(China Alert) FMC subsidiaries: Decision time
-Finalized regulations for FMC subsidiaries come into effect December 15, 2016
-Capital requirements are only one aspect of these new rules
-FMC shareholders will need to coordinate to decide the direction of subsidiary business
Update: It’s what every FMC JV shareholder has been waiting for – the finalized subsidiary regulation. According to Z-Ben Advisors’ calculations, this could result in industry-wide capital calls as high as RMB25bn-30bn (USD3.6bn-4.4bn). Some firms could have to inject hefty sums to sustain their current subsidiary business and align with growth plans (in some cases it will be a strategic choice to do so) or will have to start transitioning. Broad restructuring will depend on assessing future business together with net capital needs. The clarity provided by the formalized regulation means that foreign JV partners can now expect a more detailed plan of action from their domestic counterparts.
This is what we expect those plans to look like:…
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