Foreign investors allowed to use capital contributions
November 02, 2012 | BY
clpstaff &clp articlesThe latest Provisions from the Ministry of Commerce allow foreign investors looking to use equity interests to invest in another FIE, but questions over pricing and approval authorities remain
The Ministry of Commerce (MOFCOM) issued the Tentative Provisions Involving Equity Investments of Foreign-invested Enterprises (商务部关于涉及外商投资企业股权出资的暂行规定) on September 21. They became effective on October 22.
The Provisions lay out how foreign investors can use equity interests in a Chinese company to invest in another foreign-invested enterprise (FIE). They also prevent certain foreign investors from restricted industries from investing in another FIE.
“These Provisions have paved the road for capital contribution in the form of equity interest by general foreign investors,” said David Yu, managing partner at Llinks Law Firm in Shanghai.
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