The Ministry of Commerce (MOFCOM) and the State Administration of Foreign Exchange (SAFE) jointly released the Circular on Improving the Record-Filing for Foreign Investment in Real Estate (Shang Zi Han  No.340) (the Circular) June 24, 2014, which became effective August 1, 2014.
The Circular simplifies the current record-filing procedures for foreign investment in real estate in two ways. First, the records with MOFCOM will now be filed electronically (as opposed to in paper form).
Second, MOFCOM will strengthen its random filing check both during verification and post-verification.
Under the Circular, MOFCOM authorizes commerce authorities at the provincial level (the Provincial MOFCOM) to verify the materials submitted by foreign-invested real estate enterprises for record-filing purposes. After the materials are verified, the Provincial MOFCOM should send such materials electronically to MOFCOM via the record-filing system. MOFCOM will then conduct a weekly random check on the submitted records. MOFCOM will make public on its website those projects that have been verified but are not selected for random check as well as projects that pass verification and random check.
In addition, in order to reinforce post-verification supervision, MOFCOM will conduct a random check on projects that have been made public on its website. If it discovers any violation in the verification process, the applicable Provincial MOFCOM and foreign enterprise will be blacklisted, and MOFCOM will conduct more rigorous examinations on future changes of such foreign enterprise.
The above is in contract to the system prior to the Circular in which after the materials submitted by foreign-invested real estate enterprises for record-filing purposes were verified, the Provincial MOFCOM would submit the Archival Filing Forms of Foreign Investment in Real Estate Industry to MOFCOM. MOFCOM would then randomly select five to 10 enterprises each quarter for further verification.
The Circular also provides that MOFCOM will establish a credit system to increase the level of disclosure on violations, and improve the relevant information sharing mechanism between government agencies. Foreign-invested real estate enterprises and their investors that are found to have committed violations will be listed in a “blacklist” and the information of such enterprises will be timely shared with SAFE and the relevant departments of the State Council.
- Circular on Improving the Record-Filing for Foreign Investment in Real Estate
- Issuing Authority: the Ministry of Commerce and the State Administration of Foreign Exchange
- Date of Issuance: June 24, 2014 / Effective Date: August 1, 2014