It is not permitted to finance a foreign-invested company in China through current account contributions.. Foreign exchange control and debt control laws prohibit such loans.
The delta between the total investment amount and the registered capital may constitute a margin of foreign debt, for example through a shareholder loan. The "shareholder loan agreement" must be officially registered with the foreign exchange control administration.
Example: a foreign-invested company with a "registered capital" of USD 70.000 will have a maximum "total investment amount" of USD 100.000. The USD 30.000 delta may (but is not obligatory) be used to conclude a shareholder loan. This is the maximum foreign debt margin which the WFOE can benefit from.
Initial publication date: 26/01/2018