MOFCOM to Delegate Approval Authority of FIEs in Certain Service Industries to Provincial Counterparts
On May 4, 2009, the Ministry of Commerce ("MOFCOM")
released the Circular on Relevant Issues Concerning Approval and Management of
Foreign-Invested Enterprises in Certain Service Industries ("Service FIEs") by
the Provincial Level Commercial Authorities ("COFTEC") and the National
Economic and Technical Development Zone ("NETDZ") (the "Circular"), effective
the same date. According to the
Circular, the approval authority for the establishment and change of Service
FIEs with a total amount of investment lower than the statutory limits (i.e.,
$100 million for FIEs whose business is within the encouraged and permitted
categories, and $50 million for FIEs whose business is within the restricted
category) shall be delegated to COFTEC and NETDZ. Service FIEs include: (i)
medical institutions owned by equity holders or through a contractual joint
venture and functioning as either enterprise legal persons or non-profit
organizations; (ii) enterprises engaging in the auction business; (iii)
enterprises engaging in the distribution of books, papers and journals; (iv)
enterprises engaging in audio-visual product wholesale and owned through a
contractual joint venture; (v) enterprises engaging in non-oil-gas mineral
exploration; and (vi) enterprises engaging in non-oil-gas mining. In addition, the Circular reiterates that the
approval authority for mergers and acquisitions by foreign investors with
transaction values not exceeding the above-mentioned statutory limits (i.e.,
$100 million where the transaction parties' business is within the encouraged
and permitted categories, and $50 million when all or part of such business is
within the restricted category) is now delegated from MOFCOM to COFTEC and
NETDZ.
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.