The recent amendment of four laws relating to foreign-invested enterprises (FIEs) by the National People's Congress (NPC Decision) and the promulgation of the draft Tentative Measures for the Administration of the Record Filing of the Establishment of, and Changes to, Foreign-invested Enterprises (Draft Measures) by the Ministry of Commerce (MOFCOM) on September 3, 2016 represent a significant step towards the further relaxation of China's regime on the administration of FIEs.

Under the NPC Decision and Draft Measures, a record filing system for the establishment and administration of corporate changes of FIEs will be implemented on a nationwide basis from October 1, 2016.

Record filing and negative list

The Draft Measures, once promulgated, means a nationwide launch of the record filing system now in place in the four free trade zones (FTZs) of China. A new “negative list” for foreign investment setting out the “industries that are subject to special administrative measures for entry” (i.e. restricted industries) will be promulgated simultaneously with the official release of the Draft Measures. It is also expected that the Negative List will be similar to the one currently being adopted in the FTZs.

Under the record filing system, only foreign investment in the restricted industries will still be subject to the examination and approval by MOFCOM and/or its local counterparts (Commerce Authority). The establishment and corporate changes of FIEs outside of these restricted sectors only need to be reported to the Commerce Authority, which traditionally serves as the “gatekeeper” in scrutinizing any formation or corporate changes of an FIE.