Decision of the State Council on Temporary Adjustments to the Administrative Approval Items or Special Administrative Measures on Access Prescribed in Relevant Administrative Regulations or State Council's Documents in the China (Shanghai) Pilot Free Trade Zone
09-24-2019
C G [2013] No. 51
Attention: People’s governments of all provinces, autonomous regions and centrally administered municipalities, all ministries and commissions of the State Council and all institutions directly under the State Council:
With a view to accelerating the transformation of government functions, innovating in the mode of opening up to the outside world and further probing into the experience to push forward the reform and opening-up, the State Council has decided to temporarily adjust the following administrative approval items or special administrative measures on access prescribed in relevant administrative regulations and documents of the State Council in the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the Pilot Zone) in accordance with Decision of the Standing Committee of the National People’s Congress on Authorizing the State Council to Temporarily Adjust the Administrative Approval Items Prescribed in Relevant Laws Within the China (Shanghai) Pilot Free Trade Zone and the Framework Plan for the China (Shanghai) Pilot Free Trade Zone,:
I. To reform the administrative mode for foreign investment, for foreign investment other than those for which the State has adopted special administrative measures on access, temporary adjustments are made to the administrative approval items prescribed in the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises, the Regulations for the Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures, the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures, the Regulations on Foreign Investment Guidelines, the Administrative Measures on the Establishment of Partnership Enterprises in China by Foreign Enterprises or Individuals, the Provisional Regulations on the Duration of Sino-foreign Equity Joint Ventures, the Certain Regulations on the Subscription of Capital by the Parties to Sino-foreign Equity Joint Ventures, the Supplementary Regulations on the Certain Regulations on the Subscription of Capital by the Parties to Sino-foreign Equity Joint Ventures, the Decision of the State Council on Reform of the Investment System, and the Several Opinions of the State Council on Further Doing a Good Job in the Utilization of Foreign Investment.
II. To further open up the service sector, temporary adjustments are made to administrative approval items and special administrative measures on access in respect of qualification requirements and restrictions on shares proportion, and business scope prescribed in the Regulations of the People’s Republic of China on Vessel Registration, the Regulations of the People’s Republic of China on International Maritime Transport, the Administrative Regulations on Credit Investigation Industry, the Regulations for the Administration of Commercial Performances, the Regulations on the Administration of Entertainment Places, the Regulations of the People’s Republic of China on Establishment and Operation of Sino-Foreign Cooperative Educational Institutions, the Provisions on the Administration of Foreign-invested Telecommunication Enterprises, and the Notice of the General Office of the State Council on Transmitting the Opinions of the Ministry of Culture and Other Authorities on Special Inspections of Business Premises for Electronic Games.
Relevant departments of the State Council and Shanghai Municipal People’s Government are required, in accordance with these adjustments to laws, administrative regulations and State Council’s documents, to make corresponding adjustments to the rules and normative documents they have formulated, and set up an administrative system in line with the pilot program.
In accordance with the Decision of the Standing Committee of the National People’s Congress on Authorizing the State Council to Temporarily Adjust the Administrative Approval Items Prescribed in Relevant Laws Within the China (Shanghai) Pilot Free Trade Zone and given the pilot implementation of reform and opening-up policies in the Pilot Zone, this Decision is to be adjusted where necessary.
Appendix: List of Administrative Approval Items and Special Administrative Measures on Access Prescribed in Relevant Administrative Regulations and State Council’s Document That Are to Be Temporarily Adjusted upon A Decision of the State Council in the China (Shanghai) Pilot Free Trade Zone
State Council
December 21, 2013
Appendix
List of Administrative Approval Items and Special Administrative Measures on Access Prescribed in Relevant Administrative Regulations and State Council’s Document
That are to be Temporarily Adjusted upon A Decision of the State
Council in the China (Shanghai) Pilot Free Trade Zone
No. 1
Item: Approval for a foreign-invested project (except the domestic investment projects still subject to approval as required by the State Council)
Provisions of administrative regulations and State Council’s documents:
1. Regulations on Foreign Investment Guidelines
Provisions of Paragraph 1, Article 12: Foreign investment projects shall, depending on the nature of the projects, be examined and approved by, or filed for the record with the development and planning departments and departments in charge of economics and trade in accordance with existing examination and approval powers.
