The Administration Measures on Leasing Business with Foreign Investment effective on 5 March 2005 ("the New Measures") allow foreign investors to establish leasing companies and financial leasing companies in the form of joint ventures or wholly foreign owned enterprises in China.

The types of property which are open for leasing under the New Measures include:

  1. production equipment, communication equipment, medical treatment equipment, scientific research  equipment, inspection and test equipment, engineering machine equipment, operational equipment and other movable property;

  2. means of transport including aeroplanes, vehicles and vessels;

  3. the collateral software, technology and other intangible property relating to the above equipment and means of transport.

When applying to establish a leasing company, the following conditions must be met:

  1. its registered capital must meet the requirements as set out in the Company Law;

  2. the requirements on registered capital and total investment for foreign investment must be complied with;

  3. if it is structured as a limited liability company, its operation period should ordinarily not exceed 30 years.

With regard to the establishment of a financial leasing company, the following conditions must be met:

  1. its registered capital must not be less than US$10 million;

  2. if it is structured as a limited liability company, its operation period should ordinarily not exceed 30 years;

  3. it must have appropriate professional personnel, and its senior managerial personnel must have professional qualifications and not less than three years of experience.

In addition, the total assets of the foreign investor must not be worth less than US$5 million.

Foreign invested enterprises that obtain approval under the New Measures will be permitted to engage in the following types of business activity:

Leasing companies:

leasing business, purchase of leased property within or outside China, the business of disposing of leased property for scrap value and repairing, other business approved by the approval authority.

Financial leasing companies:

business of financial leasing, leasing business, purchase of leased property within or outside China, the business of disposing of leased property for scrap value and repairing, leasing transaction consultancy and guaranteeing, other business approved by the approval authority.

For more information on the above issues, or if you have any questions in relation to other China related matters, please contact our China Practice Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.