Ministry of Foreign Trade and Economic Cooperation and State Administration for Industry and Commerce, Merger and Division of Foreign Investment Enterprises Provisions (Revised)

Promulgated: November 22 2001
Effective: as of date of promulgation
Interpreting authority: Ministry of Foreign Trade and Economic Cooperation and State Administration for Industry and Commerce

Main contents: The revised Provisions now allow foreign investment enterprises (FIEs) to merge with domestic enterprises if all investors have made its capital contributions or provided its cooperation conditions in full in accordance with the enterprise's contract and articles of association (Article 9).
Article 18 is newly added, which stipulates that the merger of a FIE and a domestic enterprise creates a new FIE. The total amount of investment of the new FIE should be the sum of the total amount of investment of the old FIE and the total amount of assets of the domestic enterprise as stated on the financial and audit report. The registered capital of the new FIE should be the sum of the registered capital of the old FIE and the domestic enterprise.
Article 19 is also newly added, which stipulates that enterprises established by the domestic enterprise before its merger with the FIE become enterprises in which the merged enterprise holds shares.
The revised Provisions also have additional stipulations with respect to the funds used by the foreign investor to purchase equity of the domestic enterprise (Article 36).
Related legislation: PRC, Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21