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Provisional Regulations governing Investment within the Territory
by Foreign Investment Enterprises
Article 1
These Regulations are formulated in accordance with the relevant
regulations of the PRC, Company Law (hereinafter ¡°Company
Law¡±) and the laws and regulations concerning
foreign investment in order to regulate the investment activities
of FIEs.
Article 2
Investment within the territory of FIEs referred to in these
Regulations means activities of establishing enterprises through
investment or purchasing equity interests of investors of
other enterprises (hereinafter ¡°Invested Companies¡±)
within the territory of China by sino-foreign equity joint
ventures, sino-foreign contractual joint ventures, wholly
foreign owned enterprise and a joint stock limited company
with foreign investment in their own name, which are with
the form of company with limited liability.
In case any company with an investment nature established
by foreign investors intends to invest within the territory,
it shall go through the formalities according to the laws
and regulations of the State concerning the foreign investment
and the Provisional Regulations governing the Establishment
of Companies with an Investment Nature by Foreign Investment.
In case foreign investors and FIEs jointly invest within
the territory of China, they shall go through the formalities
according to the laws and regulations of the State concerning
the foreign investment. In such case the ratio of the contributions
by the foreign investors shall account for not less than 25%
of the registered capital of the Invested Companies.
Article 3
Any FIE that intends to invest within the territory shall
abide by the laws and regulations of the State.Investment
within the territory by FIEs shall follow the regulations
of the Provisional Regulations on Foreign Investment Guidelines
and the Guideline Catalogue of Foreign Investment Industries
by referrence.
FIEs are not permitted to invest in the fields in which foreign
investment is prohibited.
Article 4
The Invested Company shall be a limited liability company
or a joint stock limited company.
Article 5
FIEs can not invest until the following conditions are met:
Their registered capital has been fully paid in;
commencing to make profit;
conducting business in accordance with law and not having
the record of illegal operations.
Article 6
In case any FIE intends to invest within the territory, its
aggregated investment amount shall not exceed 50% of its own
net assets; while calculating such amount, the capital increased
by profits accruing to the Invested Company after its investment
shall not be included in the amount.
Article 7
Any FIE that intents to invest and establish a company in
the fields of the encouraged category or the permitted category
shall apply to the company registration authority at the place
where the Invested Company is or to be located and submit
the following documents:
The unanimously approved resolution of the board of directors
of the FIE concerning the investment;
the approval certificate and the business license (copies)
of the FIE;
the investment verification report issued by the legally designated
investment verification organisation evidencing that the registered
capital has already been fully paid up;
the audited balance sheet of the FIE;
the documents evidencing the payment or deduction/exemption
of the income tax of the FIE;
other documents required by the laws, regulations and rules.
Article 8
The company registration authority shall, according to the
relevant regulations of the Company Law and the Administrative
Rules of PRC on the Registration of Companies (hereinafter
referred to as the ¡°Administrative Rules on the
Registration of Companies¡±), decide whether
the registration is permitted or not. In case the registration
is permitted, the company registration authority shall issue
the Business License of Enterprise Legal Person and mark ¡°Invested
in by FIE¡± in the column of enterprise type
thereof (hereinafter referred to as the ¡°(Marked
Business License¡±).
Article 9
Any FIE that intends to invest and establish a company in
the fields of the restricted category shall apply to the competent
authority for foreign trade and economy at the provincial
level (hereinafter referred to as the ¡°Examination
and Approval Authority at the Provincial Level¡±)
of the place where the Invested Company is or is to be located
and submit the following documents:
The documents to be provided according to Article 7;
The articles of association of the Invested Company.
The articles of association of the Invested Company shall
contain the following items:
(1) Name and domicile of the company;
(2) business scope and the ratio of products to be sold domestically
and internationally of the company;
(3) registered capital of the company;
(4) company names or individual names of of the Invested
Company¡¯s investors;
(5) rights and obligations of investors;
(6) contribution method and amount of investors;
(7) conditions of transfer of capital contribution;
(8) organisations of the company and their formation, authority
and rules of procedure;
(9) legal representative of the company;
(10) dissolution reasons and liquidation method of the company;
other matters deemed necessary by investors of the Invested
Company.
Investors shall sign and seal in the articles of association
of the company.
Article 10
The Examination and Approval Authority at the Provincial Level
shall, after receiving the above application, according to
the business scope of the Invested Company, ask for opinions
of the administrative department for industry at the same
level or of the State.
The Examination Authority at the Provincial Level shall issue
a written approval reply within 10 days after obtaining the
opinions of consent or dissent from the administrative department
for industry at the same level or of the State.
Article 11
In case the Examination and Approval Authority at the Provincial
Level has made a consent reply to the FIE, the FIE shall apply
for business registration to the company registration authority
at the place where the Invested Company is or to be located
upon the approval reply.
The company registration authority shall, according to the
relevant regulations of the Administrative Rules on the Registration
of Companies, decide whether the registration is permitted
or not. In case the registration is permitted, the ¡°Marked
Business License¡± shall be issued.
Article 12
Within 30 days upon establishment of the Invested Company,
the FIE shall report the same and file the certain documents
with the original examination and approval authority. The
documents for filing include:
FIE investment filing form;
the business license (copy) of the Invested Company;
the approval reply of consent to the establishment of the
Invested Company made by the Examination and approval Authority
at the Provincial Level shall be submitted, in case the business
scope of the Invested Company touches upon the industry fields
of the restricted category.
