Administration of the Verification of Foreign-invested Projects Tentative Procedures

Repealed on May 17 2014: http://www.chinalawandpractice.com/Article/3398073/Measures-for-the-Administration-of-the-Check-and-Approval.html

(Promulgated by the National Development and Reform Commission on, and effective as of, October 9 2004.)

Order of the NDRC [2004] No.22

PART ONE: GENERAL PROVISIONS

Article 1: These Procedures have been formulated pursuant to the Administrative Licensing Law and the State Council, Reform of the Investment System Decision, in order to regulate the administration of the verification of foreign-invested projects.

Article 2: These Procedures shall govern the verification of such foreign-invested projects as Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, wholly foreign-owned enterprises, mergers and acquisitions of domestic enterprises by foreign business entities, and capital increases by foreign-invested enterprises.

PART TWO: VERIFICATION AUTHORITIES AND AUTHORITY

Article 3: In accordance with the classification of the Foreign Investment Industrial Guidance Catalogue, project applications for projects in the encouraged category and permitted category with a total investment (here and hereinafter including capital increases) of not less than US$100 million and projects in the restricted category with a total investment of not less than US$50 million shall be subject to the verification of the National Development and Reform Commission. Project applications for projects in the encouraged category and permitted category with a total investment of not less than US$500 million and projects in the restricted category with a total investment of not less than US$100 million shall be examined by the National Development and Reform Commission and then forwarded to the State Council for verification.

Article 4: Projects in the encouraged category and permitted category with a total investment of less than US$100 million and projects in the restricted category with a total investment of less than US$50 million shall be subject to the verification of local development and reform departments. Projects in the restricted category shall be subject to verification by provincial-level development and reform departments, and the authority to approve such projects may not be delegated to a lower level department.

If a local government has provided otherwise with respect to the verification of the aforementioned projects in accordance with relevant regulations, such provisions shall prevail.

PART THREE: PROJECT APPLICATIONS

Article 5: Project applications submitted to the National Development and Reform Commission shall contain the following particulars:

(1) the project name, term of operation and basic details on the investor(s);

(2) the scale of the project, main establishment particulars and products, the principal technologies and processes to be used, the target market(s) for the products and planned workforce;

(3) the location of the project, requirements concerning such resources as land, water, energy, etc. and consumption of principal raw materials;

(4) an environmental impact assessment;

(5) the pricing when public products and services are involved; and

(6) the total investment in the project, its registered capital, the capital contributions of each party, their methods of contribution, the financing plan and the equipment that needs to be imported and its cost.

Article 6: A project application submitted to the National Development and Reform Commission shall be accompanied by the following documents:

(1) the Chinese and foreign investors' enterprise registration certificates (business licences), commercial registration certificates, the most recently audited enterprise financial statements (including balance sheet, profit and loss statement and cash flow statement) and proofs of fund creditworthiness issued by the account opening bank;

(2) an investment proposal, and the board resolution concerning the capital increase, acquisition or merger;

(3) a letter of intent for financing issued by a bank;

(4) an opinion on the environmental impact assessment issued by the provincial-level or state administrative department in charge of environmental protection;

(5) an opinion on the zoning of the selected site issued by the provincial-level planning department;

(6) an opinion on the preliminary examination of the land for the project issued by the provincial-level or state land and resources department; and

(7) if a capital contribution is made in the form of state-owned assets or leaseholds, the confirmation document issued by the competent department.

PART FOUR: VERIFICATION PROCEDURE

Article 7: For projects that, according to the division of verification authority, are subject to the verification of the National Development and Reform Commission or the State Council, the project applicant shall submit its project application to the provincial-level development and reform authority of the place where the project will be located, which shall then forward the same to the National Development and Reform Commission after examination. Enterprise groups with independent development plans and enterprises directly under the central government may submit their project applications directly to the National Development and Reform Commission.

Article 8: If the National Development and Reform Commission, when examining a project application, needs to seek the opinion of the State Council department in charge of the industry, it shall submit a letter seeking comments and the relevant materials to such competent State Council department. The State Council department in charge of the industry shall provide its written comments to the National Development and Reform Commission within seven days of the date of receipt of the aforementioned materials.

Article 9: For key issues that require assessment and evaluation, the National Development and Reform Commission shall appoint, within five working days of the date of accepting the project application, a qualified consulting institution to conduct the assessment and evaluation. The appointed consulting institution shall submit its assessment report to the National Development and Reform Commission within the prescribed period of time.

