In order to promote the multinationals to invest in China and to introduce foreign advanced technology and administrative experience into China, the Provisional Regulations in Relation to the Investment in and Establishment of the Investment Type Companies, promulgated by this Ministry on 4 April 1995, are supplemented as follows:-
The registered capital of the investment company should not be less than US$30 million, the amount of loan borrowed by the investment company may not exceed four times of the already paid-up amount of its registered capital. Where required by the investment company in its business operation and if the amount of loan to be borrowed by the investment company is to exceed four times of the already paid-up amount of its registered capital, the investment company in question should apply to this Ministry for approval.
The investment company is encouraged to set up science research and development centre or department to carry out the research and development of the new products and new high technology, to transfer the research and development results therefrom and to provide the related technical services.
The investment company may sell those products manufactured by its investment enterprises as agency or as distributor in both domestic and foreign markets.
The investment company may provide its invested enterprises with the comprehensive services such as transportation, storage, etc..
The investment company may purchase in domestic market and export those products which are not subject to the export quota and export licence control.
Where the investment company is intending to carry out the business activities set out in paragraphs 3, 4 and 5 hereabove, it should submit its amended contract, articles of association and the other related documents to this Ministry for examination and approval subject to the following conditions:-
The registered capital of the investment has already been paid up in accordance with the relevant contract or articles of association and the actual paid-up amount of the registered capital is not less than UD$30 millions. Where the investment company is intending to apply for the provision of the services set out in paragraphs 3, 4 and 5 hereabove to its invested enterprises, the ratio of its subscribed contribution in the registered capitals of its invested enterprise(s) may not be less than ten percent thereof, and it shall be subject to the authorization in writing by its invested enterprise(s) (upon unanimous board resolution of its invested enterprise(s)).
Should there be any discrepancy between the provisions of this Supplementary and that of "The Interpretation of Several Matters on the Provisional Regulations in Relation to the Investment in and Establishment of the Investment Type Companies" released by this Ministry on 16 February 1996, this Supplementary shall prevail. This Supplementary shall come into implementation on the date of the promulgation.
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.