Tentative Measures for the Administration of the Record Filing of the Establishment of, and Changes in, Foreign-invested Enterprises (2nd Revision)

(Promulgated by the Ministry of Commerce on June 29, 2018, and effective as of June 30, 2018.)

 

Order of MOFCOM [2018] No.6

 

Part One: General Provisions

 

Article 1: These Measures have been formulated pursuant to the PRC Sino-foreign Equity Joint Venture Law, the PRC Sino-foreign Cooperative Joint Venture Law, the PRC Wholly Foreign-owned Enterprise Law, the PRC Company Law and related laws, administrative regulations and State Council decisions in order to further expand opening to the outside world, promote reform of the foreign investment administration regime and improve a business environment that is characterized by the rule of law, is internationalized and is more convenient.

 

Article 2: These Measures shall apply where the establishment of, or changes in, a foreign-invested enterprise does/do not involve the implementation of the special administrative measures for access specified by the state.

 

Article 3: The State Council's commerce department shall be responsible for the overall planning and guidance of the work associated with the administration by means of record filing of the establishment of, and changes in, foreign-invested enterprises nationwide.

 

The competent commerce departments of the provinces, autonomous regions, municipalities directly under the central government, cities with independent development plans, the Xinjiang Production and Construction Corps and sub-provincial municipalities as well as the relevant departments of pilot free trade zones and national economic and technological development zones are the record filing authorities for the establishment of, and changes in, foreign-invested enterprises and shall be responsible for the administration work associated with the administration by means of record filing of the establishment of, and changes in, foreign-invested enterprises in their jurisdictions.

 

Record filing authorities shall carry out their record filing work through the information system for comprehensive administration of foreign investment (the Comprehensive Administration System).

 

Article 4: A foreign-invested enterprise or its investors shall provide true, accurate and complete record filing information in accordance herewith, and the record filing undertaking completed by it/them may not contain false records, misleading statements or material omissions. A foreign-invested enterprise or its investors shall duly keep the supporting documentation relating to the submitted record filing information.

 

Part Two: Record Filing Procedures

 

Article 5:   Where the establishment of a foreign-invested enterprise falls within the scope of record filing specified herein, the representative designated or the agent jointly appointed by all of the investors (or the board of directors of a foreign-invested company limited by shares) shall, when applying to the administration for industry and commerce or market regulation department for the registration of establishment, at the same time submit online the record filing information for the establishment of a foreign-invested enterprise.

Where an enterprise that is not a foreign-invested enterprise is transformed into a foreign-invested enterprise through an acquisition, merger by absorption or other such means and the same falls within the scope of record filing specified herein, the record filing information for the establishment of a foreign-invested enterprise shall at the same time be submitted online when applying to the administration for industry and commerce or market regulation department for the amendment of registration.

The record filing authority shall commence the record filing procedures and also notify the investors thereof once it receives the record filing information sent by the administration for industry and commerce or market regulation department.

 

Article 6: Where any of the following changes in a foreign-invested enterprise that falls within the scope of record filing specified herein occurs, the representative designated or agent appointed by the foreign-invested enterprise shall complete and submit a Form for a Change to the Record Filing of a Foreign-invested Enterprise (a Change Filing Form) and related documents online through the Comprehensive Administration System within 30 days after the occurrence of the change and carry out the procedures for a change to the record filing:

 

(1) a change in the foreign-invested enterprise's basic particulars, including a change in its name, registered address, enterprise type, term of operations, industry invested in, business type, scope of business, whether it falls within the scope of enterprises eligible for tax and duty exemptions or reductions for imported equipment as specified by the state, registered capital, total investment, composition of organizational structure, legal representative or the particulars, contact person and contact information of the ultimate de facto controller of the foreign-invested enterprise;

 

(2) a change in the basic particulars of an investor of the foreign-invested enterprise, including a change in his/her/its name, nationality/region or address (place of registration or registered address), type of identity/organization document and number, capital contribution amount subscribed for, capital contribution method, capital contribution deadline, source of funds or investor type;

 

(3) a change in the basic particulars of the transaction when a foreign-invested enterprise is established by means of an acquisition;

(4) a change in equity (shares) or cooperation interests;

 

(5) a merger, division or termination of business;

 

(6) mortgage or transfer of property rights and interests of a wholly foreign-owned enterprise to a third party;

 

(7) early recovery of its investment by the foreign party in a Sino-foreign cooperative joint venture; or

 

(8) entrustment of the operations and management of a Sino-foreign cooperative joint venture to a third party.

