(“Measures”) （ 境 外 投 资 项 目 核 准 和 备 案 管 理 办 法 ） , issued by the National Development and Reform Commission (“NDRC”)
As announced in our Legal Flash of January 2014, the NDRC enacted the Catalogue of Investment Projects Approved by Government (2013 edition) (“Catalogue”), to facilitate governmental approval of inbound and outbound investment projects.
Based on the principles established in the Catalogue for simplifying the approval procedure on outbound investment projects (the “Projects”), the NDRC enacted the Measures to introduce the new framework:
- The Measures narrow the scope of Projects subject to the verification process, so most Projects will be exempt from verification process, except:
- Projects with a Chinese investment exceeding USD 1 billion (“Major Projects”); and
- Projects involving sensitive countries and regions, including countries that have not established diplomatic relations with China, countries subject to international sanctions, and countries or regions affected by wars or civil strife. Also, Projects involving sensitive industries, including basic telecommunications operations, crossborder development and use of water resources, large-scale land development, main power transmission lines and power grids, news media and other industries (“Sensitive Projects”) are exempt.
- The NDRC is responsible for verifying most Major Projects and Sensitive Projects, except those with a Chinese investment exceeding USD 2 billion that involve either sensitive countries and regions or sensitive industries, which are subject to State Council approval.
Apart from Major Projects and Sensitive Projects, other Projects are only subject to a record-filing process with the applicable authorities:
- Projects carried out by enterprises under central management, and outbound investment projects carried out by local enterprises with a Chinese investment exceeding USD 300 million will be subject to the NDRC’s record-filing regime.
- Projects carried out by local enterprises with a Chinese investment below USD 300 million will be subject to record-filing by the provincial governments’ relevant investment departments.
Under the Measures, investors in overseas acquisitions or bidding projects must submit a report to the NDRC and obtain its confirmation before carrying out substantive work. The threshold for trigging this requirement has been increased from the USD 100 million to USD 300 million.
Time limit for verification process
The Measures give a clear timeframe for the verification process:
- Where a Project qualifies for verification, the NDRC must complete the verification within 20 working days of accepting the project application report, or put forward review opinions and submit them to the State Council for verification and approval. If the NDRC is unable to decide on verification within this time limit, an extension of 10 working days is allowed.
- Where necessary, the NDRC must assign a qualified consulting agency to conduct an assessment within five working days of accepting the Project. The time period for assessment, which is not regarded the processing period for verification, must not exceed 40 working days in general.
Date of issue: April 28, 2014. Date of effectiveness: May 8, 2014.