China new investment law reporting obligations

Skip to content. The question of whether affiliated mergers and acquisitions would be included in the scope of approval by the Ministry of Commerce, and the legal basis for such approval, deserves further attention and exploration. Lester Ross Partner. Subsequent legislation will clarify the scope, content, procedure, time limit and legal consequences of the review process. To manage foreign investment, Chapter III would provide the following:.

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Soon after China’s reform and opening upthe country adopted its first law on equity joint ventures inand the laws on wholly foreign-owned enterprises and cooperative joint ventures were enacted in the s. Over the past decades, they have provided legal safeguards for foreign firms and promoted foreign investment and cooperation in China. As China becomes one of the world’s top recipients of FDI, with someforeign-invested enterprises and over 2. The unified Foreign Investment Law, replacing the three existing laws, was adopted at the Second Session of the 13th National People’s Congress on March 15, and comes into effect on January 1, The Law’s key provisions are as follows: [1]. China new investment law reporting obligations government establishes a service system for foreign investment, and provide foreign investors and foreign-funded enterprises with consultation and services in respect of laws and regulations, policies and measures, investment project information and other aspects. Such expropriation or requisition shall be made pursuant to statutory procedures and fair and reasonable compensation will be given in a timely manner.

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Jump to navigation. On Dec. Public opinion was solicited until Feb. The Draft Law purports to create a level playing field for foreign investments in China. It abolishes three principal foreign investment laws that are currently in force. The Draft Law contained about four times as many provisions as the Draft Law but was never enacted. The Draft Law is more of a guideline for foreign investment, unlike the Draft Law which also provided many details to be used for implementation.

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Jump to navigation. On Dec. Public opinion was solicited until Feb. The Draft Law purports to create a level playing field for foreign investments in China. It abolishes three principal foreign investment laws that are currently in force.

The Draft Law contained about four times as many provisions as the Draft Law but was never enacted. The Draft Law is more of a guideline for foreign investment, unlike the Draft Law which also provided many details to be used for implementation. The Draft Law is incestment concise blueprint for the regulation of foreign investments fhina the PRC, and it will change how foreign investment is regulated in China.

In any event, there can be no doubt that the Draft Law and its Accompanying Obligatiobs will create a more friendly and efficient market for Foreign Investors in the PRC. The Annotation imvestment that one purpose of the Draft Law is to create a stable, transparent, and predictable environment for foreign investment in China. It is also possible that preferential policies may be implemented for Foreign Investors. The Draft Law states that the expropriation of personal property will be permitted only for public use and after fair compensation has been paid.

Also, the free repatriation of the capital contributions, profits, capital gains, royalties, and other compensation of Foreign Investors will be allowed in RMB or a foreign currency. Finally, the Draft Law will obligatiobs an official channel that foreign-invested enterprises adversely affected by State or official conduct may use to appeal to china new investment law reporting obligations appropriate authority.

Similar provisions were introduced in more detail in the Draft Law, but the Draft Law provides only general principles and guidelines. Search form. Anti Money Laundering. Anti-Money Laundering.

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New projects would be allowed as long as they were not prohibited, as is the case with foreign-invested sole proprietorships. Indirect investment undefined. If the ultimate controlling shareholder is a Foreign Investor, but the investing entity is a Chinese enterprise, then the investment is indirect. But some issues remain unresolved. Does this mean that under the Draft Law all foreign investments in China will be required to disclose their ultimate controlling shareholder?

If so, how much must be disclosed? Will reporying be to the level of an individual, reoorting a publicly listing company, to obligaations trust, or even to an entity or individual behind a trust? And if the ultimate controlling shareholder of a Foreign Investor is a PRC citizen or a PRC business entity, will this investment qualify as foreign investment in China? The Draft Law does not answer these questions.

In our experience, either the final law will incorporate certain provisions, or there will be a separate set reportkng implementing rules that address these questions.

Ambiguous if applicable to investments from Taiwan, Hong Kong, and Macau. Existing Laws and their implementing china new investment law reporting obligations govern investments from Taiwan, Hong Kong, and Macau. However, the Draft Law does not explicitly state whether it applies to llaw investments.

If the Draft Law does not apply, additional legislation will be needed. Of course, it is also possible that the final version of the Draft Law will follow the Existing Laws and apply to Taiwan, Hong Kong, and Macau as. The Draft Law not only reduces and streamlines governmental approval formalities, it also promises to establish a comprehensive system whose purpose is to assist Foreign Investors by providing for legal and business consultations and the disclosure of information.

National treatment. Foreign Investors will now enjoy national treatment. Policies that promote investmebt business of Chinese enterprises will now be applied to foreign-invested enterprises as. Chinese government procurement procedures will also allow foreign-invested enterprises to participate on an equal basis.

And products domestically manufactured by foreign-invested enterprises will be treated the same as those made by domestic enterprises. Preferential policies for some foreign investments in China. For example, the Internet and financial invetsment in the Special Zones currently enjoy preferential policies whose purposes include meeting the current needs of the Chinese economy and enabling China to keep the promises it made when it became a member of the WTO.

In the future, the Chinese investmsnt will establish additional Special Zones and continue reducing regulations for foreign investments in certain industries found in these Special Zones. Investment protections The Draft Law states that the expropriation of personal property will be permitted only for public use and after fair compensation has been paid. Under the Existing Laws, repatriation is i reportijg to legitimate profits, funds that remain after dissolution, and other legitimate income, and ii allowed only after-tax clearance.

Although the Draft Law does not mention the tax authority in regards to the repatriation of investments made by Foreign Investors, the government will most likely retain this authority as well as the authority to regulate foreign exchange.

Government coerced Transfers prohibited. In response to recent criticism by the international community, government coerced Transfers to a Chinese counterpart are now explicitly prohibited.

This will investkent welcome news to US companies that for many years have been vocal critics of such coerced Transfers. Additional protections for Foreign Reportinng that interact with the State. Multinational clients that invest in China have claimed that local governments in rural areas are more likely than their coastal counterparts to breach State contracts or rescind promises like tax breaks that were made to attract foreign investment.

The Draft Law for the first time mandates investmeny the State keep promises made to Foreign Invfstment. More importantly, the Draft Law also includes a due process clause that better protects the interests of the Foreign Investors when they enter into contracts with the State; the State is also required to pay fair compensation and to act in the best interests of the public. A complaint mechanism that protects foreign-invested enterprises. The proposed complaint mechanism will apply to all phases of foreign investment, from the establishment of a business entity to its dissolution.

The Draft Law does not, however, specify which authority will manage the complaint mechanism or what its procedures will entail. Nor is it known whether decisions rendered by the complaint mechanism can be reportjng. It is safe to assume that specific rules will be promulgated to address these issues.

Many concepts and principles in the Draft Implementing Regulations are undefined or lack. Investmment principal features of the draft are:. While the Draft Implementing Regulations signify progress in addressing the concerns of foreign investors, several issues remain to be clarified:. The State shall publish lists of items that require administrative approval, subject to adjustment from time to time. Protection of market players.