Notice of the Ministry of Commerce on Foreign Investment Management [Effective] Promulgation date:
02-25-2011
Effective date: 02-25-2011
Department: Ministry of Commerce Subject:
Commerce and Trading Materials
Notice of the Ministry of Commerce on Foreign Investment Management (No.72 [2011] of the Ministry of Commerce)
The commerce departments of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning; and the Commerce Department of Xinjiang Construction Corps:
In 2010, by issuing the Decision on the Fifth Batch of Items Subject to Administrative Examination and Approval to Be Cancelled or Adjusted (No.21 [2010] of the State Council) and the Several Opinions on Doing a Better Job in the Utilization of Foreign Investment (No.9 [2010] of the State Council), the State Council delegated some foreign investment examination and approval powers to the provincial commerce departments and cancelled some items subject to examination and approval in relation to foreign investment. To continue doing a good job in this regard, we hereby notify you of the relevant issues as follows:
I. Management of cancelled items subject to administrative examination and approval 1. A list of equipments established or imported for investment by domestic branch companies not governed by specific provisions shall not be subject to the examination and approval of the commerce department any more. Instead, the foreign-funded enterprise concerned may directly handle the formalities at the relevant department.
2. In case the legal address changes (unless it is changed into a new address under the jurisdiction of another examination and approval organ) or name of a foreign-funded enterprise changes or an investor’s name changes, the enterprise shall, within 30 days after handling the formalities for industrial and commercial registration of modification, register at the commerce department upon the strength of an application form, a decision made by the enterprise’s body of power, an agreement on the modification of the contract/bylaws, certificates on the changed matter, the original approval certificate of the enterprise, a photocopy of the business license after change, etc. After receiving all the above-mentioned materials, the commerce department shall issue a new approval certificate to the enterprise. II. Management of Foreign-funded joint-stock companies (listed companies)
The approval certificate of a foreign-funded joint-stock company listed in China shall bear the name of the foreign investor and the shares thereof. An application for modification of the approval certificate shall be made to the commerce department if the foreign investor decreases its shares by 5% or more of the total equity. III. Management of foreign capital M&A
Foreign capital M&A with a transaction volume of not more than USD 300 million shall be
subject to the examination and approval of the provincial commerce department. However, matters that shall be subject to the examination and approval of the Ministry of Commerce as set forth in the Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (Order No.6 [2009] of the Ministry of Commerce) shall be subject to the examination and approval of the Ministry of Commerce, notwithstanding whether they have exceeded the above-mentioned limit or not.
IV. Handling of the letter of confirmation on foreign investment projects encouraged by the state
According to the principle governing the adjustment of the examination and approval powers of foreign-funded enterprises, the letter of confirmation on a foreign-funded enterprise’s project in the encouraged category shall be handled by the provincial commerce department under the relevant laws and regulations if the total amount of investment is not more than USD 300 million.
All regions shall issue letters of confirmation in strict accordance with the Notice of the Ministry of Commerce on Handling the Letter of Confirmation on Chinese-funded and Foreign-funded Projects Encouraged by the State (No.201 [2006] of the Ministry of Commerce) and other relevant laws and regulations. The Ministry of Commerce will strengthen supervision and inspection, order those departments which fail to file or issue a letter of confirmation as required to correct or cancel the letters of confirmation they have issued, and suspend their qualification for issuing letters of confirmation if serious consequences have been caused.
V. Foreign investors’ RMB investments
Out of concern of prudential supervision, upon consultation with the People’s Bank of China and the SAFE, we have decided that, where a foreign investor applies for making investment (in forming new enterprises, increasing the capital of existing enterprises, merging & acquiring enterprises inside China, providing loans, etc) in China with RMB income from cross-border trade settlement or lawfully acquired outside China, the provincial commerce department concerned shall firstly report to the Ministry of Commerce (Department of Foreign Investment) by letter, and handle the relevant formalities only after receiving an approval reply from the Ministry of Commerce (Department of Foreign Investment). The currency and amount of investment shall be specified in the letter submitted for approval.
VI. Domestic investment of foreign-funded partnership enterprises
Foreign-funded partnership enterprises whose principal business is investment shall be treated as overseas investors and, when making domestic investments, abide by the foreign investment laws, administrative regulations and rules. The commerce departments at all levels shall do a good job in the examination and management of the aforesaid enterprises and strengthen communication and cooperation with the industry and commerce administrations, the foreign exchange departments, etc.
VII. Strengthening the examination and administration of foreign investment in the service industry
The commerce departments at all levels shall examine and administer the foreign investment items subject to examination and approval in the service industry in strict accordance with the laws, regulations and other relevant provisions. For sectors governed by special provisions, such as financing lease, international express delivery, advertising, auction, and value-added telecommunication within a province, municipality or autonomous region, for sensitive sectors such as small-sum loans, market survey, credit rating and security service, and for sectors where large-amounts of funds flow into, such as startup investment, equity investment and management, the commerce departments at the provincial level shall fulfill their duties, strictly make examinations, closely cooperate with the competent departments in charge of these sectors at the same level, strengthen communication, and report the problems, if any, to the Ministry of Commerce (Department of Foreign Investment) without delay.
Ministry of Commerce of the People’s Republic of China February 25, 2011
