Shenzhen City, Pilot Projects for the Reform of the Examination and Approval of Overseas Investments Implementing Plan

Issued: May 27 2003
Effective: June 2003
Interpreting authority: Bureau of Foreign Trade and Economic Cooperation of Shenzhen City
Applicability: "Overseas investments" means business activities such as import and export trade, production and processing, exploitation of resources, contracting projects, labour cooperation, transportation, tourism, research and development, consultancy, holding controlling investments as well as other ways of investments permitted by the State engaged by all types of enterprise legal persons lawfully registered in Shenzhen by establishment of enterprises (organizations) in the form of wholly-owned enterprises, or equity or cooperative joint ventures (Item One).

Main contents: Any type of enterprise legal person may carry out overseas investments. Certain enterprises, such as those engaged in import and export trade, contracting projects and labour cooperation, should be qualified in the business in which they are engaged and have considerable business performance in the investing country or region. Investors may carry out such investments in money, physical goods or industrial property rights, proprietary technology, etc. by means of establishment of new enterprises, merger and acquisitions, injecting the relevant rights and interests in domestic assets in the overseas enterprise, etc. (Item Two). Items Three and Four detail the application procedures. Item Five deals with the administration of such overseas enterprises (organizations). The share equity of an overseas enterprise may not be held in the name of a person except in a special circumstance, where an entrusting agreement must be notarized in China. State-owned or controlled overseas enterprises are prohibited to be involved in certain high-risk businesses such as real property, securities, foreign exchange and futures investment. If the enterprise makes a loss for three consecutive years and the situation remains the same after rectification, it should be terminated or go bankrupt.
Related legislation: Pilot Projects for Expanding the Examination and Approval Authority for Overseas Investments Official Reply, 2003 and Issues Relevant to Properly Handling the Pilot Projects for Examination and Approval of Overseas Investments Circular, 2003