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Circular of the Ministry of Commerce on Delegating Approval Authority over Foreign Investment to Local Counterparts

2010-07-28 14:26:17Source:www.fdi.gov.cnAuthor:

Shang Zi Fa [2010] No. 209

For the purpose of carrying out and implementing the Several Opinions of the State Council on Further Utilizing Foreign Investment (Guo Fa [2010] No. 9) and deepening the system of the foreign investment management system, relevant issues on the approval and management authority over foreign investment enterprises to local counterparts are hereby notified as follows:

Article 1 The competent commerce authorities and national economic and technological development zones of provinces, autonomous areas, municipalities directly under the central government, cities specifically designated in the state plan, Xinjiang Production and Construction Corps and sub-provincial cities (inclusive of Harbin, Changchun, Shenyang, Jinan, Nanjing, Hangzhou, Guangzhou, Wuhan, Chengdu and Xi’an) (hereinafter referred to as local approval authorities) shall be responsible for the approval and management of and over the establishment and alteration of foreign investment enterprises of encouragement and permission with total investment of USD300m and foreign investment enterprises of restriction with total investment of USD50m in the Catalogue for the Guidance of Foreign Investment Industries (hereinafter referred to as quota). The quota for a foreign-invested joint stock company shall be computed in accordance to registered capital, that for a foreign-invested joint stock company restructured from other form in accordance to net assets value in the wake of assessment and that for a domestic enterprise by a foreign investor in the form of merger and acquisition in accordance with transaction amount.

Article 2 The local approval authorities shall be responsible for the approval and management of and over the single increase of capital with the amount below the quota.

Article 3 The local approval authorities shall be responsible for the approval and management of and over the establishment and alteration of foreign investment enterprises of encouragement above the quota and without the comprehensive balance of the state.

Article 4 The local approval authorities shall be responsible for the approval and management of and over the establishment and alteration of foreign investment companies with registered capital of below USD300m, foreign-invested joint venture enterprises with total capital of below USD300m and foreign-invested venture investment enterprises.

Article 5 The local approval authorities shall in accordance with related provisions conduct approval and management of and over the establishment and alteration (inclusive of above quota and increase of capital) of foreign investment enterprises in the service industry except otherwise the approval by the Ministry of Commerce as explicitly prescribed in laws and regulations. In event a foreign investment enterprise shall in accordance with related provisions gain the pre-license of the competent industry sector of the state or ask it for advice, it should gain written documents or opinion of agreement. The establishment and alteration of foreign investment enterprises in the areas of finance and telecommunication shall be still subject to the existing laws and regulations.

Article 6 The local approval authorities shall be responsible for the approval and management of and over the alteration (exclusive of the situation where a single increase of capital reaches or surpasses the quota or the one as prescribed in Article 5 herein) of the foreign investment enterprises established under the approval of the Ministry of Commerce, the former Ministry of Foreign Trade and Economic Cooperation and related departments under the State Council.

Article 7 The competent commerce authorities at all levels should strictly execute the policy for foreign investment industries of the state. Foreign investment involved in the industries of macro-adjustment and control and overcapacity shall be strictly examined and checked and recorded in accordance with relevant provisions of the state.

Article 8 The competent commerce authorities at all levels should in accordance with the Circular of the Ministry of Commerce on Further Improving the Approval of Foreign Investment (Shang Zi Han [2009] No. 7) as well as special provisions for foreign-invested companies, venture capital investment, finance leasing, business and direct marketing handle with archival management well.

Article 9 The competent commerce authorities of provinces, autonomous areas, municipalities directly under the central government, cities specifically designated in the state plan and Xinjiang Production and Construction Corps should in strict accordance with related provisions examine, check and issue the Confirmation Letter on Chinese-funded and Foreign-funded Projects and the Certification for Equipment, Technology and Components and Parts Imported by Foreign Investment Enterprises and timely submit it to the Ministry of Commerce for filing via the “System of Foreign Investment Approval and Management”.

Article 10 In event the content of related documents previously issued by the Ministry of Commerce is inconsistent with the Circular, the Circular shall prevail.

Article 11 The competent commerce authorities at all levels shall integrate management into service to strongly boost the transformation of governmental functions, innovate service pattern and constantly raise the service level, and simultaneously guide the orientation of foreign investment and intensify the supervision on the fulfillment of foreign investors of the obligation of contracts and articles of association as well as the status on foreign investment enterprises’ abiding by laws and regulations and their operation to create a good environment of investment for the establishment and operation of foreign investment enterprises. Please promptly report it to the Ministry of Commerce (the Foreign Investment Department) when any problem arises in the implementation of the Circular herein.

The Circular is hereby notified.

The Ministry of Commerce of the People’s Republic of China

June 10, 2010