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 19The 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 20The 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 22In 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 23Prior 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 24The MOFTEC and SAIC are responsible for the interpretation of these Regulations. Article 25 These Regulations shall come into force from September 1, |
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