Ministry of Commerce Order of the Ministry of Commerce of the People’s Republic of China No.22 The Provisions on the Establishment of Investment Companies by Foreign Investors were amended and adopted at the 12th executive meeting Bo Xilai, Minister of the Ministry of Commerce November 17, 2004 Provisions on the Establishment of Investment Companies by Foreign Investors Article 1 In order to promote foreign investors to invest in China, and introduce advanced technologies and management experiences from abroad, Article 2 The term “investment company” as mentioned in the present Provisions refers to a company established by a foreign investor in the Article 3 A foreign investor who intends to establish an investment company shall meet the following conditions: (a) 1.It is in good credit status and has necessary economic strength to establish an investment company, with its total amount of assets (b) If it establishes an investment company by means of joint venture, the Chinese investor shall be in good credit status and have necessary (c) The investment company’s registered capital shall be no less than 30 million USD. The foreign investor that applies to establish an investment company shall be a foreign company, enterprise or economic organization. Article 4 A foreign investor who meets the conditions prescribed in Item (a) of Paragraph 1 of Article 3 of the present Provisions may invest Article 5 If a foreign investor that applies to establish an investment company meets the conditions prescribed in Item (a) of Paragraph 1 of If a foreign investor invests to establish an investment company in the name of its wholly-owned subsidiary company, the parent company Article 6 An investor shall, when applying to establish an investment company, submit the following documents to the commercial department of (a) In the case of establishing a joint venture, an application report on the establishment of a joint venture investment company, contracts In the case of establishing a wholly-owned investment company, the wholly foreign-owned enterprise’s application form, feasibility (b) The certification documents of credit status, certification documents of registration (photocopies) and certification documents of (c) The approval certificate (photocopy) and business license (photocopy) of the enterprise invested by the foreign investor and the capital (d) The balance sheets of all parties to the investment in the latest three years which have been audited in pursuance of law; (e) The letter of warranty to be submitted as required by Article 5 of the present Provisions; and (f) Other documents required by the Ministry of Commerce. All the above-mentioned documents shall be formal documents unless it is indicated to be a photocopy. If the documents are not signed by a legal representative, a power of attorney by the legal representative shall be presented. If a lawfully established intermediary institution is authorized to file the application, a power of attorney signed by the legal Article 7 A foreign investor must use a convertible currency or the Renminbi profits it obtains inside the territory of China or the lawful Article 8 In the registered capital of an investment company, there shall be at least 30 million USD which shall be regarded as investments Article 9 If the registered capital of an investment company is no less than 30 million USD, the amount of loans shall be no more than 4 times Article 10 An investment company may, after being approved by the Ministry of Commerce to be established, run the following business on the basis (a) Investing in accordance with the law in the areas where foreign investments are permitted by the state. (b) Being entrusted in writing by an enterprise it invests in (unanimously adopted by the board of directors) to provide the enterprise (1) Assisting or representing the said enterprise in purchasing machinery equipment, office equipment and raw materials, components and (2) Balancing foreign exchanges between the enterprises it invests in upon the consent and under the supervision of the foreign exchange (3) Providing the enterprise it invests in with such services as technical supports in the process of production, sale and market development, (4) Assisting the enterprise it invests in to seek loans, and providing guaranty. (c) Establishing scientific research and development centers or offices inside the territory of China, engaging in research and development (d) Providing its investors with consulting services, and providing its associated companies with such consulting services including market (e) Undertaking services contracted out by its parent company or its associated companies. Article 11 The investment company undertaking goods import & export, or technology import & export shall be in accordance with Measures for the The investment company undertaking commission agency, wholesale, retail and franchising shall be in accordance with Measures for the Article 12 The term “an enterprise invested by an investment company “as mentioned in the present Provisions refers to an enterprise meeting (a) An enterprise invested by an investment company either directly or jointly with any other foreign investor and/or Chinese investor, (b) The investment company purchases part or all of the stock rights of the enterprise invested and established inside the territory of (c) The investment company’s investment amount shall be no less than 10% of the registered capital of the enterprise it invests and establishes. Article 13 An investment company may, upon approval by the People’s Bank of China, provide financial supports to the enterprise it invests in Article 14 An investment company may act as an initiator to initiate the establishment of a foreign-funded share limited company or to hold the Article 15 If an established investment company runs its business in accordance with the law and has no record of violation of law, and its registered (a) Being entrusted in writing by an enterprise it invests in (unanimously adopted by the board of directors) to carry out the following 1. Selling the products manufactured by the enterprise it invests in by means of distribution in both domestic and foreign markets; 2. Providing the enterprise it invests in with such comprehensive services such as transport, storage, etc. (b) Exporting domestic commodities involving by means of agency, distribution or by establishing an export purchasing institution (including (c) Purchasing the products manufactured by the enterprise it invests and then sell them both home and abroad after system