Category Archives: Foreign Direct Investment

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China Business Registration Reform

On February 7, 2014, the State Council issued Notice on Reform Plans of Registration Policies of Registered Capital, GuoFa [2014] No. 7 (the “Notice”) providing guidelines on business registration reforms of companies in China.  The objective of the reform is to relax the administration on market entry and optimize the business investment environment.… Continue Reading

New PRC Policies on Annual Inspection

On February 19, 2014 the state-level General Administration for Industry and Commerce (the “AIC“) issued a notice to officially cancel the annual inspection for all types of enterprises including domestic entities, representative offices, branches and foreign invested entities since March 1st, 2014. Following this state-level AIC notice, many local AICs in Beijing, Shanghai, Guangdong, Hubei … Continue Reading

China to Relax the Corporate Registered Capital System and Reform the Annual Inspection Process

The government is moving in a direction to make the corporate formation and supervision process more user-friendly.  Two key changes are expected to happen in the near future.  The first is the abolishment of the registered capital requirement which has been a source of frustration for foreign investors and especially small-to-medium sized enterprises that seek … Continue Reading

China Releases Administrative Measures on Foreign Debt Registration

On April 28, 2013, the State Administration of Foreign Exchange (the “SAFE”) promulgated the Administrative Measures of Registration of Foreign Debts (the “Foreign Debt Measures”) together with the detailed Operational Guidelines of Administration of Foreign Debt Registration (the “Guidelines”). Both regulations will be implemented from May 13, 2013. The Foreign Debt Measures and the Guidelines … Continue Reading

Green light on equity as capital contribution in FIEs

By Carol Xu Recently, MOFCOM issued the regulation permitting the use equity interest as capital contribution in FIEs (“the Provisions”). According to PRC’s Company Law (amended in 2005), investors are only allowed to make capital contributions in cash, in kind or in such intangible property rights as intellectual property rights, land use rights or other … Continue Reading

Draft Proposal to State Secrets Law

By Amin Amirkia Last week, the Legal Affairs Office of the State Council issued for public comment a draft proposal (“Proposal”) to the implementation guidelines of the Law of the People’s Republic of China on Guarding State Secrets (“State Secrets Law”). The Proposal addresses various state secrets issues, including security classifications, the qualifications for those … Continue Reading

Big Four to Localize in China

By Amin Amirkia Earlier this month, China’s Ministry of Finance, State Administration for Industry and Commerce, Ministry of Commerce, State Administration of Foreign Exchange, and China Securities Regulatory Commission issued the Notice on Issuing the Scheme on the Localized Restructuring of Sino-Foreign Cooperative Accounting Firms (“Notice”), requiring the Big Four to “localize” their operations in … Continue Reading

China’s Newly Revised Foreign Investment Guidance Catalogue

By Yan Zhang In late 2011, China’s National Development and Reform Commission (“NDRC”) and Ministry of Commence (“MOFCOM”) jointly announced the new Foreign Investment Guidance Catalogue (2011 Amendment) (“New Catalogue”). For years, China’s Foreign Investment Guidance Catalogue (“Catalogue”) has been among the most essential regulations and industrial policies in guiding foreign investment. The New Catalogue … Continue Reading

Details Of 2012 Annual Inspection Of Foreign-Invested Enterprises Announced

The Ministry of Commerce, Ministry of Finance, General Taxation Administration Bureau, State Administration for Industry and Commerce, National Bureau of Statistics and State Administration of Foreign Exchange (“SAFE”) have recently released the “Notice on Implementing the Joint Annual Inspection of Foreign-Invested Enterprises in 2012” (“Notice”). Pursuant to the Notice, the time period for the joint … Continue Reading

Six Ministries and Commissions to Join Force to Administer the Renminbi Settlement of Export Trade

On February 23, 2012, the People’s Bank of China, Ministry of Finance, MOFCOM, State Administration of Taxation, General Administration of Customs and China Banking Regulatory Commission jointly issued the Notice on the Administration of Company Settling Export Trade in Renminbi (YinFa [2012] No. 23). According to this notice, company will be subject to “key supervision … Continue Reading

Regulatory Challenges for the “Big Four”

By Amin Amirkia The “Big Four”, which dominate the Chinese market, are facing regulatory changes that could mean that only accountants with Chinese qualifications can be partners in their China-based audit practices. At the time of China’s accession to the World Trade Organization in 2001, the Big Four successfully lobbied to have an exception to … Continue Reading

China Anti-Monopoly Law: What might we see in 2012?