2. Administrative Measures on the Establishment of Partnership Enterprises in China by Foreign Enterprises or Individuals
Article 13: Where a partnership enterprise established in China by foreign enterprises or individuals is involved in an investment project which is subject to government approval, it shall go through the approval formalities for such investment project in accordance with the relevant provisions of the state.
3. Decision of the State Council on Reform of the Investment System (SC G [2004] No. 20)
Provisions of Item 2, Part II: The government shall also verify and approve foreign investment projects from such aspects as market entry, and administration of capital.
4. Several Opinions of the State Council on Further Doing a Good Job in the Utilization of Foreign Investment (SC G [2010] No. 9)
Provisions of Item 16, Part IV: An encouraged or permitted project with a total investment (including capital increase) of less than US$300 million in the Catalogue on Industry Guidelines for Foreign Investment shall be verified and approved by the relevant department of the local government unless the Catalogue of Investment Projects Subject to Government Verification and Approval requires it to be verified and approved by the relevant department of the State Council.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 2
Item: Approval for establishment of a wholly foreign-owned enterprise
Provisions of administrative regulations and State Council’s documents:
1. Detailed Rules for the Implementation of the Law of the People's Republic of China on
Wholly Foreign-owned Enterprises
Article 7: After an application to establish a wholly foreign-owned enterprise has been examined and approved by the Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as MOFTEC), a document of approval shall be issued.
The State Council shall entrust the people’s governments of the various provinces, autonomous regions, directly administered municipalities, cities under separate planning and special economic zones to examine and approve applications to establish wholly foreign-owned enterprises, and to issue a document of approval after the approval of an application, in the following circumstances:
1. The total amount of investment is within the examination and approval powers stipulated by the State Council.
2. No additional allocations of raw materials by the State are required and the nation's overall balance with regard to energy resources, transportation, and foreign trade export quotas is not affected.
The people’s governments of the various provinces, autonomous regions, directly administered municipalities, cities under separate planning and special economic zones which are authorized by the State Council shall, after approving the establishment of a wholly foreign-owned enterprise, report the details to MOFTEC within 15 days for its records. (MOFTEC and the people’s governments of the various provinces, autonomous regions, directly administered municipalities, cities under separate planning and special economic zones hereinafter shall be jointly referred to as the examining and approving authorities.)
Article 16: The articles of association of a wholly foreign-owned enterprise shall become effective after their approval by relevant examining and approving authorities and similarly when amendments are made.
2. Regulations on Foreign Investment Guidelines
Provisions of Paragraph 1, Article 12: Contracts and articles of association of the foreign investment enterprises shall be examined, approved by, or filed for the record with departments in charge of foreign trade and economics. Those restricted foreign investment projects which fall within the maximum amount limits shall be examined and approved by the corresponding competent department of the people’s government in the province, autonomous region, directly administered municipality or city with separate planning, and reported, at the same time, to the competent department and the department in charge of the relevant industry at the higher level, to be filed for the record. The examination and approval power for such projects must not be delegated to organs at lower levels. Foreign investment projects in the fields of service trades which are subject to the policy of gradual opening up shall be examined and approved in accordance with the relevant provisions of the State.
3. Several Opinions of the State Council on Further Doing a Good Job in the Utilization of Foreign Investment (SC G [2010] No. 9)
Provisions of Item 16, Part IV: the formation of foreign-invested enterprises in the service sector (excluding financial and telecommunications services) shall be examined and approved by the local governments in accordance with the relevant provisions. 4. Catalogue of Investment Projects Subject to Governmental Verification and Approval (2013 Version)
Paragraph 3, Article 12: Establishment of foreign investment enterprises and changes thereto shall be approved by the Ministry of Commerce and local governments pursuant to the relevant provisions.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 3
Item: Approval for major change in capital caused by division or merger of a wholly foreign-owned enterprise or other reasons
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Article 17: Major change in capital caused by division or merger of a wholly foreign-owned enterprise or other reasons must be approved by the examining and approving authorities and a public accountant registered in China must be engaged to examine the details and issue a capital verification report. Procedures to register such a change shall be undertaken with the relevant administrative department for industry and commerce after the approval by the examining and approving authorities.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 4
Item: Approval for increase, decrease and transfer of registered capital of a wholly foreign-owned enterprise
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Article 21: A wholly foreign-owned enterprise shall not reduce its registered capital during the period of its operations. However, if there is a genuine need to reduce its registered capital as a result of changes in the total investment or in production and business scale, such reduction must be approved by the examining and approving authorities.