 

Where, pursuant to relevant laws and regulations, a merger, division, capital reduction or other such matter is required to be announced, an account of the carrying out of the announcement procedures in accordance with the law shall be given when carrying out a change to the record filing.

 

Where any of the foregoing changes involves the rendering of a resolution by the highest authority, the date on which the highest authority of the foreign-invested enterprise renders its resolution shall be the date on which the change occurs. If laws or regulations set forth other requirements for the entry into effect of a change in a foreign-invested enterprise, the date on which the corresponding requirements are satisfied shall be the date on which the change occurs.

 

A main board-listed company or company listed on the National Equities Exchange and Quotations invested in by a foreign investor may carry out record filing procedures in respect of a change in the basic particulars of the investor or its shares only when a change in such investor's shareholding exceeds 5% in the aggregate or there is a change in the control or relative control of the company.

 

Article 7: If a listed company with foreign investment brings in a new foreign investor to make a strategic investment and the same falls within the scope of record filing, procedures for a change to the record filing shall be carried out within 30 days after securities registration with the securities depository and clearing institution and a Change Filing Form shall be completed and submitted.

 

Article 8: When a foreign-invested enterprise or its investors carry out the record filing procedures for the establishment of, or changes in, the foreign-invested enterprise, it/they shall upload and submit the following documents:

 

(1) the foreign-invested enterprise's name pre-approval materials or business license;

 

(2) the Undertaking in Respect of Record Filing of the Establishment of the Foreign-invested Enterprise signed by all of the investors (or Promoters) of the foreign-invested enterprise or their authorized representative, or the Undertaking in Respect of a Change to the Record Filing of the Foreign-invested Enterprise signed by the legal representative of the foreign-invested enterprise or his/her authorized representative;

 

(3) the supporting documents of the representative designated or the agent jointly appointed by all of the investors (or the board of directors of the foreign-invested company limited by shares) or the foreign-invested enterprise, including the power of attorney and the appointed person's identity document;

 

(4) the supporting documents evidencing that the investors or legal representative of the foreign-invested enterprise have/has appointed a third party to sign relevant documents, including the power of attorney and the appointed person's identity document (not required if no third party has been appointed to sign relevant documents);

 

(5) the documents evidencing entity qualifications or natural person identity documents of the investors (not required if the change does not involve a change in the basic particulars of the investors);

 

(6) the natural person identity document of the legal representative (not required if the change does not involve a change in the legal representative);

 

(7)          a chart of the equity structure of the ultimate de facto controller of the foreign-invested enterprise (not required if the changed matters do not involve a change in the ultimate de facto controller of the foreign-invested enterprise); and

 

(8)          if payment by the foreign investor by means of the equity of a qualified overseas company is involved, the Enterprise Overseas Investment Certificate of the domestic enterprise that received the equity of the overseas company.

 

If the original of any of the foregoing documents is in a foreign language, a Chinese translation thereof shall be uploaded and submitted simultaneously. The foreign-invested enterprise or its investors shall ensure that the content of the Chinese translation is consistent with the content of the foreign language original.

 

Article 9: If a change in a foreign-invested enterprise the establishment of which was subject to examination and approval occurs and after such change it is not subject to the implementation of the special administrative measures for access specified by the state, it shall carry out record filing procedures. Once it completes record filing, its Approval Certificate of a Foreign-invested Enterprise shall simultaneously become void.

 

Article 10: If a change in a foreign-invested enterprise subject to record filing is subject to the implementation of the special administrative measures for access specified by the state, it shall carry out examination and approval procedures in accordance with laws and regulations on foreign investment.