On February 16, 2012 the Beijing office of Sheppard Mullin had a reception to celebrate the opening of new office space in China World Trade Center in the central business district. Firm Chairman Guy Halgren welcomed our 120-plus guests. Prior to the reception, Sheppard Mullin hosted a roundtable discussion on the Anti-Monopoly Law of China … Continue Reading

Loosening Current Restrictions, While Implementing New Ones–Notice on Further Improving the Administrative Measures for Foreign-Funded Investment Companies Issued

The Ministry of Commerce and the State Administration of Foreign Exchange jointly released the Notice on Further Improving the Administrative Measures for Foreign-Funded Investment Companies (“the Notice”) on Dec 8, 2011. While amending some of the current regulations on foreign-invested investment companies, the Notice also sets some new restrictions.… Continue Reading

SAIC Issued Administrative Measures for Corporate Debt-for-Equity Swap Registration

Responsive to issues faced with difficulty in obtaining financing by businesses (particularly small- to medium-size enterprises) due to the global financial crisis, State Administration of Industry and Commence officially released Administrative Measures for Corporate Debt-for-Equity Swap Registration (the “Measures”) recently, which formalizes regulation of debt-for-equity swap on the national level. The Measures will be put … Continue Reading

New Developments for Foreign Special Purpose Companies and Round-Trip Investment

The State Administration of Foreign Exchange of the People’s Republic of China (“SAFE”) is the principal gatekeeper for incoming and outgoing investment made in foreign currency. SAFE wields tremendous influence over capital inflows and outflows and, as such, the rules it promulgates can significantly affect inbound investments. Recently, SAFE issued Circular 19, the ‘Operating Rules … Continue Reading

China’s Supreme People’s Court Issues Notice on Trial of Cases Involving Transfers of Nonperforming Assets to Foreign Investors

According to the Supreme People’s Court, when foreign investors purchase non-performing assets from Chinese firms and collect payments from the original borrower/guarantor it somehow changes the nature of the original guarantee. Consequently, on October 27, 2010, the Supreme People’s Court issued Notice on Trial of Cases Involving Issues of Validity of Guarantee Contracts Related to Use … Continue Reading

China Ends an Era of Special Tax Treatments for Foreign Companies and Individuals

Beginning December 1, 2010, foreign-invested enterprises, foreign enterprises, and foreign individuals are now required to pay the city maintenance and construction tax as well as the education surcharge, from which these entities and individuals were formerly exempt. Prior to this regulation, the PRC levied those taxes only on Chinese-owned and funded enterprises and Chinese citizens.… Continue Reading

New Rules on the Litigation of Cases Involving Foreign Investment Enterprises

In a new effort to bring clarity to regulations on the trial of cases involving Foreign Investment Enterprises (FIEs) in China, the Supreme People’s Court, the country’s highest court, implemented on August 16, 2010 Provisions on Issues Concerning Trial of Cases Relating to Foreign Investment Enterprises (I) (the “Provisions”). The Provisions deal mainly with cases … Continue Reading

China’s Recent Real Estate Policies

78 Centrally administered State-owned enterprises ordered to withdraw from real estate development. Soon after the NPC (the National People’s Congress) and CPPCC (the Chinese People’s Political Consultative Conference) sessions, during which the top authorities expressed concerns over housing prices and possible intentions to control the property bubble, Beijing’s land prices reached record highs, and the … Continue Reading

China Issues New Rules For Non-Resident Enterprise Income Tax

On February 20, 2010, the State Administration of Tax (the “SAT”) issued “Measures on the Administration of Approval and Collection of Non-resident Enterprise Income Tax” (the “Measures”). Non-resident corporations, defined in Article 3, Paragraph 2 of the Enterprise Income Tax Law of China, are governed by the Measures regarding enterprise income tax (EIT) issues. The … Continue Reading

Beijing Encourages Foreign Investment In Private Equity Fund Management Companies

After Shanghai allowed foreign private equity and venture capital funds to incorporate in Shanghai in August 2008, Beijing recently became another pioneer in giving legal status to foreign investment funds. On December 20, 2009, Beijing Municipality released a circular entitled Interim Measures on Establishing Foreign Invested Equity Investment Fund Management Enterprises (the "Measures"). The Measures … Continue Reading
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