Article 22: To increase or transfer the registered capital of a wholly foreign-owned enterprise, the approval of examining and approving authorities must be obtained and procedures for registration of the change must be undertaken with an administrative department for industry and commerce.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 5
Item: Approval for mortgage or transfer of assets or rights of a wholly foreign-owned enterprise
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Article 23: To mortgage or transfer its assets or rights and interests, a wholly foreign-owned enterprise must obtain the approval of the examining and approving authorities and report the details to the administrative department for industry and commerce.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 6:
Item: Approval for capital contribution by foreign investors
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Paragraph 2, Article 25: Subject to approval from the examining and approving authorities, a foreign investor may also invest Renminbi dividends obtained from other wholly foreign-owned enterprises it has established in China.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 7
Item: Approval for extension of capital contribution by foreign investors
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Paragraph 2, Article 31: If a foreign investor has just cause for requesting an extension of the payment period, approval shall be obtained from the examining and approving authorities and details shall be filed with the administrative department for industry and commerce.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 8
Item: Approval for operation term of a wholly foreign-owned enterprise
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Article 40: The duration of a wholly foreign-owned enterprise’s land use term shall be the same as its approved period of operations.
Article 70: The duration of the operation term of a wholly foreign-owned enterprise shall be proposed in the enterprise establishment application submitted by a foreign investor and shall be subject to approval by the examining and approving authorities in accordance with the actual conditions of the particular line of business and type of enterprise.
Paragraph 2, Article 71: If an extension of the operation term of an enterprise is required, an application for an extension shall be submitted to the examining an approving authorities 180 days prior to the expiry of the operation term. The examining and approving authorities shall decide whether or not to approve the extension application within 30 days of receiving the application.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 9
Item: Approval for termination of a wholly foreign-owned enterprise
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises
Paragraph 2, Article 72: In cases described in Item 2, 3 or 4 in the preceding paragraph, the wholly foreign-owned enterprise shall voluntarily submit an application for termination to the examining and approving authorities for approval. The date of ratification by the examining and approving authorities shall be deemed to be the date of termination of the enterprise.
Article 73: If a wholly foreign-owned enterprise terminates its operations pursuant to the provisions of Item 1, 2, 3 or 6 of Article 72 of these Detailed Rules, it shall, within 15 days from the date of termination, make a public announcement to the fact and notify its creditors. Within 15 days of announcing its termination, the enterprise shall determine procedures and principles for the liquidation and nominate candidates for a liquidation committee. Liquidation shall be undertaken after the examining and approving authorities examine and approve these details.
Content: For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 10
Item: Approval for establishment of a Sino-foreign equity joint venture
Provisions of administrative regulations and State Council’s documents:
Regulations for the Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures
Paragraphs 1, 2 and 3, Article 6: The establishment of a joint venture in China shall be subject to examination and approval by the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China (hereinafter referred to as MOFTEC). After approval, a certificate of approval shall be issued by MOFTEC.
The State Council shall delegate to the people’s governments of provinces, autonomous regions and centrally administered municipalities, or relevant departments under the State Council the power to examine and approve the establishment of joint ventures which meet the following conditions:
1. The total amount of investment is within the limit of the investment examination and approval power as stipulated by the State Council, and the source of capital of the Chinese parties has been ascertained; and
2. No additional allocations of raw materials by the State are required and the national balance of fuel, power, transportation, and foreign trade export quotas is not affected.
Joint ventures established in accordance with provisions of the preceding paragraph shall be reported to MOFTEC for the record.
Article 14: The agreement, contract and articles of association shall come into force after being approved by the examining and approving authorities. The same applies in the event of amendments.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration
No. 11
Item: Approval for shares transfer by a Sino-foreign equity joint venture
Provisions of administrative regulations and State Council’s documents:
Regulations for the Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures
Paragraph 1, Article 20: If one party to the joint venture intends to transfer all or part of his investment subscribed to a third party, consent shall be obtained from the other parties to the joint venture, and approval from the examining and approving authorities is required. Procedures to register the transfer shall be undertaken with the registration and administration department.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 12
Item: Approval for increase and decrease of registered capital by a Sino-foreign equity joint venture
Provisions of administrative regulations and State Council’s documents:
Regulations for the Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures
Article 19: A joint venture shall not reduce its registered capital during the term of the joint venture. Where there is a real need for reduction of the registered capital due to changes in the total amount of investment, the scale of production and operation or other circumstances, the reduction shall be approved by the examination and approval authorities.
