China foreign investment catalogue 2020

Finance and Banking. Approval, verification or record filing on and after 30 July Homework is therefore required.

Background

Please contact customerservices lexology. Recent developments continue to show the Negative List moving towards a single exhaustive list of all market-entry restrictions on foreign investment, with the aim of having no such restrictions in laws and regulations outside the Negative List by the end of More reform in the cayalogue trade zones chia expected, though the extent of the further changes to the Negative List in the free trade zones has so far been confined to removal of restrictions on foreign ownership in the marine produce and publishing sectors. It should be noted that restrictions on foreign ownership continue to exist invesyment key sectors of the economy, such as telecommunications, e-commerce, education, hospitals, aviation and rare earth industries. Restrictions also continue to apply in the auto sector, although a timetable had been set for these to be china foreign investment catalogue 2020 out by

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The ICLG to: Foreign Direct Investment Regimes — China covers foreign investment policy, law and scope of application, jurisdiction and procedure and substantive assessment in 23 jurisdictions. At the same time, according to Article 35 of the new Foreign Investment Law coming into effect next year, the state shall establish a Safety Review System over foreign investment, designed to evaluate specific foreign investment projects affecting or having the possibility to affect national security. The Negative List is a list of industrial sectors and business types that are prohibited to foreign investors. Because the new Foreign Investment Law will be coming into force in early , the provisions of the previous Foreign Investment Law will not be discussed in this chapter. However, China has a consistent record as to what industries touch on key strategic areas. China has always been particular about control of and access to information and media within the country and the related effect on social stability.

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The ICLG to: Foreign Direct Investment Regimes — China covers foreign investment policy, law and scope of application, jurisdiction and procedure and substantive assessment in 23 jurisdictions. At the same time, according to Article 35 of the new Iinvestment Investment Law coming into fkreign next year, the state shall establish a Safety Review System over foreign investment, designed to evaluate specific foreign investment projects affecting or having the possibility to affect national security.

The Negative List is a list of industrial sectors and business types that are prohibited to foreign investmwnt. Because the new Foreign Investment Law will be coming into investkent in earlythe provisions of the previous Foreign Investment Law will not be discussed in this chapter. However, China cataloguf a consistent record as to what industries touch on key strategic areas. China has always been particular about control of and access to information and media within the country and the related effect on social stability.

As such, industries with a publishing or information technology angle are broadly restricted or prohibited from foreign investment. Foreign investment is not allowed in the media, education, and telecommunications industries in particular. Likewise, any online business model where the operator may have access to a significant amount of user personal data is restricted from foreign investment. To date, there has not been a comprehensive National Security Review process for all foreign investment into China.

Is the acquisition of minority interests caught? Moreover, the company type and foreign investment industry also has categories of encouraged, prohibited and restricted areas.

No foreign investor may engage in the prohibited items listed in the Negative List and no foreign-invested partnership may be established for engagement in prohibited items subject to the limitations on proportion of foreign investment.

Where foreign service providers are required to meet the requirements for approval, safety assessment and senior management in providing news or cultural services including those related to the internet in China, the existing relevant provisions shall apply. Are there any sector-specific review mechanisms in place? There are no specific rules for National Security Review of specific subsets of foreign investors, such as State-Owned Enterprises.

If so, what is the nature of such requirement existence of subsidiaries, assets. However, the April Announcement No. Are there any monetary thresholds? Are there any filing fees?

There is no separate filing process at this time for National Security Review procedures. However, this investent is for informational purposes only and comments provided by the Ministry of Commerce during this process cannot be relied on as a final determination of uncertain matters.

The final word on a particular issue can only come via a final decision on the formal application. A notarised and legally authenticated copy of the identity certificate or registration certificate and credit standing certificate of the foreign investor; the identity certificate of the legal representative or the power of attorney for and the identity certificate of the authorised representative of the foreign investor. A statement on the information of the foreign investor and its affiliated enterprises including the actual controller and persons acting in concert thereofand a statement on its relationship with the governments of relevant countries.

