MOFCOM pushes FIVCIEs into record management
June 01, 2012 | BY
clpstaff &clp articles &A MOFCOM Notice forces FIVCIEs to record their investments with relevant ministries, but market participants don't think the move will deter foreign investors
The Ministry of Finance and Commerce (MOFCOM) issued its Notice on Improving Foreign-Invested Venture Capital Record Management (关于完善外商投资创业投资企业备案管理的通知) on May 7.
The Notice, which came into force on the same day, laid out rules to strengthen supervision and regulation of FIVCIEs.
The move echoes China's twelfth five-year plan to allocate more foreign investment to encouraged sectors and areas of national strategic importance, and comes as the government has been trying to lure more foreign investors into FIVCIEs, especially in emerging industries and modern service sectors.
The rules stipulate already-established FIVCIEs with investments in the encouraged or permitted categories of the Foreign Investment Industrial Guidance Catalogue (外商投资产业指导目录) will need to register their investments with the relevant ministry of commerce.
The rules' record management provisions include necessary registrations at the provincial and state ministry of commerce. Without provincial registration, FIVCIEs cannot invest in any companies under the Notice.
Hubert Tse, a Shanghai-based private equity partner of Boss & Young, said better record management would foster the long-term healthy development of FIVCIEs.
He was confident it was good news for foreign investors. “The government is encouraging foreign investors to set up FIVCEs and for already-established investments to increase their capital with offshore Yuan,” he said
Since the start of the year, policymakers have made a concerted effort to internationalise the currency by increasing the quota for qualified foreign institutional investors (QFII) and through allocating more dim sum bonds.
By David Tring
Further reading:
Administration of Foreign-invested Venture Capital Investment Enterprises Provisions (外商投资创业投资企业管理规定)
Foreign Investment Industrial Guidance Catalogue (Amended in 2011) 外商投资产业指导目录（2011年修订）
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