Article 21: Any increase or reduction of the registered capital of a joint venture shall be approved by a meeting of the board of directors and submitted to the examination and approval authorities for approval. Registration procedures for changes shall be undertaken with the registration and administration department.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 13
Item: Approval for Capital contribution method of a Sino-foreign equity joint venture
Provisions of administrative regulations and State Council’s documents:
Regulations for the Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures
Article 27: The machinery, equipment or other materials, industrial property or proprietary technologies contributed by foreign parties as investment shall be subject to the examining and approving authorities for approval.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 14
Item: Approval for operation term of a Sino-foreign equity joint venture
Provisions of administrative regulations and State Council’s documents:
Provisional Regulations on the Duration of Sino-foreign Equity Joint Ventures
Article 4: A joint venture where the parties to the enterprise do not specify the duration of the joint enterprise’s operation term in the joint venture contract shall be subject to examination and approval in accordance with State-stipulated provisions on examination and approval jurisdiction and procedures. Except in the case of an enterprise subject to direct examination and approval by the Ministry of Foreign Economic Relations and Trade, other examining and approving authorities shall report details of a case to the Ministry of Foreign Economic Relations and Trade within 30 days of its approval.
Paragraph 1, Article 6: A joint venture whose establishment was approved before the implementation of these Regulations may continue to operate pursuant to the joint venture duration stipulated in its approved contract. If, however, the parties to such a joint venture, except those engaging in operations stipulated in Article 3 of these Regulations, agree unanimously to amend the contract provision stipulating the fixed duration of the enterprise’s operation term to one of a non-specific duration, the parties to the enterprise shall declare the reasons for the amendment, conclude an agreement on the amending of the joint venture contract and submit an application to the original examining and approving authorities for examination and approval.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 15
Item: Approval for dissolution of a Sino-foreign equity joint venture
Provisions of administrative regulations and State Council’s documents:
1. Regulations for the Implementation of the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures
Paragraph 2, Article 90: In cases described in Items 2, 4, 5 and 6 of the preceding paragraph, the board of directors shall make an application for dissolution to the examining and approving authorities for approval; in situation described in Item 3, the party that performs the contract shall make an application and report it to the examining and approving authorities for approval.
2. Certain Regulations on the Subscription of Capital by the Parties to Sino-foreign Equity Joint Ventures
Paragraph 1, Article 7: If one party to a joint venture fails to subscribe the amount due or to subscribe in full its capital in accordance with the due date stipulated in the joint venture contract, this shall constitute a breach of contract. The party honoring the contract shall urge the party in default to contribute its capital in full or the amount outstanding within one month. If at the end of this period the capital to be subscribed in full or in part has still not been subscribed the party in default shall forfeit all of its rights under the joint venture contract and shall automatically withdraw from the equity joint venture. The party honoring the contract shall apply to the original examining and approving organ within one month of the due date for approval to dissolve the equity joint venture or for approval to seek another equity joint partner to assume the rights and obligations of the party in default as stipulated in the contract. The party honoring the contract may, in accordance with the law, request compensation from the party in default for any economic losses caused through that party’s failure to subscribe its capital in part or in full.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 16
Item: Approval for capital contribution of Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and wholly foreign-owned enterprises
Provisions of administrative regulations and State Council’s documents:
Full text of the Certain Regulations on the Subscription of Capital by the Parties to Sino-foreign Equity Joint Ventures
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 17
Item: Approval for establishment of a Sino-foreign contractual joint venture
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Article 6: The establishment of a contractual joint venture will be subject to the examination and approval of the Ministry of Foreign Trade and Economic Cooperation or a department or local people’s government as authorized by the State Council.
