China -  Chinese law firm

What are the new changes in the Administrative Rules on Registration of Foreign-Invested Partnership Enterprises?

1. More Foreign Investment Industry Restrictions

Compared to the State Council Measures, the SAIC Rules contain further provisions which make FIPs less foreign investment friendly. The State Council Measures provide that an FIP has to comply with China's foreign investment industry policy, which essentially means that the restrictions in the foreign investment industry guidance catalogue (the Catalogue) generally apply to an FIP. However, the SAIC Rules further provide that FIPs are not allowed for projects where foreign ownership is limited to a certain percentage under the Catalogue. This means that FIPs are only available for projects where a foreign investor is allowed to hold 100% ownership interest under the Catalogue.

2. No Prior MOC Approval Required

The SAIC Rules confirm the approval and registration authority under the State Council Measures, i.e., the local Administration for Industry and Commerce (AIC) is the approval and registration authority of an FIP, and is required to notify the equivalent level of the Ministry of Commerce (MOC) post registration, amendment or deregistration of an FIP.

The SAIC Rules have also made it clear that where the business scope of an FIP contains industries for which approval prior to AIC registration is required under relevant laws and regulations, then approval documents have to be submitted to the AIC during establishment application.



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