(the “Measures”) (境外投资管理办法), issued by the Ministry of Commerce (“MOFCOM”)
The Catalogue of Investment Projects Approved by Government (2013 edition) (《政府核准的投资项目目录（2013 年本）》) (“Catalogue”), referred to in our Legal Flash of February 2014, provides that, except for outbound investment projects involving sensitive countries, regions or industries (which are subject to approval by MOFCOM or its local counterparts), the default regime of regulating outbound investment projects is record-filing process.
Following the Catalogue, the Measures are enacted to set out the approval procedures and/or record-filing process for outbound investment projects carried out by domestic enterprises, such as new establishments, or mergers and acquisitions. Before the Measures are enacted, the old version of the Administrative Measures for Outbound Investment in 2009 will be repealed (“Old Measures”).
The Measures’ main highlights are as follows:
- The Measures specify the scope of overseas investments subject to approval procedures by defining the sensitive countries and industries
- Countries subject to approval procedures are those without diplomatic relations with the People's Republic of China and countries subject to United Nations sanctions.
- Industries subject to approval procedures participate in the export of products and technologies whose export is restricted by China and industries that affect the interests of one or more countries.
Unlike the Old Measures, under the Measures, overseas investment projects with certain thresholds or establishing offshore special purpose vehicles no longer need the relevant MOFCOM approval.
- The Measures provide hierarchical administration for outbound investments, both for approval procedures and record-filing, as follows:
- Central state-owned enterprises (“SOEs”) must report outbound investment subject to record-filing to the state-level MOFCOM, while other enterprises must report outbound investment subject to record-filing to the provincial-level MOFCOM
- Central SOEs must submit an application for outbound investment subject to approval procedure to the state-level MOFCOM, while other enterprises must submit an application for outbound investment subject to approval via the provincial-level offices of MOFCOM, which shall refer the application to the state-level MOFOC.
- The Measures simplify the approval procedures for outbound investment by:
- Lifting the restriction established in the Old Measures that made obtaining approval from the relevant authority a pre-condition for outbound investment projects.
- Removing the requirement to submit a Pre-report Form for Overseas M&A Items, where overseas investments are related to merger and acquisition activities.
- Shortening the time limit for authorities to approve outbound investments:
- for centrally-administered enterprises subject to the approval procedure, the state-level MOFCOM must grant approval within 20 working days; and
- for all other enterprises, including the review by both state- and provincial-level MOFCOM, approval must be granted within 30 working days.
Date of issue: September 6, 2014. Date of effectiveness: October 6, 2014.