7. Company Limited by Shares with Foreign Investment (CLSFI)
A Company Limited by Shares with Foreign Investment (CLSFI) can only be established by complying with the industrial policies and requirements generally applicable to foreign investment in China.
A CLSFI may be formed by promotion or share float. If by promotion, more than half of promoters must live in China and at least one a foreign shareholder. When by share float, at least one of the promoters must have been profitable in the last three years and the promoters must sign up for at least 35% of the shares.
Required minimum capital of a CSFL is 30 million RMB, which is triple that required for a domestic Chinese limited by shares organisation. The foreign share must represent at least 25% of the capital of a CLSFI.
Existing EJVs, CJVs and WFOEs may apply to their original approval authority to convert into a CLSFI provided that they meet the rules above. Original investor act as the promoters of the CLSFI but can be joined by new promoters. Applications must be approved by the Ministry of Commerce.
CFSFI’s may be listed on stock exchanges in China as well as overseas. There are requirements for these listings subject to capitalisation, business performance and number of shareholders.