The establishment of a contractual joint venture in the following circumstances will be subject to the examination and approval of a department or local people’s government as authorized by the State Council:
1. where the total amount of investment in the contractual joint venture is within the limits subject to examination and approval of a department or local people’s government authorized by the State Council;
2. where the contractual joint venture is self-financing and does not need the State to contribute to the balance of its construction and production conditions;
3. where it is not necessary for the contractual joint venture to obtain an export quota and/or license issued by the relevant state competent department; or, where it is necessary to obtain an export quota and/or license but where the consent of the relevant state competent departments has been obtained prior to submission of the project proposal; or
4. in other circumstances in which the establishment of a contractual joint venture is subject to examination and approval by a department or local people’s government authorized by the State Council as stipulated in laws and statutory regulations.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 18
Item: Approval for major amendments to agreements, contracts and articles of association of a Sino-foreign contractual joint venture
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Article 11: The contractual joint venture agreement, contract and articles of association are valid from the date on which the approval certificate is issued by the examining and approving authorities. Any major amendments to the contractual joint venture agreement, contract or articles of association during the term of the enterprise must be subject to approval by the examining and approving authorities.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 19
Item: Approval for decrease in registered capital of a Sino- foreign contractual joint venture Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Paragraph 2, Article 16: The registered capital of a contractual joint venture must not be reduced during the term of the contractual joint venture. However, if a reduction of the registered capital is necessary due to changes in the total investment and production and operation scale, such a reduction must be subject to approval by the examining and approving authorities.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 20
Item: Approval for transfer of contractual joint venture contractual rights by a Sino-foreign contractual joint venture
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Paragraph 1, Article 23: If a total or partial transfer of rights as prescribed in the contractual joint venture contract is to be carried out between the parties to a contractual joint venture or if one party to a contractual joint venture wishes to transfer, in full or in part, its rights prescribed in the contractual joint venture contract to a party other than the cooperative partners, the written agreement of the other parties to the contractual joint venture must be obtained and the matter must be reported to the examining and approving authorities for approval.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 21
Item: Approval for a contract on commissioned operation and management of a Sino-foreign contractual joint venture
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Paragraph 2, Article 35: A contractual joint venture must submit a resolution of the board of directors or joint management committee on commissioning operational management of the contractual joint venture, the signed contract on commissioning operational management and the creditworthiness certificate of the commissioned party to the examining and approving authorities for approval. The examining and approving authorities will, within thirty (30) days of receiving these documents, decide whether to approve the commission.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 22
Item: Approval for advance recovery of investment by a foreign partner
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Paragraph 1, Article 45: An application for recovery of investment during the term of the enterprise by a foreign partner in accordance with the provisions of item 2 or 3 of Article 44 shall specify the total amount of investment to be recovered and the period of and method for this recovery. Such an application must be submitted to the examining and approving authorities for approval following examination and approval by the finance and taxation organs.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 23
Item: Approval for extending operation term of a Sino-foreign contractual joint venture
Provisions of administrative regulations and State Council’s documents:
Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Paragraph 2, Article 47: If the parties to a contractual joint venture agree to extend the term of the enterprise, an application must be submitted to the examining and approving authorities 180 days before the expiry of the term of the enterprise stating the details of implementation of the original contractual joint venture contract and the reasons for the extension of the term of the enterprise. An agreement entered into by the parties to the contractual joint venture on their rights and obligations and other relevant matters within the extended period of cooperation must be submitted at the same time. The examining and approving authorities shall, within thirty (30) days of receiving an application for extension of the term of the enterprise, make a decision on whether or not to approve the application.
Paragraph 4, Article 47: If the foreign partner is to recover its investment within the term of the contractual joint venture as agreed in the contractual joint venture contract, and the foreign partner has already completely recovered its investment, the term of the contractual joint venture will not be extended. However, if the foreign partner increases its investment, subject to consent through consultation by the parties to the contractual joint venture, the contractual joint venture may apply to the examining and approving authorities for an extension of the term of the enterprise in accordance with the provisions of Paragraph 2 of this Article.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 24
Item: Approval for dissolution of a Sino-foreign contractual joint venture
Provisions of administrative regulations and State Council’s documents:
1. Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Contractual Joint Ventures
Paragraph 2, Article 48: In the circumstances described in items 2 and 4 of the preceding paragraph, the board of directors or joint management committee of the contractual joint venture will make a decision on dissolution which must be reported to the examining and approving authorities for approval. In the situation described in Item 3 of the preceding paragraph, the party or parties that failed to fulfill the obligations prescribed in the contractual joint venture contract and articles of association will bear liability for compensation of losses incurred by the other party or parties which fulfilled their obligations. The party or parties which fulfilled the contract obligations will have the right to apply to the examining and approving authorities for dissolution of the contractual joint venture.
