(Promulgated on April 4, 1995)
In order to promote foreign investment
in China and to introduce foreign advanced technology
and managerial expertise, foreign investors are permitted
to establish investment companies (hereinafter referred
to as "investment company") in China in accordance
with the Chinese laws and regulations governing foreign
investment and these Regulations.
Article 1
For the purpose of these Regulations,
the term "Investment Company" means a company
that is engaged in direct investment and established
by foreign investors in China in the form of either
a wholly foreign owned enterprise or an equity joint
venture with Chinese investors. The investment company
shall take the form of a limited liability company.
Article 2
To apply for approval to establish an
investment company, the following conditions shall be
fulfilled:
(1)
(a) the foreign investor having a good
credit and the economic strength necessary for the establishment
of an investment company; the total amount of the investor's
assets during the year preceding the application being
no be less than US $ 400 million, and the investor having
already established foreign-invested enterprise (s)
within the territory of China; and the amount of the
investor's actually paid-in capital contribution to
the registered capital thereof exceeding US $ 10 million.
Furthermore, more than three project proposals of the
investor's intended investment projects have been approved;
or
(b) the foreign investor having a good
credit and the economic strength necessary for the establishment
of an investment company; the investor have already
established more than 10 foreign-invested enterprises
in the people's Republic of China which are engaged
in production or infrastructure construction, and the
total amount of the investor's actually paid-in capital
contribution to the registered capital thereof exceeding
US $ 30 million.
(2) In case the investment company is to be established
in the form of an Chinese-foreign equity joint venture,
the Chinese investor shall have good creditability and
the economic strength necessary for the establishment
of such company, and the total amount of the Chinese
investor's assets shall not be less than RMB100 million.
and
(3) the registered capital of the investment
company being not be less than US $ 30 million.
Article 3
To apply for the establishment of an
investment company, the investor shall submit the following
documents to the Ministry of Foreign Trade and Economic
Cooperation (hereinafter referred to as "MOFTEC")
for examination and approval after the examination and
consent obtained from the foreign trade and economic
cooperation authorities of the related province, autonomous
region, municipalities directly under the Central Government
or the municipalities specifically listed in the State
economic plan in which the investment company is to
be located:
(1) If an investment company is to be
established in the form of an equity joint venture:
the project proposal for the establishment of the investment
company, and the feasibility study, contract and articles
of association signed jointly by the parties to the
investment company; or If an investment company is to
be established in the form of a wholly foreign-owned
enterprise: the project proposal, the wholly foreign-owned
enterprise application form, the feasibility study and
articles of association signed by the foreign investor.
(2) the creditability certificate for
each investing party, the registration certificate (duplicate)
and the legal representative certificate (duplicate);
(3) the approval certificate (s) (duplicate)
for the enterprise (s) already invested by the foreign
investor, the business license (s) (duplicate) and the
capital verification report (duplicate) issued by certified
public accountants registered in China;
(4) the balance sheet of each investing
party for the previous 3 years; and
(5) other documents as required by MOFTEC.
All of the aforesaid documents shall
be in the original except those specified as duplicate.
In case the documents are to be signed
by a non-legal representative, a power of attorney issued
by the legal representative shall be submitted. In case
the investor entrusts a lawfully established intermediary
for the application formalities, a power of attorney
signed by the legal representative of the investor shall
be submitted.
Article 4
The foreign investor shall make its
capital contribution to the registered capital of the
investment company in a freely convertible currency.
The Chinese investor may make its capital contribution
in Renminbi. All the capital contribution shall be paid
in full within 2 years after the date of issuance of
the business license.
Article 5
An investment company, upon approval,
may be engaged in part or all of the following business:
(1) To invest in fields such as industry,
agriculture, infrastructure, energy, etc., to the extent
that foreign investment is encouraged or permitted by
the State;
(2) With written entrustment by enterprises
with its investment (with the unanimous approval by
the board of directors), an investment company may provide
the following services for such enterprises:
(a) to assist, or act as agent for such
enterprises in purchasing domestically or overseas the
machinery, equipment and office appliances for their
own use, and raw materials, components, and parts as
being used by the enterprises for their own production
purpose, as well as to distribute at both domestic and
international markets the products produced by the enterprises
with its investment, and to provide after-sales services;
(b) to balance foreign exchange revenue
and expenditure among the enterprises with its investment
with the consent and under the supervision of the foreign
exchange administration authorities;
(c) to assist the enterprises with its
investment in the recruitment and employment of personnel
and to provide technical training, market development
and consulting; and
(d) to assist the enterprises with its
investment to seek loans and to provide guarantees.
