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MOC Issued Interim Provisions on Capital Contribution with
Shares Involving Foreign Investment Enterprises

15 October 2013 

On 21 September 2012, Ministry of Commerce of the PRC issued Interim Provisions on Capital Contribution with Shares Involving Foreign Investment Enterprises, which will come into force on 22 October 2012. The issuance of the Interim Provisions will facilitate foreign investors to integrate their investments in the PRC.
According to the Interim Provisions, the capital contribution with shares to establish or alter a foreign investment enterprise shall be subject to approval by Ministry of Commerce or the administrative department of commerce at provincial level.
The Interim Provisions require that the shares used for capital contribution must be lawfully transferable, provided that shares held in a real estate enterprise, foreign invested holding enterprise or a foreign invested venture capital enterprise are not allowed to be used for capital contribution.
The Interim Provisions require that the total sum of capital contribution with shares and the other non-monetary capital contributions to an enterprise shall not be more than 70% of the total registered capital of that enterprise (in other words, the cash contribution must not be less than 30%). The Interim Provisions also require that the capital contribution with shares shall comply with Catalogue of Industries for Guiding Foreign Investment and other regulations relevant to foreign investment and that to avoid any non-compliance, the relevant adjustments (by spinning off relevant assets or business or transferring relevant shares) must be completed before the application for capital contribution with shares being submitted.



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Disclaimer
Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

 

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