(“Measures”) (外商投资项目核准和备案管理办法), issued by the National Development and Reform Commission (“NDRC”)
The Measures are enacted in accordance with the Catalogue of Investment Projects Subject to Government Verification and Approval (2013 Version) (“Catalogue”) (see our newsletter of January 2014), which overrules the 20 04 version.
The Measures reform the approval procedures of foreign investment projects, including Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, wholly foreign-owned enterprises, foreign-invested partnerships, mergers and acquisitions ("M&A") of domestic enterprises by foreign investors, capital increase and reinvestment projects of foreign-invested enterprises.
The main highlights of the Measures are as follows:
- They rule two regimes to manage foreign investment projects: the approval regime and the record-filing regime. Unless a project is required to seek approval from the competent authorities under the Catalogue, it shall only go through record-filing procedures with the competent investment departments.
- The power of approval of most projects is delegated from the National and Democratic Reform Commission (“NDRC”) to the local government. The approval regime is as follows under the Measures:
- Approval by the NDRC at State level: encouraged projects listed in the Catalogue of Industries for Guiding Foreign Investment (“Guiding Catalogue”) that must be controlled by Chinese investors and with an investment amount over USD 300 million, as well as restricted projects (except for real estate) with an investment amount over USD 50 million.
- Approval by the provincial government: restricted projects listed in the Guiding Catalogue with an investment amount under USD 50 million (capital increase included), as well as any real estate projects.
- Approval by the local government: encouraged projects under the Guiding Catalogue that must be controlled by Chinese investors and with an investment amount under USD 300 million.
- This regime refers to either new projects or the increase of investment in already existing projects, and the control must be understood as actual control despite a minority shareholding.
- To identify the competent approval authority, if the project consists of the increase of investment in an already existing project, it shall be considered the amount of the increase. For M&A projects, it shall be considered the amount of the transaction.
- Foreign investment projects that may impact on the national security will be subject to security reviews, in accordance with relevant regulations.
Date of issue: May 17, 2014; Date of effectiveness: June 17, 2014.