Implementing Regulations for the PRC Foreign Investment Law (Draft for Comments)
中华人民共和国外商投资法实施条例 (征求意见稿)
November 14, 2019 | BY
Susan MokFIL implementing rules address the VIE structure concerns
Issued: November 1, 2019
Main contents: For the purposes of Item (3) of the second paragraph of Article 2 of the Foreign Investment Law, the phrase "investment in a new project in China" means that a foreign investor invests in the construction of a specific project in China, but neither establishes a foreign-invested enterprise nor acquires shares, equity, share of property or other similar rights or interests in an enterprise in China (Article 4).
Where a wholly-owned enterprise established outside China by a Chinese natural person, legal person or other organization makes an investment in China, it may, subject to the review of the relevant competent State Council department and the approval of the State Council, be exempted from the restrictions of the relevant special administrative measures for access of the Negative List for Foreign Investment Access.
For the purposes of the preceding paragraph, the term "legal person or other organization" excludes foreign-invested enterprises (Article 35).
If the organizational form, organizational structure, etc. of a foreign-invested enterprise established before the implementation of the Foreign Investment Law is inconsistent with the mandatory provisions of laws such as the PRC Company Law or the PRC Partnership Law, the state encourages it to carry out amendment procedures in accordance with the law within five years after the implementation of the Foreign Investment Law (Article 42).
Where a foreign investor invests in a sector the investment in which the Negative List for Foreign Investment Access specifies as being restricted, it shall comply with the restrictive requirements specified in the Negative List on shareholding percentages, senior management personnel, etc.
Where the Negative List for Foreign Investment Access sets forth a restriction on the shareholding percentage of foreign investors in the relevant sector and a foreign investor invests in the sector in question by way of establishing a partnership, the percentage of the foreign investor's voting rights specified in the partnership agreement shall comply with the restriction in the Negative List on shareholding percentage (Article 34).
Where the parties to an existing foreign-invested enterprise have provided in the contract for the method of distributing profits, the method of distributing remaining property, etc., they may, after the implementation of the Foreign Investment Law, continue to carry out such matters as provided in the contract during the equity/cooperative joint venture term (Article 43).
Other than the technical requirements of the disclosed standards of a foreign-invested enterprise that are more stringent than the relevant technical requirements of mandatory standards, a relevant government authority may not apply to such foreign-invested enterprise technical requirements that are more stringent than those of the mandatory standards, and may not compel or compel in a disguised manner the application of recommended standards or association standards by such foreign-invested enterprise (Article 16).
| Issued: 2019-11-01This premium content is reserved for
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