Tuesday, 25 October, 2016

Major Revisions to China’s Regulations on FDI: From a Long and Complex Approval System to an Easier Filing System

On 3 September 2016, the Chinese government approved and publicised the National People's Congress Standing Committee’s decision to amend four laws. These changes aim to further open the Chinese market to foreign investments, and to promote facilitation and standardisation of the administration required for FDI. 

The revision to these four laws, including the Law of the People’s Republic of China on Foreign-Investment Enterprises, entered into effect on 1 October 2016.

The revised laws allow foreign-invested enterprises involved in sectors which are not included in the negative list for foreign investment in the People Republic of China to go through a new record-filing system for establishment and change. This replaces the permission-approval system at the Ministry of Commerce.

The changes have also been extended to the filing of basic information, such as registered capital, registered address, legal representative and shareholder details. They will not only simplify the incorporation process, but also projects related to equity transfer, deregistration and corporate restructuring.

This is an important reform for foreign investments in China and for foreign companies planning to enter the Chinese market. In practice, the authorities have simply extended some of the procedures applied in the pilot free-trade zones to the rest of the country.




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