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Measures on the Administration of Foreign Investment in Leasing Business

外商投资租赁业管理办法

Measures on the Administration of Foreign Investment in Leasing Business (the "Measures")

Issued: February 3, 2005

Effective: March 5, 2005

Issuing Authority: The Ministry of Commerce ("MOFCOM")

Main Contents: The Measures introduce the following changes:

More Corporate Forms--In addition to equity joint ventures and cooperative joint ventures, which were allowed under the interim measures, leasing FIEs can now be established in the form of wholly owned foreign enterprises and joint stock limited companies. 

Lower Market Entry Thresholds--No leasing business experience is necessary for Chinese or foreign investors.  The minimum total assets threshold for foreign investors has been lowered to US$5 million, down from US$400 million for foreign investors in financial leasing FIEs and US$50 million for foreign investors in non-financial leasing FIEs.

The minimum registered capital of financial leasing FIEs has been lowered from US$20 million to US$10 million.  As a specific minimum registered capital requirement for non-financial leasing FIEs has been removed, such FIEs only need to comply with registered capital requirements of the PRC Company Law.

Delegation of Approval Authority - The competent commerce departments at the provincial level are in charge of the examination and approval of non-financial leasing FIEs in the form of limited liability companies, while non-financial leasing FIEs in the form of joint stock limited companies are subject to the regulations applicable to joint stock limited companies with foreign investment. For financial leasing FIEs, competent commerce departments at the provincial level will perform preliminary examinations, and MOFCOM will make final approval decisions.

Strict Supervision over Financial Leasing FIEs - Prior to March 31 of each year, financial leasing FIEs shall submit their business operation report and audited financial report from the previous year to MOFCOM.

The Measures also include definitions for the non-financial lease business, financial lease business and leased property. For any leased property, the value of the intangible assets, which are part of the leased property, cannot be more than 50 percent of the total value of the leased property.