Article 10: The National Development and Reform Commission shall complete its verification of the project application or submit its comments upon examination to the State Council within 20 working days of the date of acceptance of such application. If it cannot render its decision on verification or submit its comments upon examination within 20 working days, an extension of 10 working days may be approved by the person in charge of the National Development and Reform Commission and the project applicant shall be informed as to the reason for the delay.

The time limit for verification specified in the preceding paragraph does not include the time for the assessment conducted by the appointed consulting institution.

Article 11: The National Development and Reform Commission shall issue a written verification document to a project applicant whose project has been approved. For projects that are not approved, the project applicant shall be notified in writing of the decision, with an explanation of the reason therefor, and informed that it has the right to apply for administrative review or institute an administrative action in accordance with the law.

PART FIVE: VERIFICATION CONDITIONS AND VALIDITY

Article 12: The conditions for verification of a project application by the National Development and Reform Commission are set forth below:

(1) compliance with relevant state laws, regulations, the Foreign Investment Industrial Guidance Catalogue and/or the Guiding Foreign Investment in the Dominant Industries of the Central and Western Regions Catalogue;

(2) compliance with the requirements of the medium to long-term plans for the development of the national economy and society, the industry plan and the policy for the adjustment of the industrial structure;

(3) compliance with the public interest and relevant state anti-monopoly provisions;

(4) compliance with land use plans, the urban master plan and environmental protection policies;

(5) compliance with the technical and process standards prescribed by the state; and

(6) compliance with relevant state provisions on administration of the capital account and control of foreign debts.

Article 13: The project applicant shall carry out the procedures relating to land use, urban planning, quality supervision, work safety, use of resources, enterprise establishment (or modification), administration of the capital account, equipment import and applicable tax policies, etc. in accordance with the law on the strength of the verification document issued by the National Development and Reform Commission.

Article 14: The verification document issued by the National Development and Reform Commission shall specify its term of validity. During the term of validity, the verification document shall be the basis for the carrying out by the project applicant of the relevant procedures specified in Article 13 hereof. If the project applicant carries out the aforementioned relevant procedures after the expiration of the term of validity, it shall additionally present the document issued by the National Development and Reform Commission that authorizes the extension of the said verification.

Article 15: The land, urban planning, quality supervision, work safety regulation, industry and commerce, customs, tax and exchange control departments, etc. may not carry out the relevant procedures for foreign-invested projects that have not been granted verification.

Article 16: If a project applicant has used such improper means as breaking the project into smaller parts, providing fraudulent materials, etc. in order to obtain a project verification document, the National Development and Reform Commission may revoke the verification document for the project.

Article 17: The National Development and Reform Commission may supervise and inspect the implementation of projects by project applicants and the verification of foreign-invested projects by local development and reform departments, and handle problems it ascertains in accordance with the law.

PART SIX: AMENDMENT AND VERIFICATION THEREOF

Article 18: An application for amendment shall be submitted to the National Development and Reform Commission for a project approved by the National Development and Reform Commission if:

(1) a change in the place of establishment occurs;

(2) a change in investor or equity occurs;

(3) a change in the main establishment particulars or main products occurs;

(4) the total investment exceeds the approved investment amount by 20% or more; or

(5) another circumstance arises that, in accordance with relevant laws, regulations or industrial policy, requires amendment.

Article 19: The procedures for amendment of verification shall, mutatis mutandis, be handled in accordance with the provisions of Part Four hereof.

PART SEVEN: SUPPLEMENTARY PROVISIONS

Article 20: Provincial-level development and reform authorities shall, within 20 working days of the date of verifying projects, forward copies of the project verifications for locally verified foreign-invested projects with a total investment of not less that US$30 million to the National Development and Reform Commission, so that information on verified projects is available in a timely manner.

Article 21: All provincial-level development and reform departments shall formulate commensurate administrative procedures based on the Guiding the Direction of Foreign Investment Provisions (Order No.346 of the State Council) and these Procedures.

Article 22: Investment projects to be established in Mainland China by investors from the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan shall, mutatis mutandis, be handled in accordance with these Procedures.

Article 23: The National Development and Reform Commission is in charge of interpreting these Procedures.

Article 24: These Procedures shall be implemented as of October 9 2004. In the event of a conflict between previous provisions on the examination and approval of foreign-invested projects and these Procedures, these Procedures shall prevail.