2. Certain Regulations on the Subscription of Capital by the Parties to Sino-foreign Contractual Joint Ventures
Paragraph 1, Article 7: If one party to a joint venture fails to subscribe the amount due or to subscribe in full its capital in accordance with the due date stipulated in the joint venture contract, this shall constitute a breach of contract. The party honoring the contract shall urge the party in default to contribute its capital in full or the amount outstanding within one month. If at the end of this period the capital to be subscribed in full or in part has still not been subscribed the party in default shall forfeit all of its rights under the joint venture contract and shall automatically withdraw from the contractual joint venture. The party honoring the contract shall apply to the original examining and approving organ within one month of the due date for approval to dissolve the contractual joint venture or for approval to seek another contractual joint partner to assume the rights and obligations of the party in default as stipulated in the contract. The party honoring the contract may, in accordance with the law, request compensation from the party in default for any economic losses caused through that party’s failure to subscribe its capital in part or in full.
Article 10: The subscription of capital by the various parties to Sino-foreign contractual joint ventures shall be handled with reference to these Regulations.
Content:
For the sectors that are not included in the Negative List, this requirement for administrative approval is suspended and superseded by filing-based administration.
No. 25
Item: Relaxed Restrictions on the ratio of foreign shares in a Sino-foreign equity/contractual joint venture for international vessel transportation
Provisions of administrative regulations and State Council’s documents:
1. Regulations of the People’s Republic of China on Vessel Registration
Item 2, Paragraph 1, Article 2: Ships owned by enterprises with legal person status established under the laws of the People’s Republic of China and whose principal places of business are located within the territory thereof, provided that, where foreign investment is involved, the proportion of registered capital contributed by Chinese investors shall not be less than 50 per cent;
2. Regulations of the People’s Republic of China on International Maritime Transport
Paragraphs 2, 3 and 4, Article 29:
In Sino-foreign equity joint ventures engaging in international vessel transport and international vessel agency business, the ratio of foreign investment shall not exceed 49 per cent.
In Sino-foreign contractual joint ventures engaging in international vessel transport and international shipping agency business, the ratio of foreign investment shall be determined with reference to the provision in the preceding paragraph.
The chairmen of boards and the general managers in Sino-foreign equity joint ventures in international vessel transport and Sino-foreign contractual joint ventures in international vessel transport shall be appointed by the Chinese side after consultation with both parties involved in the Sino-foreign equity joint ventures and the Sino-foreign contractual joint ventures.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the competent transportation administrative department of the State Council.
No. 26
Item: Permission for establishment of a wholly foreign-owned international vessel management enterprise
Provisions of administrative regulations and State Council’s documents:
Regulations of the People’s Republic of China on International Maritime Transport
Paragraph 1, Article 29: With the approval of the competent transportation administrative department of the State Council and in accordance with relevant laws, administrative regulations and other state provisions, foreign investors may invest to establish Sino-foreign equity joint ventures or Sino-foreign contractual joint ventures engaging in international vessel transport, international shipping agencies, international vessel administration, loading and unloading of international maritime transport cargoes, storage of international maritime transport cargoes, container depots and stacking yards of international maritime transport cargoes, and may invest to establish wholly foreign-owned enterprises to engage in the storage of international maritime transport cargoes.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the competent transportation administrative department of the State Council.
No. 27
Item: Permission for establishment of a foreign-funded credit investigation companies
Provisions of administrative regulations and State Council’s documents:
Administrative Regulations on Credit Investigation Industry
Article 45: Establishment criteria for foreign-funded credit investigation entities shall be formulated by the credit investigation industry supervision and administration department of the State Council jointly with the relevant department(s) of the State Council, and submitted to the State Council for approval.
Overseas credit investigation entities engaging in credit investigation business in China shall be subject to approval by the credit investigation industry supervision and administration department of the State Council.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the credit investigation industry supervision and administration department of the State Council.
No. 28
Item: Removal of restrictions on ratio of foreign share in a foreign-funded performance agency, and permission for establishment of a wholly foreign-owned performance brokerage institution to provide service in Shanghai
Provisions of administrative regulations and State Council’s documents:
Regulations for the Administration of Commercial Performances
Paragraphs 1 and 2, Article 11: Foreign investors, along with Chinese investors, may establish Sino-foreign equity joint or Sino-foreign contractual joint performance brokerage institutions or performance premise operator; foreign investors shall not establish any Sino-foreign equity joint, Sino-foreign contractual joint or wholly foreign-owned culture and arts performance group, and shall not establish any wholly foreign-owned performance brokerage institutions or performance premise operator.
Where a Sino-foreign equity joint performance brokerage institution or performance premise operator is established, the investment proportion of the Chinese party shall not be less than 51%; where a Sino-foreign contractual joint performance brokerage institution or performance premise business operator is established, the Chinese party shall have the predominant power in operation.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the competent culture administrative department of the State Council.