Article 13
Any FIE intends to invest with its fixed assets and thereby
change its original business scale or content shall apply
to the original examination and approval authority and obtain
the consent of the original examination and approval authority
prior to the investment.
The original examination and approval authority shall give
a reply within 15 days upon receiving the application; if
it delays to give a reply, the consent shall be deemed given.
In case the original examination and approval authority disagree,
the FIE may appeal to the examination and approval authority
at a higher level or the Ministry of Foreign Trade and Economy
Cooperation (hereinafter referred to as the ¡°MOFTEC¡±).
The examination and approval authority at a higher level or
the MOFTEC shall, within 30 days upon receiving the appeal,
make a written reply to the FIE.
Article 14
In case any company established according to Article 7 and
8 of these Regulations intends to change the business scope
and thereby touches the fields of the restricted industry
category, it shall go through the formalities according to
Article 9 and 10 of these Regulations and apply to the original
company registration authority for amendment registration.
Article 15
In case any FIE intends to purchase equity interests of the
investors of the Invested Company and the business scope of
the Invested Company belongs to the fields of the encouraged
category or the permitted category, the Invested Company shall
submit the documents listed in Article 7 of these Regulations
to the original company registration authority and apply for
amendment registration according to the relevant regulations
of the Administrative Rules on the Registration of Companies.
In case the business scope of the Invested Company touches
upon the fields of the restricted category, after the FIE
has gone through the formalities according to Article 9 and
10 of these Regulations, the Invested Company shall, upon
the consent approval reply of the Examination and Approval
Authority at the Provincial Level, apply to the original company
registration authority for amendment registration according
to the relevant regulations of the Administrative Rules on
the Registration of Companies.
The company registration authority shall, according to the
relevant regulations of the Administrative Rules on the Registration
of Companies, decide whether the registration is permitted
or not. In case the registration is permitted, (the original
company registration authority) shall issue the ¡°Mmarked
Business License¡±.
In case the Invested Company belongs to FIEs, the case shall
be handled according to the Several Regulations on Changes
in Equity Interest of Investors in FIEs.
Article 16
In case any FIE intends to invest in the central and/or west
regions and the foreign investment accounts for not less than
25% of the Invested Company, the Invested Company may enjoy
the FIE treatment.
Article 17
Any qualifying Invested Company that intends to enjoy the
FIE treatment shall, according to the regulations governing
the FIE establishment procedure, apply to the Examination
and Approval Authority at the Provincial Level where the Invested
Company is or to be located. The applicant shall submit the
following documents:
The documents as provided in Article 7;
the name and domicile of the Invested Company;
investment contract and articles of association of the Invested
Company;
the project proposal letter and feasibility study report
for establishing the Invested Company shall be submitted,
in case the business scope of the Invested Company touches
upon the fields of the restricted category.
In case the Invested Company, whose investors assign their
equity interests, enjoys the FIE treatment, the applicant
shall, in addition to submit the documents listed in the previous
paragraph to the Examination and Approval Authority at the
Provincial Level where the Invested Company is or to be located,
submit the respective agreement on transfer of equity interest
of investors.
Article 18
In case the Examination and Approval Authority at the Provincial
Level confirms that the investment of FIE conforms with the
relevant laws and regulations of the State, and the ration
of foreign investment in the registered capital of the Invested
Company is not lower than 25%, it shall issue the approval
document and ¡°FIE Approval Certificate¡±
marked with ¡°Invested by FIE¡± to
the applicant.
In case the business scope of the Invested Company touches
upon the fields of the restricted category, the Examination
and Approval Authority at the Provincial Level shall, prior
to approval, ask for opinions of the relevant industry administrative
departments according to the regulations of Article 10 of
these Regulations.
Article 19
The applicant shall, upon the ¡°FIE Approval Certificate¡±,
apply for registration to the company registration authority
at the place of the Invested Company is or to be located.
The company registration authority shall, according to the
relevant regulations of the Administrative Rules on the Registration
of Companies, decide whether the registration is permitted
or not. In case the registration is permitted, the ¡°Marked
Business License¡± shall be issued.
In case the business scope of the Invested Company touches
upon the fields of the restricted category, the case shall
be handled according to Article 7 of these Regulations.
Article 20
The Invested Companies in the middle and/or west regions shall,
upon the ¡°FIE Approval Certificate¡±
and the ¡°(marked) Business License¡±,
enjoy the FIE treatment stipulated in the laws and regulations
of the State.
Article 21
In case the total investment of an Invested Companies established
in the central and/or west regions exceeds the examination
and approval power of the examination and approval authority
of the province, autonomous region or directly administrated
municipality where it locates or to be located, the case shall
be submitted to MOFTEC for approval.
Article 22
In case the Invested Company a foreign investment enterprise
which falls into a special category or industry, and such,
is expressly required by laws, regulations or government department
rules to be examined and approved by MOFTEC, the Examination
and Approval Authority at the Provincial Level shall forward
the relevant application documents to MOFTEC for approval.
MOFTEC shall, according to the regulations of the laws, regulations
and department rules, decide whether to grant its approval
or not.
Article 23
Prior to the promulgation of these Regulations, any enterprise
with equity participation by FIEs established according to
the relevant regulations, which meets the requirements of
these Regulations, may make up for the relevant procedures
by making reference to these Regulations and enjoy the FIE
treatment.
Article 24
The MOFTEC and SAIC are responsible for the interpretation
of these Regulations.
Article 25
These Regulations shall come into force from September 1,
2000.
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