Guangzhou Municipality, Promoting the Development of the Venture Investment Industry Several Provisions

Promulgated: August 9 2001
Effective: September 1 2001
Applicability: Venture investment, as defined in Article 2, is equity investment in a scientific or advanced technology enterprise with the aim of investment returns after the enterprise reaches maturity. Article 3 defines venture investment organizations as venture investment limited liability companies or venture investment companies limited by shares and venture investment management companies established in the municipality.

Main contents: Apart from direct equity investment, venture investment can also be carried out through a venture investment fund (Article 4). Financial underwriting agencies, science and technology appraisal firms and providers of other intermediary services are encouraged to serve the venture investment industry (Article 5). The registered capital of venture investment limited liability companies must exceed Rmb30 million, while that of companies limited by shares must exceed Rmb50 million (Article 7). The registered capital of venture investment management companies must exceed Rmb1 million (Article 8). The registered capital of a venture investment company can be paid in instalments, the full amount being due within two years of the date of issue of the business licence; the registered capital of venture investment management companies is due within 90 days of business licence issue (Article 9). Venture investment firms are permitted to undertake the management of the venture capital of other venture investment companies (Article 11, Item Two). They can also provide security for loans to technical and scientific companies (Article 11, Item Four). Venture investment and venture investment management companies operating within the Guangzhou High and New Technology Industry Development Zone are eligible for preferential policies applicable to hi-tech companies (Article 13). Venture investment companies investing more than Rmb15 million or providing security exceeding Rmb50 million may also enjoy preferential policies of the Guangzhou Municipality (Article 14). A venture investment company may invest 100% of its capital (Article 15). The exit mechanism of a venture investment company includes mergers and acquisition, equity buy-back, technological property rights transactions and listing on the stock market (Article 16).