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Guidelines for Venture Capital Investment in the Hainan Free Trade Port (2022 Edition)

The Provincial Development and Reform Commission issued Guidelines on Venture Capital Investment in the Hainan Free Trade Port (2022) (hereinafter referred to as the Guidelines), which clarifies the relevant regulations and preferential policies on the management of venture capital enterprises in Hainan.

It is required that the registered capital of the enterprises on record shall not be less than 30 million yuan, the number of investors shall not exceed 200, and at least three senior managers with more than two years of venture capital or relevant business experience shall assume responsibility for investment management.

Venture capital refers to the equity investment in unlisted growing start-up enterprises in the process of creation or reconstruction, in order to obtain capital appreciation income mainly through equity transfer after the venture enterprises are mature or relatively mature.

Venture capital enterprises refers to enterprises and organizations registered and established within the territory of the People’s Republic of China that are mainly engaged in venture capital investment.

Start-up enterprises refers to growing enterprises that are registered and established in the People’s Republic of China and are in the process of establishment or reconstruction, but do not include enterprises that have been listed on the open market.

The Guidelines specify the relevant provisions on the management of venture capital enterprises in the Hainan Free Trade Port, and the conditions for filing in the Development and Reform Department are as follows:

Registration has been completed in the market supervision department,

The business scope is in compliance with the requirements,

The registered capital is not less than 30 million yuan,

The first paid in capital is not less than 10 million yuan,

All investors promise to make up the registered capital within 5 years after registration,

The number of investors shall not exceed 200.

Where a venture capital enterprise is established in the form of a limited liability company, the number of investors shall not exceed 50. The investment of a single investor in a venture capital enterprise shall not be less than 1 million yuan. All investors shall make capital contributions in currency; at least 3 senior managers with more than 2 years of venture capital or relevant business experience shall assume investment management responsibilities.

The Guidelines specify preferential policies for venture capital enterprises in Hainan:

1. Corporate income tax: for venture capital enterprises set up and filed in the Hainan Free Trade Port, firstly, they can deduct the taxable income by 70% of the investment in small and medium-sized high-tech enterprises and technology-based start-ups, and secondly, they can enjoy a 15% corporate income tax discount for encouraged industries in the Hainan Free Trade Port.

2. Personal income tax: eligible venture capital practitioners, comprehensive income, business income from the Hainan Free Trade Port and talent subsidy income recognized by Hainan Province can enjoy the preferential policy of exempting that part of the actual tax burden of individual income tax exceeding 15%.

The Guidelines also introduce the filing process for venture capital enterprises, filing materials and instructions, and answers some common questions.

Hainan Free Trade Port Venture Capital Investment Guidelines (2022 Edition) Chinese text

Application documents for the filing of venture capital enterprises Chinese text

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Hainan to issue offshore RMB local government bonds in Hong Kong
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