Allowing Foreign Investors to Set up Holding Companies in China

2004-02-20

To promote greater inflow of foreign investment as well as advanced technologies and management expertise to China, the Ministry of Commerce of China (MOFCOM) made the announcement in the afternoon that foreign investors will be allowed to set up holding companies in China in accordance with China's law and regulations governing foreign investment.

Holding companies in these regulations refer to companies with limited liabilities set up by foreign investors in China in the form of sole investment or joint investment with Chinese partners that engage in direct investment. Applicants applying to set up holding companies in China should meet the following criteria:

1. The foreign investor in question should have a sound financial standing and the financial capacity needed to set up a holding company. It should have a registered capital of no less than 400 million USD one year prior to its application and should have set up a foreign invested company in China's territory with an actual registered capital contribution of over 10 million USD and over three investment projects under planning.

2. The foreign investor should have set up over 10 FIEs in China's territory and actually contributed over 30 million USD to the total registered capital. If the foreign investor applies to establish a holding company by joint investment, it should have a total asset value of no less than 100 million RMB one year prior to its application.

3. The registered capital of the holding company should be no less than 30 million USD. The foreign investor applying to set up a holding company should be a foreign firm, enterprise or economic organization by nature.