Ministry of Foreign Trade and Economic Cooperation, Ministry of Science and Technology, State Administration for Industry and Commerce, State Administration of Taxation and State Administration of Foreign Exchange, Administration of Foreign-invested Venture Investment Enterprises Provisions

Promulgated: January 30 2003
Effective: March 1 2003
Interpreting authority: Ministry of Foreign Trade and Economic Cooperation, Ministry of Science, State Administration for Industry and Commerce, State Administration of Taxation and State Administration of Foreign Exchange
Applicability: "Foreign-invested venture investment enterprises" is defined as foreign-invested enterprises the business activity of which is venture investment established in accordance with the Provisions by foreign investors or foreign investors and companies, enterprises or other economic organizations registered in China in accordance with Chinese law (Article 2). For the purposes of these Provisions, the term "Venture Investment" means an investment method consisting of equity investment, principally in unlisted high- and new-technology enterprises, and the provision to such enterprises of start-up management services with the object of obtaining gains in the form of capital appreciation (Article 3).

Main contents: As compared to the Establishment of Foreign-funded Venture Investment Enterprises Tentative Provisions of 2001, the new Provisions elaborate on the non-legal-person system and the company system. The minimum contribution subscribed for by investors of non-legal-person venture investment enterprises should be US$10 million while that of the company system venture investment enterprises should be US$5 million (Article 6). The new Provisions specify the conditions that a requisite investor must meet. For instance, it shall have cumulative capital under its management of not less than US$100 million in the three years before the application and in which at least US$50 million should have been used for venture investment (Article 7). The new Provisions have stipulations on capital contributions and changes therein. Article 13 stipulates that an investor may inject its subscribed contribution in instalments within a period of up to five years. Normally an investor is not allowed to reduce the amount of contribution subscribed for. Part Five contains new stipulations on the qualifications and procedures for establishment of venture investment management enterprises.
Related legislation:PRC Sino-foreign Cooperative Joint Venture Law (Revised), Oct 31 2000, CLP 2000 No.10 p4; PRC Sino-foreign Equity Joint Venture Law (2nd Revision), Mar 15 2001, CLP 2001 No.3 p5; PRC Wholly Foreign-owned Enterprise Law (Revised), Oct 31 2000, CLP 2000 No.10 p4 and PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21
Repealed legislation: Establishment of Foreign-funded Venture Investment Enterprises Tentative Provisions, Aug 28 2001, CLP 2001 No.8 p7