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China to Encourage Overseas Investment via Issuance of Administrative Measures

March 16, 2009

On March 16, 2009, the Ministry of Commerce ("MOFCOM") issued the Administrative Measures for Overseas Investment (the "Measures"), effective May 1, 2009. The Measures supersede the previously applicable Provisions on Examination and Approval of Investment to Run Enterprises Abroad.

The Measures aim to simplify and further standardize approval of overseas investment by delegating approval authority to provincial authorities, and setting forth more detailed procedural and documentation requirements. For purposes of the Measures, overseas investment can be divided into three categories, each subject to different approval procedures:

  • overseas investment subject to approval of MOFCOM, including investment in foreign countries that have not yet established diplomatic relationships with China, investment in certain other specific countries and areas (a list of such countries and areas is to be published by MOFCOM and other relevant authorities), investment in which Chinese parties invest more than USD100 million, investment that will have an influence on the interests of several countries or areas and establishment of special purpose vehicles (i.e. an overseas company directly or indirectly controlled by a Chinese company for the purpose of having its actual owned domestic company to be listed abroad);
  • overseas investment subject to normal approval of the provincial counterparts of MOFCOM, including investment in which Chinese parties invest more than USD10 million but less than USD100 million, investment in energy and minerals and overseas investment that requires local investment promotion; and
  • overseas investment not in the above two categories, which is entitled to a facilitated approval process by either MOFCOM or its provincial counterparts.

Approval will take approximately two to eight weeks for overseas investment in Categories (i) and (ii), depending on whether MOFCOM approval is required and whether comments from the PRC consulate or embassy of the host country need to be solicited. However, approval of overseas investments in Category (iii) will take only three business days and require only one application form, which is intended to facilitate and encourage overseas investment by Chinese enterprises in the current difficult economic environment.


Copyright ©2009 by Kaye Scholer LLP. All Rights Reserved. This publication is intended as a general guide only. It does not contain a general legal analysis or constitute an opinion of Kaye Scholer LLP or any member of the firm on the legal issues described. It is recommended that readers not rely on this general guide but that professional advice be sought in connection with individual matters.References herein to "Kaye Scholer LLP & Affiliates," "Kaye Scholer," "Kaye Scholer LLP," "the firm" and terms of similar import refer to Kaye Scholer LLP and its affiliates operating in various jurisdictions.

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