 

Article 11: Once the record filing authority has received the information on the establishment or a change to the record filing of a foreign-invested enterprise, it shall formally verify the information provided for completeness and accuracy, and determine whether the submitted particulars fall within the scope of record filing. If the same fall within the scope of record filing specified herein, the record filing authority shall complete record filing within three working days. If a particular falls outside the scope of record filing, the record filing authority shall notify the foreign-invested enterprise or its investors online within three working days to handle the matter in accordance with relevant provisions and notify relevant departments to deal with the matter in accordance with the law.

 

If the record filing authority discovers that the information provided by a foreign-invested enterprise or its investors is formally incomplete or inaccurate, or requires it/them to provide further explanation of the scope of business, it shall inform it/them one time online to submit additional relevant information online within 15 working days. The time required to provide the additional information shall not count toward the record filing authority's record filing deadline. If the foreign-invested enterprise or its investors fail(s) to provide the additional relevant information within 15 working days, the record filing authority shall inform it/them online that record filing has not been completed. The foreign-invested enterprise or its investors shall separately apply to the record filing authority for supplementary record filing of information in respect of the same establishment or change within five working days.

 

The record filing authority shall post the record filing outcome on the Comprehensive Administration System, and the foreign-invested enterprise or its investors may check information on the record filing outcome on the Comprehensive Administration System.

 

Article 12: Once record filing is completed, the foreign-invested enterprise or its investors may collect the Acknowledgement of Record Filing of the Establishment of a Foreign-invested Enterprise or Acknowledgement of a Change to the Record Filing of a Foreign-invested Enterprise (a Record Filing Acknowledgement) from the record filing authority on the strength (of a photocopy) of the foreign-invested enterprise's business license.

 

Article 13: The Record Filing Acknowledgement issued by a record filing authority shall contain the following information:

 

(1) that the foreign-invested enterprise or its investors has/have submitted the materials for the record filing of establishment or a change and that they satisfy the formal requirements;

 

(2) the establishment or changed particulars of the foreign-invested enterprise placed on the record;

 

(3) that the establishment of, or change in, the foreign-invested enterprise falls within the scope of record filing; and

 

(4) whether the foreign-invested enterprise falls within the scope of those eligible for tax and duty exemptions or reductions on imported equipment as specified by the state.

 

Part Three: Oversight

 

Article 14: The competent commerce department shall conduct monitoring inspections of the compliance with these Measures by foreign-invested enterprises and their investors.

 

The competent commerce department may conduct a monitoring inspection by means such as a random inspection, inspection conducted on the basis of a report, inspection conducted on the basis of a recommendation and the matters reported by a relevant department or judicial authority or inspection initiated ex officio.

 

The competent commerce department shall coordinate and cooperate closely with the public security, state-owned asset, customs, tax, industry and commerce, securities, foreign exchange and other such relevant administrative departments and strengthen information sharing. If, in the course of a monitoring inspection, the competent commerce department discovers a violation of laws or regulations by a foreign-invested enterprise or its investors falling outside its purview, it shall notify the relevant department thereof in a timely manner.

 

Article 15: The competent commerce department shall, in accordance with the requirements of fairness and compliance and based on the record filing numbers of foreign-invested enterprises, determine targets of inspection through a random drawing and select inspectors at random to conduct monitoring inspections of foreign-invested enterprises and their investors. The results of such random inspections shall be published by the competent commerce department on the platform for publication of foreign investment information of the Ministry of Commerce.

 

Article 16: If a citizen, legal person or other organization discovers that a foreign-invested enterprise or its investors has/have committed a violation of these Measures, he/she/it may report the same to the competent commerce department. Where the report is made in writing, there is a clear party reported and the relevant facts and evidence are provided, the competent commerce department shall conduct the necessary inspection after it receives the report.

 

Article 17: If, in the course of performing its duties, another relevant department or judicial authority discovers that a foreign-invested enterprise or its investors has/have committed a violation of these Measures, it may recommend to the competent commerce department that a monitoring inspection be conducted, and the competent commerce department shall conduct the inspection in a timely manner after it receives the relevant recommendation.

 

Article 18: With respect to a foreign-invested enterprise or the investors thereof that has/have not carried out record filing in accordance herewith, or has/have a record of fraudulent record filing, failing to cooperate in a monitoring inspection or refusal to perform an administrative penalty decision rendered by the competent commerce department, the competent commerce department may initiate an inspection thereof ex officio.

