ANNOUNCED AS TEMPORARYNo
FDI: Entry and ownership rule
On 17 May 2014, the the NDRC (National Development and Reform Commision) issued Order No.12 amending the restrictions for foreign investment projects (henceforth: FIPs). Under the new rules, fewer foreign investment projects are subject to mandatory approval by the NDRC.
FIPs include all sorts of foreign investments in Mainland China, inter alia cooperative joint ventures, foreign investment partnerships, domestic firms merged by foreign investments, fully foreign-owned entities or related capital increases.
Furthermore, the Chinese government defines all sectors into three categories: encouraged, permitted and restricted. Investors ought to check in the Foreign Investment Industrial Guidance Catalogue (henceforth: "the Catalogue"), which sector belongs to which category.
With the new provisions in place, FIPs in the restricted sectors will have to be reported to the NDRC, if they include investments of at least 50 million USD. The same requirement will hold for FIPs in the encouraged category for investments of at least 300 million USD.
FIPs in the restricted sectors worth less than 50 million USD (as well as all real estate investments in the restricted category) will have to obtain an approval from the provincial government. Meanwhile, FIPs in the encouraged sectors worth less than 300 million USD shall apply for an approval with the local authorities. All remaining FIPs (i.e. those in the permitted category) will simply have to register with the local government and not seek formal approval.
Previously, all investments required an approval from the NDRC, prolonging the investment registration process.
The restrictions came into force on 17 June 2014.
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