital anytime, any places with foreign currencies through TT and international SWIFT code.

No standard details to explain this question. Why?

Because the investment capital from all over the world with different commercial banks or other financial organizations. Also, some countries need to transfer registered capital from home countries and through the USA system (transfer station), then to be a Chinese account final. From our experience, estimate banking charge needs 10 – 120 USD or Euro for each transferring.

If the corporate shareholder(s) is a local citizen or existed business entity, you can transfer the registered capital from local bank account(s) under your name, if the corporate shareholder(s) from foreign countries ( foreign business entities or non residents ), you must use a foreign account to transfer investment capital.

Sure, no limits for that, even if a corporate shareholder from other countries, also you can use HK as an offshore account to transfer registered capital to a Chinese account of the corporation. If you are an individual shareholder, also you may use a HK offshore account transferring capital, although you are an American (under the same passport), in a similar way, you may transfer capital from the UK, although you are a HK citizen.

Three points or situations you have to know, if the investment capital be refused.

1. Verification documents include wrong information or other mistakes, such as, spelling, account details, purpose, SWIFT code, etc. Especially for Non-English speaking countries.
2. The cumulative injected capital (funds) had already over its registered capital. You have to change corporate registered capital to a larger amount then can be accepted to transfer more funds.
3. Account failure, corporations do not report VAT and tax records long time, or have the situations of owing taxes, enterprises will be listed black names, accounts also will be frozen ( include its balance ).
So if you want to transfer registered capital from an oversea account to Chinese companies, all procedure must be approved by local supervision departments.

LEARN OTHER REQUIREMENTS OF INCORPORATION FOR A FOREIGN COMPANY
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