porno Chinese Law | China: Capital Contributions
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Capital Contributions

Q1: When did the Use of Equity Interests to Make Capital Contributions to Foreign-invested Enterprises ("Tentative Provisions") take effect?

 

A: Tentative Provisions took effect on 22 October 2012.

 

Q2 Equity Interests of what types of companies are allowed to be contributed as registered capital?

 

A: 

1.      Foreign invested enterprises ("FIEs"), including joint ventures (both co-operative and equity joint ventures) and wholly-foreign owned enterprises);

2.      Companies which are wholly owned by PRC nationals or entities ("Domestic Companies"); and

3.      Companies listed in the PRC

 

Q3: What companies can receive Equity Interests as capital contributions?

 

1.      Newly-established FIEs;

2.      existing FIE;

3.      Domestic Company which is converted into an FIE as a result of the capital contribution.

4.      Consideration for participation in private placements relating to PRC listed companies.

 

Q4: What are not provided by Tentative Provisions

 

A:

l  It does not provide explicit legal basis for allowing unlisted overseas shares to be used as the means for funding a China acquisition or newly established FIEs.

 

l  The processes and documentation requirements for the underlying M&A transactions implicit in using Equity Interests in this way have not been streamlined or simplified as a result of the Tentative Provisions, which generally refer to various existing rules governing such transactions. 

 

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