Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • Changi Airport Group
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • BCC Partners
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek International Pte. Ltd.
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • Kazakhstan Potash Corporation Limited
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V. (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • TMI Associates (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Jurie Advokat AB (Sweden)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

CHINESE UPDATE – China’s Ministry of Commerce Promulgates Revised Measures for Overseas Investment Management

Editors’ Note: Contributed by Adam Li (Li, Qi), a partner at Jun He and a member of XBMA’s Legal Roundtable. Mr. Li is a leading expert in international M&A, capital market and international financial transactions involving Chinese companies. He has broad experience with VIEs and other structures for foreign investment in China. Authored by Alex Hao, a resident partner at Jun He’s New York office. Mr. Hao has significant experience in corporate, M&A, finance and FDI matters involving China.

Executive Summary: A series of new regulations have gradually deregulate the approval process for Chinese overseas investment since the beginning of 2014. On September 6, 2014, China’s Ministry of Commerce released revised regulations that narrow the scope of types of foreign investment that need to be verified and approved, establish the management mode of “adopting recordation as primary means and using verification and approval as ancillary means” and optimizes the administrative process of overseas investment. This article provides a brief overview of these new measures.

The Ministry of Commerce Released Revised Measures for Overseas Investment Management

Since the beginning of 2014, the National Development and Reform Commission (“NDRC”), the State Administration of Foreign Exchange (“SAFE”) and other government departments have successively put forward a series of new regulations, including Measures for the Administration of Confirmation and Recordation of Overseas Investment Projects, Regulations of Cross-border Guaranteed Foreign Exchange, which gradually deregulate the approval process for Chinese overseas investment. On September 6, 2014, the Ministry of Commerce (“MOFCOM”) released the revised Measures for Overseas Investment Management (“Measures”). Compared to its 2009 predecessor, the revised Measures narrows the scope of types of foreign investment needed to be verified and approved, establishes the management mode of “adopting recordation as primary means and using verification and approval as ancillary means” and optimizes the administrative process of overseas investment. These Measures will take effect on October 6, 2014.

I. Background of Overseas Investment Deregulation

In November 2013, the Decision on Major Issues Concerning Comprehensively Deepening Reforms (the “Decision”) was adopted at the Third Plenary Session of the 18th Communist Party in China, pursuant to which, “China shall expand enterprise overseas investment, establish the role of enterprise overseas investment and reform the examination and approval system of overseas investment.”
In December 2013, the Catalogue of Investment Projects Subject to Government Verification and Approval (2013 version) (“Approval Catalogue”) issued by State Council provided that “investment projects with investment of USD 1 billion or more and projects involving sensitive countries and regions or sensitive industries shall be subject to the verification and approval by the competent investment department of the State Council. Investment projects of enterprises under central management other than those listed in the preceding paragraph and projects with investment of USD 300 million or more from local enterprises shall be submitted to the competent investment department of the State Council for recordation.” It was the first time that the State Council has revised the Approval Catalogue since 2004.

In April 2014, the NDRC promulgated the Measures for the Administration of Confirmation and Recordation of Overseas Investment Projects. Starting from May 8, 2014, overseas investment projects are no longer divided into resource category and non-resource category. An overseas investment project with the amount of Chinese investment of USD 1 billion or above shall be subject to confirmation by the NDRC. Overseas investment projects involving sensitive countries and regions or sensitive industries shall be subject to confirmation by the NDRC, regardless of the limit of investment. In particular, an overseas investment project with the amount of Chinese investment of USD 2 billion or above and involving any sensitive country or region or sensitive industry shall be subject to an examination opinion of the NDRC before being reported to the State Council for confirmation. This regulation changed what shall be subject to confirmation by the NDRC from projects under resource category with the amount of Chinese investment of USD 300 million to projects under non-resource category with the amount of Chinese investment of USD 100 million or over.
Projects with the amount of Chinese investment of USD 1 billion shall be subject to recordation with the NDRC.

