Revising the Foreign-invested Holding Company Regulations

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clpstaff

PRC holding company structures are evolving as China¡¦s economy becomes more sophisticated and as foreign companies reorient their China strategies. What changes have been introduced by recent regulations?

By Lester Ross and Grace Chen, Wilmer Cutler Pickering Hale and Dorr LLP, Beijing

Holding companies are relatively recent introductions to the PRC regime governing company structures. The establishment by foreign investors of China-domiciled holding companies was first authorized on April 4 1995.1  To many contemplating setting up holding companies, the US$30 million registered capital contribution threshold and other conditions for establishment, as well as restrictions on their functions, have limited their attractiveness.  Nevertheless, more than 300 holding companies have been established to date by foreign investors who have relatively large investment programmes in multiple projects.  Investors have been attracted by the opportunities to centralize administrative operations, create better career opportunities for management personnel, and build a stronger brand. 

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