Foreign Investors Able to Turn Credit Right to Stock Right

【前言】Foreign Investors Able to Turn Credit Right to Stock Right由文秘帮小编整理而成，但愿对你的学习工作带来帮助。The new policy makes definite stipulations about the applicable scope, admission criterion and procedures. Any foreign-funded companies incorporated in Zhejiang with foreign shareholder as creditor and investee company as debtor can apply for incre...

The foreign investors in Zhejiang are given the right to turn credit right to stock right.

According to the Hong Kong media’s report, the Zhejiang Provincial Industrial and Commercial Administration Bureau issued the “Temporary Method of Approving and Registering Foreign-funded Companies’ Turning Credit Right to Stock Right in Zhejiang” on January 15. At the same time, 12 foreign companies having been approved to turn credit right to stock right received their new business licenses, approval letter and the registration letter of foreign credit.

An insider from the Zhejiang Provincial Industrial and Commercial Administration Bureau, the new policy possesses great significance for broadening financing and investment channels for foreign companies, improving Zhejiang’s appeal for foreign investors and optimizing foreign companies’ asset portfolio.

It is known that there are 21,629 foreign-funded companies registered in Zhejiang, which have invested 106.94 billion US dollars. They play an important role in Zhejiang’s economy. Previously, the credit right held by foreign companies only exists in the form of debts for the companies receiving their investments. This stops foreign investors taking over companies with debts and leads to many investee companies’ disability in finding qualified and powerful investors though they have the will to conduct assets reconstruction through share capital increase. The new policy proposes an effective solution to these two problems.

Detailed requirements in admission criterion

The new policy makes definite stipulations about the applicable scope, admission criterion and procedures. Any foreign-funded companies incorporated in Zhejiang with foreign shareholder as creditor and investee company as debtor can apply for increasing registered capital and changing the way of capital contribution. The appliers must have legal and effective credit right that has clear ownership and obligation, complete powers and functions and that can be legally reviewed and transferred. The credit right must be foreign debt’s principle and current interest registered by foreign shareholders. The investee company’s registered capital should be paid based on fixed terms and their senior executives must agree with this application.

The application follows the procedures as follows: 1), foreign investors and investee companies apply and register the changes in the departments of foreign exchange administration and commercial affairs; 2), the two departments review and approve the application; 3), foreign investors and investee companies register the changes in the industrial and commercial administration departments.

Two companies in Jiaxing are the first beneficiaries

Jiaxing Burlington Textile Company Limited Cone Denim (Jiaxing) Ltd. are the first two beneficiaries of this new policy. The registered capital of Jiaxing Burlington Textile Company Limited was previously 14 million US dollars. “In December 2010 we applied to turn foreign debts into capital share increase. Its shareholder International Textile Group (Barbados) Co., Ltd successfully turned the debt of investee company into registered capital of the joint venture with the increasing amount of 3.1 million US dollars,” said Alex Moor, general manager of this Jiaxing-based company. He says that the new policy effectively improves the investment environment for foreign companies and provides a good solution to solve capital shortage.