On October 8, the executive meeting of the State Council decided to substitute registration mechanism for examination and approval mechanism for establishment and change of foreign-funded enterprises that are not subject to any special access management measures, such as the restriction and prohibition items and relevant regulations on requirements for equity and high management under the encouragement items of the Catalogue for the Guidance of Industries for Foreign Investment (2015). In addition, the registration shall not be used as a precondition for going through the procedures for business and foreign exchange registration.

 

The same day, the Ministry of Commerce released the Interim Measures for Management of Registration for Establishment and Change of Foreign-funded Enterprises, clearly specifying that registration management shall be adopted to take the place of examination and approval management for establishment and change of foreign-funded enterprises that are not subject to any special access management measures of China. The Interim Measures have been put into force since the date of release. Moreover, the National Development and Reform Commission and the Ministry of Commerce jointly announced that the scope of the special access management measures for foreign investment shall be subject to the restriction and prohibition items and relevant regulations on requirements for equity and high management under the encouragement items of the Catalogue for the Guidance of Industries for Foreign Investment (Amended in 2015).

 

In accordance with the Interim Measures, the registration mechanism is applicable for Sino-foreign equity joint ventures, Sino-foreign cooperative enterprises, foreign-funded enterprises and foreign-invested companies limited by shares. For enterprises invested by investors from Hong Kong, Macao and Taiwan and not covered by the special access management measures, applicable registration management can be adopted.

 

The person in charge of the Department of Treaty and Law of the Ministry of Commerce believed that the Interim Measures are important supporting measures for copying and promoting the experience of the pilot free trade zones nationwide. The registration refers to informative registration and is not a precondition for enterprises to go through other procedures. The foreign investors bear the responsibilities for the authenticity, accuracy and integrity of the reported information in the form of letter of commitment, and the registration authorities only make formal review of the reported information during the registration stage and do not have mandatory requirement for enterprises to acquire the receipt of registration. This is fundamentally different from the current case-by-case examination and approval mechanism for foreign investment. It is a “veritable registration mechanism” for the convenience of and serving the enterprises.

 

The person said that it is a significant reform of the Chinese foreign investment management system, reflecting the spirit to “have legal basis for any significant reform”, and will certainly further promote the opening-up and the improvement of the law-based, internationalized and convenient business environment of China.

 

The executive meeting of the State Council believed that the actions to copy and extend the experience of the pilot free trade zones and create a business environment with equal treatment for domestic and foreign enterprises and fair competition by deepening the reform for streamlining administration and delegating power to the lower levels, integrating power delegation and management and optimizing services are important steps for a new round of high-level opening-up. By adopting registration mechanism, the examination and approval procedures for the establishment and change of foreign-funded enterprises can be reduced by more than 95%. Related departments should improve their efficiency and enhance targeted investment promotion and services at the same time of strengthening in-process and follow-up supervision and encouraging integrity and compliance to laws and regulations. For the next step, the requirements for expanded opening-up should be based on to continuously optimize the special access management measures.

 

Related insider said that, the registration management reform for establishment of foreign-funded enterprises and the implementation of supporting measures will be helpful for further investment facilitation and optimization of business environment.

 

Source: Translated from Invest Guangzhou, October 10, 2016