 

Article 19: The subjects of a monitoring inspection of a foreign-invested enterprise or its investors conducted by the competent commerce department shall include the following:

 

(1) whether it/they have carried out record filing procedures in accordance herewith;

 

(2) whether the record filing information provided by it/them is true, accurate and complete;

 

(3) whether investment and operational activities are being carried out in a sector in which investment is prohibited as per the implementation of the special administrative measures for access specified by the state;

 

(4) whether investment and operational activities are being carried out in a sector in which investment is restricted as per the implementation of the special administrative measures for access specified by the state without having undergone examination and approval;

 

(5) whether a circumstance triggering a national security review exists;

 

(6) whether a Record Filing Acknowledgement has been forged, altered, leased out, lent out or transferred; or

 

(7) whether or not an administrative penalty decision rendered by the competent commerce department has been performed.

 

Article 20: During an inspection, the competent commerce department may review relevant materials in accordance with the law or require that the party being inspected provide the same, and the party being inspected shall truthfully provide the same.

 

Article 21: When the competent commerce department conducts an inspection, it may not hinder the normal production and operating activities of the party being inspected, accept property or services offered by the party being inspected or seek other unlawful benefits.

 

Article 22: Information reflecting the integrity position of the foreign-invested enterprise or its investors to which the competent commerce department and the other competent departments are privy in the course of a monitoring inspection shall be recorded in the foreign investment integrity file system of the Ministry of Commerce. Where a foreign-invested enterprise or its investors fail(s) to carry out record filing procedures in accordance herewith, its/their record filing is fraudulent, it/they forge(s), alter(s), lease(s) out, lend(s) or transfer(s) the Record Filing Acknowledgement, fail(s) to cooperate in a monitoring inspection or refuse(s) to perform an administrative penalty decision rendered by the competent commerce department, the competent commerce department shall publish the relevant integrity information on the platform for publication of foreign investment information of the Ministry of Commerce.

 

The Ministry of Commerce shall share the integrity information of foreign-invested enterprises and their investors with relevant departments.

 

The integrity information published or shared by the competent commerce department in accordance with the two preceding paragraphs may not contain private personal information or trade secrets of the foreign-invested enterprise or its investors, or state secrets.

 

Article 23: A foreign-invested enterprise and its investors may check their own integrity information on the foreign investment integrity file system of the Ministry of Commerce and if it/they deem the record of the relevant information to be incomplete or to contain errors, it/they may provide the relevant supporting documentation and apply to the competent commerce department for correction thereof. If, following a check, the same is ascertained to be true, the information shall be corrected.

 

A bad faith record arising as a result of a violation hereof shall be expunged by the competent commerce department if, within three years after the foreign-invested enterprise or its investors remedied the violation of the law and performed the relevant obligations, it/they has not committed a further violation hereof.

 

Part Four: Legal Liability

 

Article 24: If a foreign-invested enterprise or its investors violate(s) these Measures by failing to punctually perform its/their record filing obligation or by making a material omission when carrying out record filing, the competent commerce department shall order it/them to rectify the matter within a specified period of time. If it/they fail(s) to do so, or if the circumstances are serious, a fine of up to Rmb30,000 shall be imposed.

 

If a foreign-invested enterprise or its investors violate(s) these Measures by evading the performance of its/their record filing obligation, withholding true information or providing misleading or false information when carrying out record filing, or forging, altering, leasing out, lending or transferring a Record Filing Acknowledgement, the competent commerce department shall order it/them to rectify the matter within a specified period of time and impose a fine of up to Rmb30,000. If another law or set of regulations is/are violated, the relevant department shall pursue its/their corresponding legal liability.

 

Article 25: Where a foreign-invested enterprise or its investors engage(s) in investment and operational activities in a sector in which investment is restricted as per the implementation of the special administrative measures for access specified by the state without having undergone examination and approval, the competent commerce department shall order it/them to rectify the matter within a specified period of time and impose a fine of up to Rmb30,000. If another law or set of regulations is/are violated, the relevant department shall pursue its/their corresponding legal liability.

