Category Archives: Trade & Investment

Mar. to Jun. 2015 China Bulletin

The 6th revision of the Foreign Investment Industrial Guidance Catalog (Catalog) became effective April 10, 2015, replacing the 2011 5th revision.  All versions of the Catalog have served to regulate the inflow of foreign investment into China.  The 2015 Catalog does not adopt a negative list, as implemented in the free trade zones, but it substantially reduces the number of industries in the restricted category, Continue reading

Mar. to Jun. 2015 China Bulletin

The State Administration of Taxation (SAT) issued an announcement on March 10, 2015, (Notice 14) on enterprise income tax issues following from the Encouraged Foreign Investment Project Catalog for Central and Western China (Central & Western Catalog), as supplemented by the Catalog of Encouraged Industries in the Western Region, released by the National Development and Reform Commission and effective from October 1, 2014 Continue reading

Dec. 2014 to Feb. 2015 China Bulletin

Giving with One Hand, Taking with the Other:

The Ministry of Commerce released the PRC Foreign Investment Law (Draft for Comments) on January 19 for public comment.

On the positive side, the Draft Law 1) replaces the encouraged, restricted and prohibited industry lists with a single “negative list” of industries restricted or prohibited to foreign investment, 2) replaces the foreign investment approval system and its time-consuming procedures with a simpler reporting system for non-restricted industries, and 3) repeals the current three foreign-invested enterprise laws (for wholly-owned subsidiaries and joint ventures), reverting to the PRC Company Law as the uniform basis for corporate structure and governance. Continue reading

Dec. 2014 to Feb. 2015 China Bulletin

Compliance May be Difficult for Foreign Companies

The National People’s Congress is considering a draft Anti-Terrorism Law that could, if enacted, have a substantial impact on sales and operations of foreign technology companies in China. The law would require all companies to keep servers and user data in China. Foreign technology providers would be required to provide Chinese government authorities with encryption keys for secure devices and equip their devices with ”back-doors” to enable Chinese authorities to access data on the them. All companies would be required to keep records of communications, remove content related to terrorism, and provide related records to the authorities. Continue reading

Aug. to Nov. 2014 China Bulletin

On October 1, 2014, the Provisional Rules on Enterprise Information Disclosure (see English Translation) came into effect. They implement the Plan on the Reform of the Registered Capital Registration System and build on the changes to the registered capital contribution system in the revised Company Law (see Feb-June China Bulletin). Subsidiaries of foreign companies in China must comply with them. They institute systematic national rules for disclosure of corporate information, replace the time-consuming enterprise annual inspection with an annual report, and require public disclosure of information through an online system. While very helpful, the Rules do not require disclosure of key information, such as audited reports, that was available to anyone requesting it through a Chinese-qualified attorney as recently as three years ago. Continue reading

Aug. to Nov. 2014 China Bulletin

Interim Regulations on Disclosure of Enterprise Information [Effective]
企业信息公示暂行条例 (Chinese Original);

Order of State Council No. 654
(English Translation – Ishimaru & Associates © 2014)
Interim Regulations on Disclosure of Enterprise Information, adopted at the 57th executive meeting of the State Council on July 23, 2014, are hereby promulgated and come into force on October 1, 2014.
Article 1 These Regulations are formulated to guarantee fair competition, promote enterprise integrity and self-discipline, regulate the disclosure of enterprise information, strengthen enterprise credit control, protect trading safety, improve regulatory effectiveness, and expand social supervision.
Article 2 “Enterprise information” in these Regulations refers to information Continue reading

Feb. to June 2014 China Bulletin

On March 1, dramatic amendments to the Company Law came into effect, eliminating minimum capital requirements and mandatory payment periods (e.g., an initial contribution of 20% with the remainder made within two years) for all companies, including foreign-invested enterprises (FIEs).  The shareholders now determine a company’s capital contributions according to operational needs.  Companies no longer must submit to an annual inspection but now only file an annual report (Annual Report Notice, English translation).  For many companies, the amendments also eliminate the requirement of a capital verification report to evidence cash contributions.  Certain requirements remain unchanged, however, Continue reading

Feb. to June 2014 China Bulletin

Notice by Ministry of Commerce, Ministry of Finance, State Administration of Taxation, Bureau of Statistics, Administration of Foreign Exchange Concerning the Launch of the 2014 Joint Declaration of Annual Operations for Foreign-Invested Enterprise

Continue reading

Oct. 2013 to Jan. 2014 China Bulletin

Following the opening of the Shanghai Free Trade Zone (SFTZ) in September (Aug.-Sept. China Bulletin), at least 12 foreign bank branches and 1,400 companies have registered in the SFTZ, and more than 6,000 are applying to register.  A series of new announcements and regulations have been issued opening value-added telecoms services (see SFTZ VATS Opening), relaxing foreign investment approval requirements, permitting resident and non-resident free-trade bank accounts, liberalizing foreign exchange for trade and investment, reducing restrictions on cross-border securities investment, clarifying import tax policies, opening performance agency and entertainment venue operations to foreign investment, and producing and selling video game equipment (see below).  Industries where foreign investment is restricted in China proper, like securities and gold trading, are targeting the SFTZ. Continue reading