integration; (d) Providing relevant technical trainings for the domestic distributors and agents of the products by the enterprise it invests, and (e) It is permitted to, before the enterprise it invests in starts production or before the new products of the enterprise it invests (f) Providing the enterprise it invests in with services of operative lease of machines and office equipment; (g) Providing after-sale service for the imports (h) Participating in overseas contract projects undertaken by Chinese enterprises having the right to run overseas contract projects (i) selling (excluding retail) at home the imports of investment company manufactured by its parent company. Article 16 An investment company shall, if importing the products under Paragraphs 3 and 5 of Article 15 go through the formalities in accordance Article 17 An investment company shall, if applying for running the business prescribed in Article 15 of the present Provisions, submit the (a) An application letter signed by the legal representative of the investment company; (b) The resolution of the investment company’s board of directors; (c) The investment company’s amended articles of association; (d) The investment company’s approval certificate (photocopy), business license (photocopy) and its capital verification report issued (e) The capital verification report issued by Chinese CPA on the enterprise it invests in; and (f) Other documents as required by the Ministry of Commerce. Article 18 The duration of an investment company shall be verified in light of the nature of the project under planned establishment by the investment Article 19 An investment company shall, if investing to establish an enterprise, separately report for approval according to the scope of approval Article 20 If an investment company invests to establish an enterprise, with the proportion of the converted sole investment by the foreign investor Article 21 An investment company shall, if establishing a branch, report to the Ministry of Commerce for examination and approval. If the investment (a) Its registered capital has been contributed in good time as prescribed in the contract and the articles of association, and the contributed (b) The region where the branch company is planned to be established shall be a region with concentrative investments of the investment Article 22 An investment company that meets the prescribed conditions may file an application for determining as the regional headquarter of (a) When applying for determining as the regional headquarter, an investment company shall meet the following requirements: (1) The contributed investment in the registered capital is not less than 100 million USD; or the contributed investment in the registered (2) Meeting the conditions as specified in Article 8 of the present Provisions; (3) It has established research and development institutions according to relevant regulations. (b) An investment company that has been determined as the regional headquarter may, in light of the actual needs of its business in China, (1) The business as prescribed in Articles 10 and 15; (2) Importing and selling transnational company and holding associated company’s products within China; (3) Importing the original auxiliary materials and parts necessary for providing maintenance services for products of the enterprises (4) Undertaking services contracted out by enterprises both at home and abroad; (5) It may engage in logistics and distribution services in accordance with relevant provisions; (6) Upon approval of the China Banking Supervision Commission, it may establish financial companies to provide relevant financial services (7) Upon approval of the Ministry of Commerce, it may engage in contracting overseas projects and make investments abroad, establish financial (8) Entrust other domestic company with producing or processing its products or its parent company’s products and sell at home and abroad; (9) Other business upon approval. (c) Application procedures: (1) The investment company shall file an application to the local administrative department for commerce of the province, autonomous region, (2) The Ministry of Commerce shall make a reply within 30 days from the day when it receives a complete set of application materials, (3) The investment company shall, within 30 days, file an application to the administrative department of industry and commerce for modifying (d) Application documents: (1) The application signed by the legal representative of the investment company; (2) Resolution of the investment company or the board of directors of the transnational company; (3) The amended articles of association / contract of the investment company; (4) The approval certificate (photocopy) and business license (photocopy) of the investment enterprise and the capital verification report (5) The approval certificate (photography) and business license (photocopy) and the capital verification report (photocopy) issued by (6) The invested enterprise’ capital verification report (photocopy) issued by a Chinese CPA (7) The main financial statements of the investment companies audited by Chinese CPA; and (8) Other documents required by the Ministry of Commerce. The above-mentioned documents shall be formal ones except for those indicated as photography. The “transnational company” as mentioned in the present Article refers to the parent company of the company group of the foreign investor Article 23 The investment activities of an investment company inside the territory of China are not be limited by its registration place. Article 24 The investment activities of an investment company inside the territory of China are not be limited by its registration place. Article 25 An investment company shall earnestly implement its project investment plans, and shall, within 3 months before the next year, submit Article 26 An investment company and the enterprise it invests and establishes are legal persons or entities independent from each other, and Article 27 An investment company and the enterprises established by it shall abide by the law, regulation and rules of China, shall not evade Article 28 No investment company may directly engage in productive activities. Article 29 The present Provisions shall be allowed to apply to the establishment of investment companies in the Mainland by investors from Taiwan, Article 30 The power to interpret the present Provisions shall remain with the Ministry of Commerce. Article 31 The present Provisions shall be implemented 30 days after the date of promulgation. |
Ministry of Commerce
2004-11-17