 

Article 26: Where a foreign-invested enterprise or its investors engage(s) in investment and operational activities in a sector in which investment is prohibited as per the implementation of special administrative measures for access specified by the state, the competent commerce department shall order it/them to rectify the matter within a specified period of time and impose a fine of up to Rmb30,000. If it/they violate another law or set of regulations, the relevant department shall pursue its/their corresponding legal liability.

 

Article 27: If a foreign-invested enterprise or its investors evade(s), refuse(s) or otherwise impede(s) a monitoring inspection by the competent commerce department, the competent commerce department shall order it/them to rectify the matter and impose a fine of up to Rmb10,000.

 

Article 28: If a member of the relevant working personnel abuses his/her authority, is derelict in his/her duties, practices favoritism by committing fraud or solicits or accepts a bribe in the course of record filing or oversight, he or she shall be subjected to administrative sanctions in accordance with the law. If a criminal offense is constituted, his/her criminal liability shall be pursued in accordance with the law.

 

Part Five: Supplementary Provisions

 

Article 29: Where a competent commerce department has accepted the application for the establishment of, or a change in, a foreign-invested enterprise before the implementation hereof, but has not completed the examination and approval procedure and such establishment or change falls within the scope of record filing, it shall terminate the examination and approval procedures and the foreign-invested enterprise or its investors shall carry out record filing procedures in accordance herewith.

 

Article 30: If a foreign investment matter involves an anti-monopoly review, the same shall be handled in accordance with relevant provisions.

 

Article 31: If a foreign investment matter involves a national security review, the same shall be handled in accordance with relevant provisions. If a record filing authority, when carrying out record filing procedures or conducting a monitoring inspection, deems that the foreign investment matter may fall within the scope of a national security review and the investors of the foreign-invested enterprise failed to submit an application to the Ministry of Commerce for a national security review, the record filing authority shall inform the investors in a timely manner to submit an application for a security review to the Ministry of Commerce, suspend the relevant procedures and report relevant matters to the Ministry of Commerce.

 

Article 32: Investment-type foreign-invested enterprises (including companies with an investment nature and venture capital firms) are deemed foreign investors and shall be governed by these Measures.

 

Article 33: Where the investment of an investor from the Hong Kong Special Administrative Region, Macao Special Administrative Region or Taiwan does not involve the implementation of the special administrative measures for access specified by the state, matters shall be handled with reference hereto.

 

Article 34: Where in the Mainland a Hong Kong service provider only invests in a service trade sector open to Hong Kong pursuant to the Agreement on Trade in Services under the Mainland and Hong Kong Closer Economic Partnership Arrangement or in the Mainland a Macao service provider only invests in a service trade sector open to Macao pursuant to the Agreement on Trade in Services under the Mainland and Macao Closer Economic Partnership Arrangement, the record filing of the establishment of, and changes in, his/her/its company shall be handled in accordance with the Measures for the Administration of the Record Filing of the Mainland Investments of Hong Kong and Macao Service Providers (Trial Implementation).

 

Article 35: If ministerial rules or regulations or a relevant document promulgated by the Ministry of Commerce before the entry into effect hereof are or is inconsistent with these Measures, these Measures shall prevail.

 

Article 36: The relevant authorities of pilot free trade zones and national economic and technological development zones shall conduct monitoring inspections of the compliance with these Measures by foreign-invested enterprises and their investors within their zones in accordance with Part Three and Four hereof.

 

Article 37: These Measures shall be effective as of the date of promulgation. The Measures for the Administration of the Record Filing of Foreign Investment in Pilot Free Trade Zones (Trial Implementation) (Announcement of the Ministry of Commerce No.12 of 2015) shall be repealed simultaneously.

 

Attachments:

 

1. Form for Record Filing of the Establishment of a Foreign-invested Enterprise (omitted)

 

2. Form for a Change to the Record Filing of a Foreign-invested Enterprise (omitted)

 

3. Acknowledgement of Record Filing of the Establishment of a Foreign-invested Enterprise (omitted)

 

4. Acknowledgement of a Change to the Record Filing of a Foreign-invested Enterprise (omitted)