The Standing Committee of the National People’s Congress abolished the approval requirement for foreign projects in China (FIEs, including wholly foreign-owned enterprises and joint ventures) in September. No longer do such projects have to undergo the time-consuming and sometiems costly approval process, unless they fall within a negative list (discussed below). Projects not on the negative list need only make a simplified record filing through an online system no later than 30 days after issuance of the Business License.. Continue reading
The Ministry of Commerce released the PRC Foreign Investment Law (Draft for Comments) (“Draft Law”) in early 2015 for public comment. Although some provisions may change in the final version, which is still under revision and expect to be promulgated is late 2016 or 2017, the Draft Law represents a paradigm shift for foreign investment. It includes both good and bad news for U.S. investors in China. Continue reading
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
The process to establish a wholly-owned subsidiary (called a wholly foreign-owned enterprise or WFOE) in the Shanghai Free Trade Zone (SFTZ) is summarized below for companies that are not on the negative list. The process closely follows other areas of China, but no foreign-investment approval is required.
1. WFOE Establishment
- prepare application form and documents and Articles of Association and coordinate with government authorities during the application process
- locate premises, sign lease agreement and register lease as pre-condition to applying for Business License
- select name and apply for enterprise name reservation