Laws of the People's Republic of China

The State Administration for Industry and Commerce

Reply of the Department of Enterprise Registration of the State Administration for Industry and Commerce Concerning the Interpretation of Article 5 of the Interim Provisions of the State Administration for Industry and Commerce on the Proportion of the Registered Capital and the Total Investment Amount of Chinese-foreign Equity Joint Ventures

GongShangQiWaiZi [1987] No.54

September 17, 1987

Commission of Foreign Economic Relations and Trade of Tianjin:

Your Letter Requesting for Instructions on the Interpretation of Article 5 of the Interim Provisions of the State Administration for Industry and Commerce on the Proportion of the Registered Capital and the Total Investment Amount of Chinese-foreign Equity Joint Ventures has been transferred here by the Bureau of Foreign Investment of the Ministry of Foreign Economic Relations and Trade.

We hereby give the interpretation of Article 5 of the Interim Provisions of the State Administration for Industry and Commerce on the Proportion of the Registered Capital and the Total Investment Amount of Chinese-foreign Equity Joint Ventures (hereinafter referred to as the Interim Provisions) as follows:

Chinese-foreign equity joint ventures that increase their investment upon approval and registration, the supplementary registered capital should be calculated in relation to the increased investment and the proportion should be determined in accordance with Article 3 of the Interim Provisions. For example, the approved registered investment of a project is 5 million US dollars, the registered capital 2.5 million US dollars, and then an increased investment worth 2 million US dollars is approved; in that case, the supplementary registered capital should be 7/10 of the 2 million or 1.4 million and the total registered capital after altered registration should be 3.9 million US dollars (i.e. 1.4 million plus 2.5 million).