Circular of SAIC, MOFCOM, GAC and SAFE on Printing and Issuing Suggestions on Implementation of Several Issues Applicable for Law of Examination, Approval, Registration and Administration of Foreign-funded Enterprises

Circular of SAIC, MOFCOM, GAC and SAFE on Printing and Issuing Suggestions on Implementation of Several Issues Applicable for Law of Examination, Approval, Registration and Administration of Foreign-funded Enterprises

Gong Shang Wai Qi Zi [2006] No. 81

April 24, 2006

The industry and commerce administrative bureaus, the commerce departments and foreign exchange administrative bureaus of all provinces, autonomous regions, municipalities and cities enjoying the State economic plan, all customs directly under the State Administration of Customs and all national economic and technology development zones:

The "Decisions on Amending the 'Company Law of the People's Republic of China" and the "Decisions of the State Council on Amending the 'Regulations of the People's Republic of China on the Registration Administration of Companies" passed at the 18th session of the Standing Committee of the tenth National People's Congress on 27 October 2005 became effective from 1 January 2006. In order to properly apply the law, implement the examination, approval and registration work of foreign-invested companies in a regulated, convenient and efficient way, promote the sound development of foreign-invested companies and enhance the quality and level of utilizing foreign investment, the "Implementing Opinions on Several Issues Concerning the Application of Law Governing the Examination, Approval and Registration of Foreign-invested Companies" are hereby distributed to you and please implement them accordingly. Should there be any problem in the implementation, please report it timely.

Enclosure: Implementing Opinions on Several Issues Concerning the Application of Law Governing the Examination, Approval and Registration of Foreign-invested Companies

In order to properly apply the law, implement the examination, approval and registration work of foreign-invested companies in a regulated, convenient and efficient way, promote the sound development of foreign-invested companies and enhance the quality and level of utilizing foreign investment, the implementing opinions are hereby provided as follows as to how to apply the Company Law of the People's Republic of China (hereinafter referred to as the "Company Law"), the Regulations of the People's Republic of China on the Administration of Companies Registration (hereinafter referred to as the "Regulations on the Administration of Companies Registration") and the foreign investment related laws, regulations and policies of the State in the examination, approval and registration of foreign-invested companies.

I. The administration of registration of foreign-invested companies shall apply to the Company Law and the Regulations on the Administration of Companies Registration. Where any other law has otherwise been provided in connection with foreign-invested enterprises, such law shall prevail; where no provision has been provided in the Company Law, the Regulations on the Administration of Companies Registration or any law related to foreign-invested enterprises, the administrative regulations or the State Council's decisions relating to foreign-invested enterprises and other foreign investment related provisions of the State shall prevail.

II. Foreign companies, enterprises and other economic organizations or individuals (hereinafter referred to as "foreign investors") may establish a company either in the form of Chinese-foreign equity joint ventures or Chinese-foreign cooperative joint ventures by cooperating with Chinese enterprises and other economic organizations or in the form of foreign joint ventures or wholly foreign-owned enterprises.
Where any foreign investor establishes a one-person limited company in the form of wholly foreign-owned enterprises in accordance with the law, its minimum amount of registered capital shall meet the requirements for one-person limited companies as provided in the Company Law; where any foreign individual establishes a one-person limited company, he shall also confront to the provisions on the foreign investment restriction for one-person limited companies provided in the Company Law. Wholly foreign-owned companies established according to the law prior to 1 January 2006 shall remain unchanged, but the above provisions shall be fulfilled when they alter the registered capital and make foreign investment.

III. The board of directors of a Chinese-foreign equity joint venture and cooperative joint venture is the authority of the company and the organizational structure shall be formulated in the articles of association in accordance with the Law on Chinese-Foreign Equity Joint Ventures, the Law on Chinese-Foreign Cooperative Joint Ventures and the Company Law.
The organizational structure of a foreign joint venture or a wholly foreign-owned company or a foreign-invested stock limited company shall comply with the provisions in the Company Law and the articles of association.

IV. The time limit for applying for the establishment of foreign-invested companies shall comply with the provisions in the Regulations on the Administration of Companies Registration. However, those who establish a company in the form of Chinese-foreign cooperative joint ventures, foreign joint ventures or wholly foreign-owned ventures shall, in accordance with the provisions in the Law on Chinese-Foreign Cooperative Joint Ventures and the Law on Foreign-funded Enterprises, apply for the registration of establishment to the company registration authority within 30 days upon receipt of the approval document. If failed to do so within the limit, the applicant shall confirm the effect of the original approval document with the examination and approval authority or apply for another approval.
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