Registered Capital and Total Investment Calculators

Within the gap between Total Investment and Registered Capital, authorities allow for a capped loan amount to be arranged between an overseas creditor and the WFOE. Most commonly, WFOEs resort to a shareholder loan or to a loan granted by a related party, such as a company that is part of the same group as the parent. Yet the WFOE is also permitted to seek out a loan from a wider range of sources, such as loans from overseas governments, loans from overseas banks and financial institutions, loans from overseas enterprises and other kinds of international commercial loans.


OPPORTUNITY

Early on in the process of incorporating a WFOE, investors are faced with the critical task of deciding how much Registered Capital to commit to their company. Because overcommitted funds may become idle and delay profit repatriation - and running out of working capital puts the WFOE at risk of insolvency - the careful planning of Registered Capital commitments is necessary. For investors looking for the right balance between under-commitment and over-commitment of Registered Capital, the ability to fall back on company loans offers welcome flexibility.

The purpose of these calculators is to provide investors with a tool to explore the option of utilizing company loans based on the statutory ratios between Registered Capital and Total Investment.

Please note that these calculators were designed to provide an indicative assessment of the Loan to Total Investment ratio. Before making any decisions regarding Registered Capital and Total Investment, investors are advised to consult a professional financial advisor. For more information, and to schedule a consultation, please contact a Dezan Shira & Associates Representative by clicking here.


Registered Capital - Total Investment Calculator


Registered Capital (US$ million)
Maximum Total Investment (US$ million)
Loan (US$ million)

Note:

  • If Registered Capital is less than US$ 2.1m, Total Investment is up to 10/7 of the Registered Capital;
  • If Registered Capital is between US$ 2.1m (included) and US$ 5m, Total Investment is up to two times the Registered Capital;
  • If Registered Capital is between 5m (included) and 12m, Total Investment is up to 2.5 times the Registered Capital;
  • If Registered Capital is above US$ 12m, Total Investment is up to three times the Registered Capital.


Total Investment - Registered Capital Calculator


Total Investment (US$ million)
Minimum Registered Capital
Minimum Registered Capital (US$ million)
Loan
Loan (US$ million)

Note:

  • If Total Investment is less than US$ 3m, Registered Capital must be at least 70% of Total Investment;
  • If Total Investment is between US$ 3m and US$ 10m (included), Registered Capital must be at least 50% of Total Investment or US$ 2.1m, whichever is higher;
  • If Total Investment is between US$ 10m and US$ 30m (included), Registered Capital must be at least 40% of Total Investment or US$ 5m, whichever is higher;
  • If Total Investment is above US$ 30m, Registered Capital must be at least 1/3 of Total Investment or US$ 12m, whichever is higher.

NOTE: To further explore the topic of registered capital injection into a WFOE, and the role that foreign loans can play in the optimal allocation of capital, please consult this article.


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