No. 29
Item: Permission for establishment of a wholly foreign-owned entertainment business to provide service in the Pilot Zone
Provisions of administrative regulations and State Council’s documents:
Regulations on the Administration of Entertainment Places
Article 6: Foreign investors may establish Sino-foreign equity or contractual joint entertainment places together with Chinese investors, other than wholly foreign-funded entertainment places.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the competent culture administrative department of the State Council.
No. 30
Item: Permission for establishment of a Sino-foreign cooperative for-profit educational and training institution and for-profit vocational training institution
Provisions of administrative regulations and State Council’s documents:
Regulations of the People’s Republic of China on Establishment and Operation of Sino-Foreign Cooperative Educational Institutions
Article 60: Administrative measures on Sino-foreign cooperative training institutions registered with the administrative department for industry and commerce shall be provided separately by the State Council.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the culture administrative department of the State Council.
No. 31
Item: Subject to network information security, permission for a foreign-funded enterprise to conduct certain value-added telecommunications services in specific forms
Provisions of administrative regulations and State Council’s documents:
Provisions on the Administration of Foreign-invested Telecommunication Enterprises
Article 2: “Foreign-invested telecommunication enterprises” refers to enterprises engaging in the operation of telecommunication businesses which are established in accordance with the law within the territory of China and invested in jointly by foreign investors and Chinese investors in the form of Sino-foreign joint equity.
Paragraph 2, Article 6: The ratio of investment by foreign investors in a foreign-invested telecommunication enterprise which engages in the operation of value-added telecommunication business (including wireless paging business under basic telecommunication business), shall not ultimately be in excess of 50 per cent.
Article 12: To apply for the establishment of a foreign-invested telecommunication enterprise to engage in value-added telecommunication business within a province, autonomous region or directly administered municipality, an application shall be submitted by the major investor of the Chinese party to the telecommunication administrative department in the relevant province, autonomous region or directly administered municipality, together with the following documents:
1. qualification certificates or the relevant confirmation documents as stipulated in Article 10 of these Provisions; and
2. certificates or confirmation documents for other conditions required for operating a value-added telecommunication business as set out in the Telecommunication Regulations. The telecommunication administrative department in the province, autonomous region or directly administered municipality shall give its opinion and sign it within 60 days from the date of receiving the application. Where the application is agreed to, the matter shall be reported to the competent information industry administrative department of the State Council; where the application is rejected, the applicant shall be given written notification and an explanation of the reasons.
The competent information industry administrative department of the State Council shall complete the examination within 30 days from the date of receiving the application documents which are signed as agreed to by the telecommunication administrative department in the province, autonomous region or directly administered municipality, and make a decision on whether or not to grant approval. Where approval is granted, the Examination Opinion on Foreign Investment Engaging in Telecommunication Business shall be issued; where rejection is decided on, the applicant shall be given written notification and an explanation of the reasons.
Article 14: When establishing a foreign-invested telecommunication enterprise whose investment project, in accordance with the relevant provisions of the State, is subject to approval from the department in charge of development and reform under the State Council, the competent industry and information technology administrative department of the State Council shall, before the issuance of the Examination Opinion on Foreign Investment Engaging in Telecommunication Business, forward the application materials to the department in charge of development and reform under the State Council for approval. When an application is to be forwarded to the department in charge of development and reform under the State Council for approval, the time limit for examination and approval stipulated in Articles 11 and 12 of these Provisions may be extended for 30 days.
Article 15: Where a foreign-invested telecommunication enterprise is to be established to operate basic telecommunication business or value-added telecommunication business with a coverage of more than one province, autonomous region or directly administered municipality, the major investor of the Chinese party shall, upon receiving the Examination Opinion on Foreign Investment Engaging in Telecommunication Business, submit the contract and articles of association of the proposed foreign-invested telecommunication enterprise to the competent commerce administrative department of the State Council. Where a foreign-invested telecommunication enterprise is to be established to operate value-added telecommunication business within a province, autonomous region or directly administered municipality, the major investor of the Chinese party shall, upon receiving the Examination Opinion on Foreign Investment Engaging in Telecommunication Business, submit the contract and articles of association of the proposed foreign-invested telecommunication enterprise to the competent commerce administrative department of the relevant province, autonomous region or directly administered municipality. The competent commerce administrative department of the State Council and the competent commerce administrative department in the province, autonomous region or directly administered municipality, shall complete examination within 90 days from the date of receiving the contract and articles of association of the proposed foreign-invested telecommunication enterprise, and make a decision on whether or not to grant approval. Where approval is granted, the Foreign Investment Enterprise Approval Certificate shall be issued; where approval is not granted, the applicant shall be given written notification and an explanation of the reasons.
