FIREE recordals tracker: August 2015 update

China Real Estate & Hotel Law & Insight Update September 2015 If you have any questions concerning :this publication, please contact Rico Chan Partner 852 2846 1971+ 86 10 6535 3920+ rico.chan@bakermckenzie.com FIREE Recordals Tracker: August 2015 Update Since May 2007, any injection of foreign capital in foreign-invested real estate enterprises (“FIREEs”) must be recorded with the PRC Ministry of Commerce (“MOFCOM”). These “FIREE recordals” provide a useful perspective on the trend and pace of new foreign capital inflow into the China real estate sector. However, the FIREE recordal statistics do not .disclose the actual amount of foreign capital involved in each transaction Baker & McKenzie has been tracking FIREE recordals announced by MOFCOM since May 2007. Set out below are some FIREE recordal :statistics and data current up to the end of August 2015. In summary The total number of FIREE recordals in August 2015 was 29, equal to • .29 in July 2015 ,The total number of FIREE recordals in 2008, 2009, 2010, 2011 • 2012, 2013 and 2014 were 1,051, 991, 1,094, 767, 759, 763 and 622 .respectively Since May 2007, cumulatively, there have been 8,187 FIREE • recordals up to the end of August 2015. This includes 3,435 cases of new project operating entities being established, 3,841 cases of (capital increase or M&A transactions (involving capital increase related to existing project operating entities, and 511 cases of M&A .transactions which do not involve any capital increase 1. Types of FIREE recordals in Jun 2015, Jul 2015 :and Aug 2015 respectively Jun 2015 Jul 2015 Aug 2015 Establishment of new entities: 9 5 4 • /Capital increase • :(M&A (involving capital increase 30 18 17 M&A (no capital increase): 12 5 6 • Miscellaneous recordals: 3 1 2 • Total: 54 29 29 www.bakermckenzie.com Beijing Suite 3401, China World Office 2 China World Trade Centre 1 Jianguomenwai Dajie Beijing 100004, PRC Tel: +86 10 6535 3800 Fax: +86 10 6505 2309 Shanghai Unit 1601, Jin Mao Tower 88 Century Avenue, Pudong Shanghai 200121, PRC Tel: +86 21 6105 8558 Fax: +86 21 5047 0020 Hong Kong 14th Floor, Hutchison House 10 Harcourt Road Central, Hong Kong SAR Tel: +852 2846 1888 Fax: +852 2845 0476 2 Baker & McKenzie | September 2015 :2. FIREE recordals in Aug 2015 Types of Recordals Cities Number of Recordals Establishment of new entities Harbin 1 Huizhou 1 Shenzhen 1 Tianjin 1 Total 4 / Capital increase M&A (involving capital (increase Shanghai 4 Foshan 2 Shenyang 2 Changsha 1 Chaozhou 1 Dongguan 1 Haikou 1 Jiangmen 1 Sanya 1 Shenzhen 1 Taizhou 1 Tianjin 1 Total 17 M&A (no capital (increase Dalian 1 Huai’an 1 Huizhou 1 Jinan 1 Xi’an 1 Zhengzhou 1 Total 6 Miscellaneous Shantou 1 Zhuhai 1 Total 2 3 Baker & McKenzie | September 2015 3. FIREE recordals: monthly from 1 Jan 2011 to :31 Aug 2015 Number of Recordals 78 41 625656 4849 605560 95 107 4642 5953 32 595660 53 63 106 130 55 31 64 5555 75 84 39 4745 103 110 57 19 64 57 47 62 32 55 48 26 46 109 4045 33 4943 54 2929 0 20 40 60 80 100 120 140 4. Cities with the highest number of FIREE :recordals from May 2007 to Aug 2015 Number of Recordals 597 473 314 292 291 252 208 0 100 200 300 400 500 600 700 Shanghai Shenyang Guangzhou Dalian Tianjin Chengdu Beijing 5. Types of FIREE recordals from May 2007 to :Aug 2015 Capital increase/M&A Involving capital increase) 3,841) Establishment of new entities 3,435 M&A (No capital increase) 511 Miscellaneous 400 ____________________ Total: 8,187 %46.9 %42 %6.2% 4.9 4 Baker & McKenzie | September 2015 About the FIREE Recordal Regime The regulatory regime for recording foreign-invested real estate enterprises was first established in May 2007 by MOFCOM and the State “Administration of Foreign Exchange (“SAFE”). This “FIREE recordal regime was part of a scheme of regulatory measures introduced between 2006 to 2007 to monitor and control foreign investment in the real estate sector at a time when the central government considered the real estate sector to be overheated. This regime controls all types of foreign capital inflow being injected into the real estate sector for purposes such as the .setting up of new entities, capital increases and mergers & acquisitions Foreign capital flowing into China cannot be converted into Renminbi China’s legal currency) unless and until the “FIREE recordal” process has) .been completed with MOFCOM and SAFE Since July 2008, the provincial-level commerce authorities have been charged with the primary responsibility of vetting the legal compliance of FIREE-related transactions. MOFCOM reserves the right to conduct random checks on the recordals filed by the provincial-level commerce authorities. Generally, within one to two weeks of receiving an electronic submission from a provincial-level commerce authority, MOFCOM will release the new FIREE recordal on its public website. Only then can the local bureau of SAFE and the local commercial bank credit the foreign currency funds into the accounts of the transaction parties concerned. In December 2008, MOFCOM further simplified the local recordal procedures such that the general office of the provincial government is no longer required to jointly endorse the recordal form with the provincial-level .commerce authority Pursuant to Notice 340 issued by MOFCOM, starting from August 2014 provincial-level commerce authorities are authorized to complete the .FIREE recordal process for companies located in their respective regions MOFCOM will continue to consolidate all the new FIREE recordals on a nation-wide basis and publish such data on its official website. MOFCOM will also conduct random checks on the recordals submitted and the local authorities and parties involved, and non-compliance will lead to sanction .and black-listing of the violators This publication has been prepared for clients and professional associates of Baker & McKenzie. Whilst every effort has been made to ensure accuracy, this publication is not an exhaustive analysis of the area of law discussed. Baker & McKenzie cannot accept responsibility for any loss incurred by any person acting or refraining from action as a result of the material in this publication. If you require any advice .concerning individual problems or other expert assistance, we recommend that you consult a competent professional adviser Unsubscribe .To unsubscribe from our mailing list or to change your communication preferences, please contact hklaw@bakermckenzie.com 2015 Baker & McKenzie. All rights reserved. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional © .service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm If you have any questions regarding real estate & hotel in China or Hong :Kong, you may also contact Edmond Chan 852 2846 1735 + edmond.chan@bakermckenzie.com Rico Chan (852 2846 1971 (Hong Kong+ (86 10 6536 3920 (Beijing+ (86 21 6105 5958 (Shanghai+ rico.chan@bakermckenzie.com Milton Cheng 852 2846 1056+ milton.cheng@bakermckenzie.com Debbie Cheung 852 2846 1929+ debbie.cheung@bakermckenzie.com Jason Ng 852 2846 2443+ jason.ng@bakermckenzie.com