II. Revised Measures Issued by the MOFCOM

In September 2014, after the State Council and the NDRC revised the regulations of market entrance threshold of overseas investment countries, the MOFCOM released the revised Measures by soliciting public opinion and changing administration system, following the idea of deepening reform, simplifying administration and recognizing the role of enterprise overseas investment. Moreover, the MOFCOM learned from the problems reflected from the “Going out” policy of Chinese enterprises, and also strengthened guidance and regulation of enterprise overseas investment behavior. A brief overview of the revised Measures is discussed below.

1. Clarifying the role of enterprise overseas investment
Article 1 General Provisions of the revised Measures clarifies, for the first time, the legal status of enterprises conducting overseas investment, decision-making autonomy and self-accountability for loss and profit of enterprises, recognizing the role of enterprise overseas investment. By doing this, it benefits the implementation of the enterprise’s autonomy in decision-making and improves the facilitation of overseas investment; meanwhile, it embodies the encouragement and support of the country to enterprises with different ownership conducting overseas investment, which facilitates development of overseas investment in our country.

2. Establishing the management mode of “adopting recordation as primary means and using verification and approval as ancillary means”
Article 6 of the revised Measures stipulates that different management modes of verification and approval by the MOFCOM or recordation by the provincial department in charge of commerce are applied to different situations. If the enterprise overseas investment involves any sensitive country (region) or sensitive industry, it shall be submitted to the MOFCOM for verification and approval. Overseas investment of enterprises under other circumstances shall be subject to recordation.

3. Scope and process of verification and approval and recordation

a) Industries and regions under verification and approval. Article 7 of the revised Measures clarifies the categories of countries and industries where foreign investment is subject to verification and approval. Overseas investment in countries with which China has not established diplomatic relations and countries sanctioned by United Nations shall report to the MOFCOM for verification and approval. Recordation form and application form for overseas investment annexed to the Measures provided the query path for the list of above-mentioned countries. Industry involving any technology or commodities of which the export is prohibited and industries endanger interest of a nation (a district) or above shall report to the MOFCOM for verification and approval.b) Scope and time limits of verification and approval. The revised Measures eliminated the requirement for overseas investment with an amount of above a specified monetary threshold or overseas investment aiming at establishing special purpose companies overseas to be subjected to verification and approval. And the time limits is reduced to 5 business days. For verification and approval of central enterprises, decisions shall be made within in 20 business days; for local enterprises, decision shall be made within 30 business days.c) Clarify the requirements and process of recordation. Enterprises shall be granted recordation within 3 business days if the Investment Recording Form was complete and truthfully stated, which simplifies the procedure of administrative recordation.d) Competent authority for recordation. Provincial departments in charge of commerce shall be responsible for the recordation management of local enterprises’ overseas investment for establishment of enterprise as well as printing and issuance of an Enterprise Overseas Investment Certificate (“Certificate”). The Certificate shall be printed and sealed by the provincial departments in charge of commerce respectively. It changes the previous regulation that the Certificate shall be printed and made by the MOFCOM in a unified manner, which is conducive to motivate local departments in charge of commerce and to regulate administrative conduct as well as improving the administrative competence with its advantage of being close to the basic and nearby management, so that an environment will be created favorable to the successful operation and management of overseas investment.

4. The government provides public services, reinforces the guidance and standardization for enterprises

The revised Measures confirms that the government will continue to provide services to enterprises, reinforces the guidance and standardization of enterprise overseas investment behavior, urges enterprises to request the invested overseas enterprises to abide by both domestic and foreign laws and regulations, respect local customs and practices, fulfill social obligations, emphasize environment and labor protection, train its employees and create a positive corporate culture; the Measures also provides support for the development domestic and foreign chambers of commerce and plays a role in serving and regulating domestic and overseas Chinese enterprises, which urges enterprises to establish a proper philosophy for overseas business operation and promote sustainable development in overseas investment.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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