CIL Blog

2007, Chengdu, a lisence of paid up capital ZERO has been issued, but 20% of the capital shall be rendered within 3 monthes

Unlike the company formation under common law, such as in Delaware US, or UK, a Chinese company formation can not use the term of authorized capital, instead the registered capital shall be paid up.
Registered Capital: USD$140,000 is a good idea for all kinds of WFOE, with USD$ 140,000 investment it’s easy to get approved. Initial Paid-up would be 20% of the registered capital, the balance should be remitted within 2 years, according to the new coporate law 2006.
Registered capital is the amount that it’s required to run the business until it can break even - the ‘registered capital’ is a guideline only. In another word to say, the registered capital is more like the money paid for lisence instead of for starter money invested. If you do looking for a minimum registered capital, for instance RMB 30,000 (which is impossible to establish a WFOE in China) this means you will run out of money pretty soon, which leads to increased costs in reapplying for permission to increase capital, additional licensing fees and renewals of business licenses and so on. The WFOE needs funding via it’s registered capital until it’s about to support itself from it’s own cash flow.

However the amount of registered capital is dependent upon factors like Scope of Business and Location. In reality local authorities will review the feasibility study report (and check the lease contract) approve the investment on a case-by-case basis; reduced registered capital could be negotiated in some cases.

The minimum registered capital guides for various industries according to our practice in China, for instance Beijing, Shanghai, Guangzhou, Shenzhen are given below:

Consulting WFOE	RMB 100,000 ~ RMB 500,000
Service WFOE	RMB 100,000 ~ RMB 500,000
Hi-Tech WFOE	RMB 100,000 ~ RMB 500,000
Trading WFOE / FICE	RMB 500,000 ~ RMB 1 million
Catering WFOE	RMB 500,000 ~ RMB 1 million
Manufacturing WFOE	RMB 1 million or USD 140,000

Tags: paid up capital, registered capital, WFOE

Michael Liu Managing Direcotor of CIL

Our local China & Hong Kong team of senior consultants, lawyers, accountants and commercial experts are fully conversant with Greater China’s business, financing and taxation, and, through an international network of partnerships and years of experience, CIL can offer you a bespoke advisory service on investment in China from an international perspective, which includes:
- Advice on the selection of domiciling jurisdictions within China
- Advice on market entry into China
- Advice on the selection of corporate entities of investment in China
- Advice on strategy of using a Hong Kong company to access the China market or play worldwide
- Advice on a Hong Kong company’s financing and taxation
- Advice on matters relating to out-sourcing and procurement in China
- Advice on utilizing offshore structures to invest in China
- Advice on special license applications for Chinese WFOE or JV.
- Advice on strategy and company formation structure of RTI (return tripping investment) for the purpose of financing, such as IPO or RTO etc.

IOM FSC Official attend CIL seminar 2007

-Expertise in utilizing double tax treaties.
- Expertise in tax returns and other favorable taxation policies
- Advice on tax compliance in HK and Chinese companies, including WFOE JV and RO.
- Advice to clients seeking to establish or restructure international or offshore operations, especially through or related to a HK or Chinese structure.
- Advice on establishment or take over of a Chinese company which belongs to restricted industries such as natural resources, financing, publishing, communications etc.

Tags: Advisory services