China Laws and Regulations Update in Augest 2017

1.Catalogue of Industries for Guiding Foreign Investment (Revised Edition 2017)

Promulgated by the National Development and Reform Committee

File No. No.4 Order of the NDRC

Promulgation date: 28th June 2017

Effective date: 28th July 2017

The Catalogue of Industries for Guiding Foreign Investment (Revised Edition 2017) first introduced the negative list for foreign investment access, containing 63 articles about restrictions and prohibitions, decreased by 30 articles compared with the 2015 edition. The Catalogue shall be the basis on which the pre-establishment national treatment and negative list administration model is implemented. No measure should be taken to restrict foreign investment access to any area outside the scope of the negative list. The new Catalogue further relaxes the restrictions on foreign investment access to service, manufacturing and mining industries and especially abolishes the restrictions on foreign investment access to industries of oil and gas for special use, precious metals, lithium ores, etc. (Source: Website of the National Development and Reform Committee)

2.Decision on Revising the Interim Rules on the Filing of Incorporation and Change of Foreign Invested Enterprises

Promulgated by the Ministry of Commerce of the People’s Republic of China

File No. [2017] No.1 Order of the Ministry of Commerce

Promulgation date: 30st July 2017

Effective date: 30st July 2017

The Rules provides that the filing system shall apply to foreign investors involved in merger and acquisition of non-foreign invested businesses and strategic investment into public companies, but without involving special administration measures or related parties. And any foreign invested business or investor applying for the filing or change of the foreign invested business should provide a chart showing equity structure of the actual controller of the foreign invested business. (If the above change does not involve a change of the actual controller of the foreign invested business, the chart is not necessary). In addition, any foreign investor using equity of an overseas company as means of payment should provide the Foreign Investment Certificate for the domestic business that will acquire equity in the overseas company.

(Source: Website of the Ministry of Commerce)

3.Regulations on Strict Exclusion of Illegal Evidence from Criminal Cases

Promulgated by the Supreme People’s Court

File No. F.F.[2017] No.15

Promulgation date: 27th June 2017

Effective date: 27th June 2017

The Regulations consists of five parts and forty-two articles to set forth criteria for and exclusions of illegal evidences used in investigation, legal action, defense, trial, etc. to prevent cases from being decided in a wrong or unfair way. The Regulations explicitly states that torture and abuse in interrogations, gathering evidence in a threatening, alluring, deceiving or otherwise illegal ways and forcing someone to confess guilt should be strictly prohibited. All cases should be decided based on evidences and investigation results, not relying too much on confession. The Regulations requires that testimony made by suspects, defendants or witnesses that is gathered in a threatening, violent or illegal way or in a way that restricts personal freedom should be excluded.

(Source: Website of the Supreme People’s Court)

4.No.14 Accounting Standards for Enterprises – Revenue

Promulgated by the Ministry of Finance

File No. C.K. [2017] No.22

Promulgation date: 19th July 2017

Effective date: 1st January 2018

Revised parts of the Standard mainly include: a. inclusion of the existing revenue and building contract standards into one revenue verification model, b. criteria for deciding the time of revenue recognition based on transfer of control instead of transfer of risk compensation; c. more accurate guidance for accounting treatment of the contract containing different types of arrangements for transactions, d. explicit provisions on revenue recognition and computation for certain types of transactions (or matters). The Standard shall be effective at the end of this year to any business that exists as a listed company both onshore and offshore, two years later to any business that only exists as an onshore listed company, and three years later to any non-listed company at home.

(Source: Website of the Ministry of Finance)

5.Patent Grant Rules in Shanghai

Promulgated by Shanghai Intellectual Property Office and Shanghai Municipal Finance Bureau

File No. H.Z.J. [2017] 61

Promulgation date: 27th May 2017

Effective date: 1st July 2017

The Rules states that the grant applicant means a corporation, public institution, authority and social community registered or filed in Shanghai and individuals with the right to reside in Shanghai permanently or temporarily. Any eligible applicant can get a grant equal to 50% of the amount of application fees (including application and extra application fees, costs of publication, printing and priority claims) and licensing fees (including patent registration fees, publication and printing costs, annual licensing fees for the first year after the license is granted) actually paid to apply for a utility model in China, or a grant equal to 60% of the amount of the above fees and costs actually paid to apply for an appearance design. The grant will not be given until the license is granted for the utility model or the appearance design. The Rules shall be effective from 1st July 2017 to 30th June 2022.

(Source: Website of Shanghai Municipal Finance Bureau)


Lawyer Contacts

You Yunting86-21-52134900

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