News

Minimum registered capital requirement for company registration in mainland China

Release Date

30 September 2011

Unlike Australia where almost any adult can legally register a one-dollar company, the Chinese government requires a minimum registered capital when an application to register a company in mainland China is lodged.

The minimum registered capital is supposed to be the funding to run the company and in most cases cannot be withdrawn.

Variation on minimum registered capital in China

Theoretically the minimum registered capital is RMB 30,000 (approximately A$4,600) for a company with limited liability in China based on Company Law of the People's Republic of China. In addition, the registered capital should match the operation and business scale of the proposed company as per the company’s feasibility study.

However, with the incentive to attract foreign investment into local areas, most Chinese provincial, municipal and local government agencies have their own practice and/or local regulations in regard to the minimum registered capital for each business registration application, depending on the industry sector, business scope and operation scale of the company to be registered. In some cases, the minimum registered capital can be skyrocketing.

 

First step to register a company in China

Hence as the first step to register a company in China, each company needs to clarify the minimum registered capital required for its proposed business in China in case the required amount is beyond its reach.

In the case of a Sino-foreign joint venture, the proportion of registered capital and total amount of investment of Sino-foreign equity joint ventures shall abide by the following provisions:
 

  • Where the total amount of investment of the Sino-foreign equity joint venture is less than 3,000,000 U.S. dollars the registered capital shall account for 70% of the total amount of investment at least.
  • Where the total amount of investment of the Sino-foreign equity joint venture is between over 3,000,000 U.S. dollars to 10,000,000 U.S. dollars the registered capital shall account for 50% of the total amount of investment at least.
  • Where the total amount of investment of the Sino-foreign equity joint venture is between over 10,000,000 U.S. dollars to 30,000,000 U.S. dollars the registered capital shall account for 40% of the total amount of investment at least.
  • Where the total amount of investment of the Sino-foreign equity joint venture is over 30,000,000 U.S. dollars, the registered capital shall account for 33.33% of the total amount of investment at least.
     

Requirements on form and timing of capital remittance

The foreign investor should also be aware of the form of investment and requirement on the timing for the remittance of the registered capital:
 

  • The investor may invest with non-cash assets including intellectual property, materials and land which can be assessed at a cash value. However, a cash investment from all shareholders should be equal or more than 30% of the company’s registered capital;
  • 20% or more of the total registered capital must be invested in the company at the establishment date of the company, while the remaining could be invested within two years. However, the initial investment must be equal or more than the required minimum registered capital.
  • The amount of the capital contributions in currency paid by all the shareholders shall be not less than 30% of the registered capital of the limited liability company.


Caution is recommended to ensure that companies start their negotiations at the right level of the government as renegotiating to obtain “local” benefits will be complicated or in some instances not possible.
 

Contact Us

Call Us on 1800 505 529
Submit Enquiry