MOFCOM promulgated the newly-revised Administrative Measures for Outbound Investment (Order of the Ministry of Commerce  No.3, “the Measures”) on September 6 th , 2014, which shall come into force as of October 6 th , 2014. Administrative Measures for Outbound Investment (Order of the Ministry of Commerce  No.5, the “ Former Measures”) issued in 2009 shall be repealed simultaneously. This revision simplifies the process of administrative examination and approval and institutes the decentralization, thereby defining the dominant position of the enterprises in outbound investment and further facilitating the process thereof.
The Measures include 39 articles in five chapters, covering General Provisions, Archive Filing and Verification, Rules and Services, Legal Liabilities, and Supplementary Provisions. Comparing with the Former Measures, the principal innovations of the Measures are listed as follows:
(1) Defining the Dominant Position of the Enterprises in Outbound Investment
The Measures clearly stipulate in General Provisions that an enterprise which makes outbound investment shall “make decisions independently and be responsible for its own profits and losses in accordance with the law”, and delete the requirement for an enterprise to obtain the approval from the competent government authority before the contracts and agreements regarding its outbound investment take effect. Those revisions are beneficial to the implementation of the enterprises’ autonomy in investment decision and the promotion of the outbound investment facilitation.
(2) Establishing the Administration System of “Primarily by Archive Filing, Supplementarily by Verification”
According to the Measures, owning the non-financial enterprises or obtaining the ownership, control right or management right or other interests of the existing non-financial enterprises through establishing the a new enterprise, merger and acquisition, or other means. Where the outbound investment carried out by an enterprise involves sensitive countries, regions and sensitive industries, approval shall be needed issued by Ministry of Commerce or the local branch thereof. While in other circumstances of outbound investment, archive filing management shall be implemented. For outbound investments subject to archive filing, a central enterprise shall report its outbound investments to the Ministry of Commerce for filing and a local enterprise to the provincial department in charge of commerce at its locality.
“Sensitive Countries” in the Measures refer to countries that have not established diplomatic relations with China and countries under the United Nations’ sanctions. The query methods of the above-mentioned categories of countries are provided in the Outbound Investment Archival Filing Form and the Outbound Investment Application Form attached to the Measures. According to the Measures, when necessary, MOFCOM could separately announce the list of countries and regions for which verification management required. “Sensitive Industries” in the Measures refer to industries involving exportation of products and technologies which is restricted by China, or industries affecting the interests of a country (region) or more.
(3) Narrowing the Coverage and Limitation Period of the Verification
The Measures cancel the requirements for approving the outbound investment above designated investment amount and establishing special purpose vehicles. The Measures also cancel the requirement for obtaining opinions from relevant Chinese chambers of commerce and associations on approving outbound investments on exploration and development of mineral resource. In conclusion, if not involving sensitive countries and regions and sensitive industries, the outbound investment no longer needs to be approved.
The Measures shorten the approving period. The outbound Investment of a central enterprise shall be decided within 20 working days (including the time for seeking opinions from (the economic and commercial counselor's office of) the embassy (consulate) of China in the country concerned) after accepting the application. The outbound Investment of a local enterprise shall be decided within 30 working days, of which the provincial commerce department shall submit preliminary review opinions and all application materials to MOFCOM within 15 working days (including the time for seeking opinions from (the economic and commercial counselor's office of) the embassy (consulate) of China in the country concerned); MOFCOM shall decide whether to approve the application within 15 working after receiving the preliminary review opinions.
(4) Clarifying the Requirements and Procedures for Archive Filing
According to the Measures, central enterprises and local enterprises shall fill out and print out the Outbound Investment Archival Filing Form (hereinafter referred to as the “Archival Filing Form”) through “Outbound Investment Management System”, then report the form bearing its seal along with the copies of business license to MOFCOM and the provincial commerce department, respectively, for archive filing. Where the Archival Filing Form is filled out accurately and completely and in the legal form, and an enterprise states in the Archival Filing Form that its outbound investment does not fall under any circumstance specified in Article 4 of the Measures, MOFCOM or the provincial commerce department shall record the same and issue the Certificate of Outbound Investment by Enterprises within three working days upon receiving the application.
(5) Cancelling the Mandatory Requirement of the Limitation Period of the Outbound Reinvestment’s Archive Filing
According to the Former Measures, the outbound reinvestment of an overseas enterprise invested by an enterprise shall be reported to the competent department in charge of commerce by the enterprise within one month after the overseas legal procedure is completed. The Measures cancel the mandatory requirement of the limitation period, whereupon the outbound reinvestment of an overseas enterprise invested by an enterprise might be reported to the competent department in charge of commerce by the enterprise at any time after the overseas legal procedure is completed.
(6) Facilitate the Enterprises to Handle Business Locally
According to the Measures, the provincial commerce departments should take charge of the archive filing administration of their local enterprises’ outbound investment and starting business overseas, and the Certificate of Outbound Investment by Enterprises could be sealed printed and issued by themselves. This altered the former practice that the Certificate of Outbound Investment by Enterprises must be uniformly printed by MOFCOM (but the uniform coding system remains the same). By administrating locally, the Measures manage to promote the facilitation of outbound investment.
(7) Strengthening Guidance and Regulation for Outbound Investment
In Chapter 3 Rules and Services, the Measures require the overseas enterprises to strengthen the consciousness of risk and responsibility, observe the laws and regulations of the investment destination, respect local customs, perform social responsibility, and take responsibility in respect of environment protection, labor protection, and enterprise cultural construction so as to better integrate with the local society.
(8) Strengthening Legal Liability and Increasing Penalties
In Chapter 4 Legal Liabilities, the Measures revise the penalties of going through filing procedures and obtaining the Certificate by providing false materials or by any improper means, and falling under any circumstance specified in Article 4 thereof in the process of outbound investment. And the intensity of the penalties is greatly enhanced. The Measures also claim that if a crime is constituted, the enterprise shall be prosecuted for criminal liabilities in accordance with the law.
(9) Transforming Government Functions, Improving Services and Guarantees
The Measures instruct MOFCOM and the provincial commerce departments to improve work efficiency and to provide quality services. MOFCOM shall promulgate the Guidance on Foreign Countries (Regions) for Outbound Investments and Cooperation, industry guidelines of countries and other documents to help enterprises to understand the investment environment of investment destinations; it shall strengthen the guidance and regulation over outbound investments of enterprises, and, in concert with the relevant departments, promulgate environmental protection guidelines to urge enterprises to operate overseas in accordance with laws and regulations; it shall also set up an outbound investment and cooperation information service system to provide information services including statistics, investment opportunities, investment barriers and risk pre-warning for enterprises to carry out outbound investments.