Registered Capital Vs. Total InvestmentThe Difference Between An Foreign Invested Enterprises (FIEs) Authorized Total Investment Amount And Its Registered Capital Defines It Maximum Permitted Debt Funding:Authorized Total Investment Registered Capital Maximum Permitted DebtAn FIEs Proportion Of Registered Capital To Authorized Total Investment (and Thus Maximun Permitted Debt) Are Regulated And Subject To The Approval Of The FIEs Original Examination And Approval Authority.The Permitted Ratios Of Registered Capital To Total Investment Are:At Least 70 In Registered Capital For Total Investments Of US3 Million Or Less (thus US2.1 Million In Equity And US900,000 In Debt For A US3 Million Total Investment);At Least 50 Or US2.1 Million In Registered Capital (whichever Is Greater) For Total Investments Of Over US3 Million Up To US10 Million;At Least 40 Or US5 Million (whichever Is Greater) For Total Investments Of Over US10 Million Up To US30 Million; AndAt Least 33.3 (one-third) Or US12 Million In Registered Capital (whichever Is Greater) For Total Investments Of Over US30 Million.Foreign Invested Holding Companies (FICLS) Are Allowed To Maintain Higher Debt Levels. Please Dee Holding Company Under Alternatives For Details.There Are Three Main Sources Of Debt Funding Available To FIEs:Foreign Exchange Loans (including Shareholder Loans) Obtainable From Local Institutions To Extend Foreign Exchange Loans Or Overseas Financial Institutions. They Must Be Registered With The State Administration Of Foreign Exchange (SAFE) Or Its Local Branch So That Foreign Exchange Can Be Obtained For Repayment.RMB Loans Obtainable For Local Financial Institutions; Keep In Mind, However, That Not All Financial Institutions Are Licensed To Extend RMB Loans.Loans From Foreign Invested Holding Companies See The Section On FIHC For More Detail. The FIHC Must Typically Be Invested In An FIE Before It Can Extend Loans To It.Bad Funding Ideas:Group Finance Companies Theoretically Possible, But Likely To Be More Trouble Than Its Worth.Intra-group Lending Frowned Upon By The Chinese Authorities And Illegal In Most Instances.