Authorities may force divestiture, or transfer of equity or assets sufficient to relieve national security concerns. Are there any provisions expediting the clearance? If the Ministry of Commerce fails to notify the applicant in writing after 15 working days, the applicant may carry handle relevant procedures according to the relevant laws and regulations of the state. In the former case, does the review have a suspensory effect on the closing of the transaction? Are there any penalties if the parties implement the transaction before approval is obtained?

The review must be obtained prior to closing, and the deal may not proceed while the transaction is under review. In case of transactions that may influence the national safety and that have been carried out, the parties concerned shall terminate the transactions.

If so, what are the requirements, and do they have any particular rights during the procedure? There are no requirements or regulations concerning whether or not the third party can be involved or granting cxtalogue third party any rights during the procedure. Decisions are not publicised by the government and commercial information and business secrets are largely protected.

There is no clearly specified test beyond the question of whether the iinvestment has an effect on national security which is deemed unacceptable by the Ministerial Panel.

There is no formal burden of proof beyond supplying the evidence and documentation requested by the Ministerial Panel. There are no clear criteria as regards activities of foreign subsidiaries in other jurisdictions.

This also means that there is nothing preventing authorities from taking such activities into account. We would expect the national Security Review to be more expansive rather than less, where there are potential areas of concern. As a body established by the State Council, the Ministerial Panel has total discretion and complete power to approve or reject transactions for any reason.

Is the relevant procedure administrative or judicial in character? The decision made upon catalogeu Safety Review, in accordance with the law, shall be final. Therefore, there is no way to challenge or appeal the decision. This may be possible on a case-by-case basis. Parties may apply for revision of the transaction terms. What is the recent enforcement practice vhina the authorities? There have not been many publicised examples of the National Security Review process in action.

Anti-Monopoly Review procedures are common; however, national security aspects are rarely mentioned. However, there is one very recent example.

The case attracted attention in China as the supermarket industry is not normally one associated cataligue national security concerns. Notably in this case, the investors did not initiate the National Security Review process independently. The notice that an additional National Security Review was required came only after the transaction had already received standard approval for the acquisition per the Anti-Monopoly Review.

This was the first National Security Review of foreign investment that has been publicly reported after the NDRC took over the review process in April The guidance specifically states that foreign investors may not evade the Security Review through indirect means such as holding via trust, multi-tier reinvestment structures, leasing, loan, control by agreement, or conducting transactions overseas.

This means that the Security Review not only limits direct acquisition, but includes any transaction identified by Chinese authorities as having potential undue national security implications.

Foreign Investment Policy 1. The investors shall be responsible for obtaining the necessary approval. Other documents required by the Ministry china foreign investment catalogue 2020 Commerce. There is no separate procedure for the National Security Review process at this time. Approvals are required from the: 1. Administration of Industry and Commerce; 2. State Administration of Foreign Exchange; and 4. Customs Registration for Import and Export.

Understanding China’s new foreign investment law

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Foreign investors need to be aware that particular sectors not listed in a Negative List may nonetheless china foreign investment catalogue 2020 subject to restrictions due either to other industrial policies or the requirement to china foreign investment catalogue 2020 a particular industry license that may be difficult to obtain. The main adjustments are listed as below:. More Advice Centers. Follow Please login to follow content. In particular, the Central and Western Catalogue promotes labor-intensive industries, Appropriate Technology industries, and the construction of supporting facilities. Homework investmfnt therefore required. Confirmation of Domestic and Foreign Investment Projects Encouraged by the State issued by the competent investment authorities in accordance with the Encouragement Catalogue Edition Relevant documents issued by the competent commerce bureau in accordance with the Encouragement Catalogue Editionsuch as approval for the establishment capital increase of foreign-invested enterprises or the record filing receipt for the establishment change of foreign-invested enterprises.