Amended Overseas Investment Authorisation and Monitoring Procedures Introduced
24 January 2018
All investments in geographical regions or business sectors deemed to be “sensitive” will now be subject to approval by the National Development and Reform Commission (NDRC). This stipulation applies to all projects either directly launched by mainland investors or via any overseas enterprises controlled by them.
In the case of projects deemed to be “non-sensitive”, it is only required that details of the project are filed with the relevant body, as detailed below:
- If the investor is a state-controlled enterprise, the relevant records should be filed with the NDRC
- If the investor is a local enterprise and the amount of Chinese investment is US$300 million or more, the relevant records should be filed with the NDRC
- If the investor is a local enterprise and the amount of Chinese investment is less than US$300 million, the relevant records should be filed with the development and reform department of the province where the investor is registered
These incoming regulations – Measures for the Administration of Overseas Investment of Enterprises – will come into effect on 1 March this year. On the same date, the currently-prevailing Administrative Measures for the Approval and Recording-Filing of Overseas Investment Projects (NDRC Order No. 9) will be repealed.
In general terms, the new Measures dispense with a number of the provisions of Order No. 9, while clarifying and optimising several of the procedures relating to the approval and record maintenance procedures, as well as to the statutory time frame for completing such formalities.
The more specific changes are as follows:
Abolition of the Project Information Reporting System
The requirement that all overseas acquisitions or tenders involving an investment of US$300 million or more on the part of the Chinese party should be reported to the NDRC prior to substantive work on the deal, as required under Order No 9, is dispensed with by the new Measures.
Abolition of Local Government Application Examination Prior to Submission to NDRC
While Order No. 9 specifies that all applications and record maintenance should first be vetted by the local development and reform department prior to being forwarded to the NRDC, this no longer applies under the terms of the new Measures. In the case of projects deemed to fall within the NRDC’s approval and record-filing remit, businesses may directly submit their application to the Commission via the relevant online channel.
Extended Deadline for Completing Approval and Record-filing Requirements
Order No. 9’s stipulation that investors must secure approval or the relevant record-filing acknowledgement prior to the signing of any agreement relating to an overseas investment project requiring NDRC approval or the completion of all record-filing procedures has now been rescinded. Instead, under the new Measures, investors can now wait to secure formal approval / record-filing acknowledgment until the day before an investment project is actually initiated.
In additional moves, the new Measures have also introduced a number of adjustments to the regulatory measures relating to overseas investments:
- All overseas investments made by domestic enterprises or native individuals via overseas enterprises under their control have now been brought within the statutory administrative framework
- A mechanism for the coordinated regulation of the supervision and inspection of overseas investments has been introduced, with said supervision / inspection to be conducted via online monitoring, in-person interviews, written enquiries and spot checks
- A record of all transgressions / criminal activities relating to overseas investment is to be kept, together with details of the disciplinary measures and more severe forms of censure incurred
For further details (in Chinese), please visit the following link:
- Finance & Investment