Shenzhen Special Economic Zone, Venture Capital Investment Regulations

Promulgated: February 27 2003
Effective: April 1 2003
Applicability: For the purposes of these Regulations, "venture capital investment" means equity investment in non-listed technology entrepreneurial enterprises and projects and provision of management services to such enterprises and projects, in expectation for capital appreciation benefits. These Regulations apply to the establishment, venture capital investment activities and regulation of venture capital investment institutions and venture capital investment management institutions in Shenzhen (Article 2).

Main contents: Registered capital requirement for establishing a venture capital investment institution is Rmb50 million if the institution is to be a company limited by shares, or Rmb30 million if the institution is to be a limited liability company or limited liability partnership (Article 8). Overseas investors wishing to establish a venture capital investment institution under these Regulations shall also comply with the relevant requirements of the State (Article 9). Contribution of registered capital in a venture capital investment institution shall be made in cash only but can be made by instalments in three years (Articles 10 and 14). For a venture capital investment management institution, the registered capital requirement is Rmb10 million if it is to be a company limited by shares, or Rmb1 million if it is to be a limited liability company (Article 17). A venture capital investment institution may invest in technology or other entrepreneurial enterprises and projects and may provide management services to the enterprises and projects (Article 22). It may also appoint a venture capital investment management institution to manage its investment activities (Article 26). Venture capital investment institutions and venture capital investment management institutions to be established with foreign capital shall be examined and approved by the municipal department in charge of foreign trade and economic cooperation (Articles 12 and 19).
The municipality's science and technology administrative authority shall draft policies of encouragement and regulation of venture capital investments for approval by the municipal government and shall formulate and publish a "Guidance Directory for Venture Capital Investment In the High and New Technology Sector" (hereafter, the Guidance Directory) (Article 5). When the accumulated investments of a venture capital investment institution in the projects listed in the Guidance Directory exceeds 70% of its registered capital or total investment with no less than 30% in entrepreneurial enterprises, it is entitled to preferential policies for high and new technology enterprises (Article 39).