Article 16: The major investor of the Chinese party in a foreign-invested telecommunication enterprise shall, upon receiving a Foreign Investment Enterprise Approval Certificate, carry out formalities with the competent industry and information technology administrative department of the State Council for a Telecommunication Business Operation Permit.
The major investor of the Chinese party in a foreign-invested telecommunication enterprise shall, upon receiving a Foreign Investment Enterprise Approval Certificate and the Telecommunication Business Operation Permit, carry out formalities with the administrative department for industry and commerce for the registration of the foreign-invested telecommunication enterprise.
Article 18: Whoever violates the provisions of Article 6 shall be ordered to make a correction within a prescribed time limit and be subject to a fine of not less than 100,000 yuan but not more than 500,000 yuan by the competent industry and information technology administrative department of the State Council; if there is a failure to make a correction within the time limit the Telecommunication Business Operation Permit shall be revoked by the competent industry and information technology administrative department of the State Council, and the Foreign Investment Enterprise Approval Certificate shall be cancelled by the competent commerce administrative department which originally issued the Foreign Investment Enter Enterprise Approval Certificate.
Article 19: Whoever violates the provisions of Article 17 shall be ordered to make a correction within a prescribed time limit and be subject to a fine of not less than 200,000 yuan but not more than 1 million yuan by the competent industry and information technology administrative department of the State Council; in the case of failure to make a correction within the time limit the Telecommunication Business Operation Permit shall be revoked by the competent industry and information technology administrative department of the State Council, and the Foreign Investment Enterprise Approval Certificate shall be cancelled by the competent commerce administrative department which originally issued the Foreign Investment Enterprise Approval Certificate.
Article 20: Where false or forged qualification certificates or confirmation documents are provided when applying for the establishment of a foreign-invested telecommunication enterprise, the approval shall become invalid. A fine of not less than 200,000 yuan but not more than 1 million yuan shall be imposed and the Telecommunication Business Operation Permit shall be revoked by the competent industry and information technology administrative department of the State Council, and the Foreign Investment Enterprise Approval Certificate shall be cancelled by the competent commerce administrative department which originally issued the Foreign Investment Enterprise Approval Certificate.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the competent industry and information technology administrative department of the State Council.
No. 32
Item: Permission for a foreign-funded enterprise to manufacture or sell entertainment and gaming consoles. Entertainment and gaming consoles that pass the content review by the competent culture administrative department may be sold in the domestic market.
Provisions of administrative regulations and State Council’s documents:
Notice of the General Office of the State Council on Transmitting the Opinions of the Ministry of Culture and Other Authorities on Special Inspections of Business Premises of Electronic Games (SC G [2000] No. 44)
II. As of the date these Opinions are issued, all local authorities shall immediately stop approving the establishment of new business premises for electronic games, and stop approving addition to or any equipment update of electronic games equipment in the existing premises of electronic games.
VI. As of the date these Opinions are issued, all production and sales of electronic games equipment and their components and parts supplying the domestic market shall be stopped. No enterprise or individual may (continue to) engage in the production and sales of electronic games equipment and their components and parts supplying the domestic market. Any person who is found selling equipment or components or parts to any business premises of electronic games is subject to punishments by the department for economy and trade, the department for information industry together with the administrative department for industry and commerce in accordance with relevant provisions.
Except by processing trade, import of electronic games equipment and their components and parts in other forms of trade is strictly restricted (customs goods code 95041000、95043010, and 95049010). Electronic games equipment and their components and parts under processing trade are listed as restricted goods, on which the system of actual transfers from the guarantee accounts is imposed; the department in charge of foreign trade and economics are required to tighten review and administration, customs authorities shall strengthen supervision to ensure that such products can only be sold overseas; if such goods cannot be exported within the prescribed time limit, the customs shall confiscate them according to law, or supervise their destruction by relevant enterprises. All local customs authorities are required to strengthen inspection, focus on key points of examination and crack down on illegal acts of smuggling electronic games equipment and components and parts through false declaration, and secret carrying.
Content:
Relevant provisions are suspended and superseded by relevant administrative measures to be formulated by the competent culture administrative department of the State Council.
