On October 8, 2016, the Ministry of Commerce (“MOFCOM”) issued Administrative Interim Measures on Record Filing for the Establishment of and Changes to Foreign-Invested Enterprises, taking retroactive effect on October 1, 2016, and marking the start of a new era for foreign-invested enterprises (“FIEs”) in China.
To further refine the system, the MOFCOM has now released Draft Administrative Measures on Record Filing for the Establishment of and Changes to Foreign-Invested Enterprises (“Draft Measures”), open for public comments until June 15, 2017.
- Merger and acquisition by foreign investors in domestic companies and domestic listed companies will become integrated into the record filing system and will no longer be subject to examination and approval procedures.
- Record filing for acquisition by foreign investors in domestic listed companies can be conducted 30 days before or 30 days after registration in the securities registration and settlement institution.
- Record filing must be also conducted for any change of foreign investor’s’ ultimate controller.
- Record filing must be conducted for changes to (i) the transfer price, payment method and appraisal value of the equity or assets on foreign investors’ acquisition of domestic companies, and (ii) the transfer price and payment method of foreign investors’ acquisition of domestic listed companies.
- Record filing of new foreign shareholders of foreign-invested listed companies can be conducted 30 days before or 30 days after registration in the securities registration and settlement institution.
- Foreign investors must file a copy of the Certificate of Enterprise’s Overseas Investment if they use equity interests in overseas enterprises as a payment method.
Foreign investment still subject to examination and approval procedures is limited to areas under special state administration, including investments in the restricted and prohibited categories of the current Guideline Catalogue for Foreign Investment Industries and those in the encouraged category with requirements to have Chinese shareholding or senior management, which will form the negative list in the new Revised Guideline Catalogue to be released this year.
Date of issue: May 26, 2017. Deadline for public comments: June 15, 2017