MOFTEC Further Expands The Scope Of Business Of An Investment Holding Company Established By Foreign Investors In China

Written by Elaine Lo, Partner of Johnson Stokes & Master (5 Apr 2003)

Summary

The Ministry of Foreign Trade and Economic Co-operation ("MOFTEC") (now replaced by the Ministry of Commerce) recently issued a decision (the "Decision") to amend and clarify the Tentative Provisions relating to the Establishment of Companies with an Investment Nature by Foreign Investors (the "Investment Company Provisions"), promulgated by MOFTEC on 4 April 1995, and the two Supplementary Provisions issued by MOFTEC in August 1999 and May 2001 respectively to supplement the Investment Company Provisions. The Decision will become effective on 7 April 2003.

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1. Currency to be used for payment of Registered Capital

Article 4 of the Investment Company Provisions originally required a foreign investor to contribute capital in an investment holding company in a freely convertible currency. The Decision has now relaxed this rule by providing that the foreign investor may also use Renminbi funds which are...