China Laws and Regulations Update in August 2018

1.Decision to Amend the Provisional Rules on Filings of Establishment and Change of Foreign Funded Enterprises

Promulgated by the Ministry of Commerce

File number: No.19 MOC Order in 2018

Promulgation date: 29 June 2018

Effective date: 30 June 2018

The Provisional Rules states that in order to establish a foreign funded enterprise or change a domestic enterprise into a foreign funded enterprise by merger, acquisition, absorption, combination, etc. by filing as required by the Provisional Rules, filings of establishment of the foreign-funded enterprise shall be submitted online during the establishment and change recordation processes of the administration of industry and commerce and the market supervision and regulation department and the recordation authority shall begin the recordation process upon and inform the investor of receipt of the filings transferred by the administration of industry and commerce and the market supervision and regulation department. If the foreign-funded enterprise or its investor delays in submitting or has a material omission in its filings, the commerce department should give an order to correct it within a limited period of time. A fine of less than RMB 30,000 should be payable for a failure to correct it as required or a serious misconduct. (Source: Website of the Ministry of Commerce)

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The Establishment Procedure of Foreign-Capital Enterprises in Shanghai FTZ

(By Bai Lituan) On August 30, 2013, the Standing Committee of the National People’s Congress enacted the Decision of the Standing Committee of the National People’s Congress on Authorizing the State Council to Temporarily.

Adjust the Administrative Examination and Approval of Relevant Laws in China (Shanghai) Free Trade Zone (the “DESIVISION”). The DESIVISION authorizes the State Council to temporarily adjust about 11 administration examinations and approval of the establishment and merger of foreign-capital enterprises including the wholly foreign-owned enterprises, Sino-foreign cooperative joint venture and Sino-foreign equity joint ventures in the Shanghai Pilot Free Trade Zone (the “FTZ”). Earlier reports once said that it would temporarily suspend the implementation of the Law on Wholly Foreign-Owned Enterprises, the Law on Sino-Foreign Cooperative Joint Ventures and the Law on Sino-Foreign Equity Joint Ventures in the FTZ. In effect, those three laws involve the establishment, business structure, foreign exchange management, labor and personnel, finance and accounting, dissolution and liquidation, etc. The DESIVION of the National People’s Congress just temporarily suspends 11 administration approvals and changes them into filling administration. The Law on Wholly Foreign-Owned Enterprises, the Law on Sino-Foreign Cooperative Joint Ventures and the Law on Sino-Foreign Equity Joint Ventures will still be enforced in the FTZ and be temporarily adjusted.

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