What is Registered Capital compared to Total Investment?-ChinaFIG FDI Consulting Services.

ChinaFig  can answer your questions on registered capital, along with China business, China incorporations, China investment, China merger acquisition service along with advice from in-house China accountants.

The registered capital compared to the total investment prescribes a maximum debt to equity ratio.  The Registered Capital of a WFOE or JV is the amount of capital contribution actually paid up by all shareholders and proof of which is to be submitted to the company registration authority. The Total Investment however, is a combination of the registered capital and any loans which an enterprise may receive from the parent company or outside parties. 

This subject tends to be difficult for new entrants to China to understand.  It can be viewed from two different perspective, but both end up with the same result.  The official government publications generally address it first from the perspective of Total investment.

The perspective noted above however is generally not the approach investors tend to take.  Investors first tend to focus on what amount the will be required to inject, the registered capital. 

In narrative form, the Total investment vs. Registered Capital can be explained as follows:

1. With a total investment of US$3 million or less, the registered capital should account for at least 70% of the total investment;

2. With a total investment of over US$3 million but less than US$10 million, the registered capital should account for at least 50% of the total investment;

3.  With a the total investment of over US$10 million but less than or equal to US$30 million, the registered capital should account for at least 40% of the total investment;

4. With a total investment of over US$30 million, the registered capital should account for at least one-third of the total investment;