And
(3) An investment company may provide
consulting services for its investors.
Article 6
For the purpose of Item 2, Article 5
of these regulations, enterprises with investment from
the investment company mean:
(1) the enterprises in which an investment
company invests directly or jointly with other foreign
investors and/ or Chinese investors, and the capital
contribution of the investment company or of the investment
company together with other foreign investors, accounts
for more than twenty-five per cent of the registered
capital of such enterprises already established; and
(2) the enterprises already established
within the territory of China in which the capital contribution
of the investment company and other foreign investors
account for more than twenty-five per cent of the registered
capital of such an enterprise as a result of purchasing
part or all of the shares from its investors, or its
affiliated companies or other foreign investors.
Unless otherwise specifically approved
by MOFTEC, an investment company can only provide services
specified in Item 2, Article 5 hereof for the enterprises
with its investment as described above.
An investment company shall not be engaged
in intermediary business service related to trade in
China on behalf of its investor(s).
Article 7
Upon the approval by the People's Bank
of China, an investment company may provide financial
support for the enterprises with its investment.
Article 8
The term of operation of an investment
company shall be examined and approved in accordance
with the relevant state regulations on the term of operation
of foreign-invested enterprises and on the basis of
the nature of the projects intended to be established
by the Investment Company.
Article 9
The establishment of an enterprise in
which an investment company invests shall be separately
submitted for approval in accordance with the limits
of approval authorization and the approval procedures
for the examination and approval of foreign-invested
enterprises.
Article 10
An enterprise established by an investment
company whose foreign exchange investment solely made
or together with other foreign investors is not less
than twenty-five per cent of the registered capital
of the enterprise shall enjoy the treatment of a foreign-invested
enterprise, and be issued a foreign-invested enterprise
approval certificate and foreign-invested enterprise
business license.
Article 11
A foreign investor, fulfilling the conditions
specified in Article 2 Item 1 (a), may contribute capital
to and establish an investment company in the name of
its wholly-owned subsidiary.
Article 12
An investor that applies for approval
to establish an investment company shall submit a guarantee
letter to the examination and approval authorities in
which it guarantees the capital contribution to the
registered capital and technology transfer by the investment
company to the enterprise(s) to be established when
such investment company invests within the territory
of China.
In case an investment company is established
in the name of its wholly-owned subsidiary, the parent
company shall provide such a guarantee letter to the
examination and approval authorities in which it guarantees
the capital contribution to the registered capital of
the investment company to be established by its subsidiary
in accordance with the conditions as approved by the
examination and approval authorities, as well as the
capital contribution by the investment company to the
registered capital of and the technology transfer to
the enterprise (s) to be established when it invests
within the territory of China.
Article 13
The investment activities by an investment
company within the territory of China shall not be limited
to the place of its registration.
Article 14
Matters concerning the taxation of an
investment company shall be handled in accordance with
the relevant laws and regulations of China.
Article 15
An Investment Company shall actually
implement its project investment plan, and its investment
situation of the previous year shall be filed with MOFTEC
within the first 3 months of each year.
Article 16
An investment company and the enterprises
established with its investment shall be legal persons
or entities independent of each other.
Their business transactions shall be
dealt with as normal business transaction between independent
enterprises.
Article 17
An investment company as well as the
enterprises established with its investment shall abide
by the laws and regulations of China, and shall not
escape from being administrated and evade paying taxes
by any means.
Article 18
These Regulations are applicable as
a measure of reference to investors from the regions
of Taiwan, Hong Kong and Macao carrying out investment
and establishing investment companies in the mainland.
Article 19
The interpretation of these Regulations
shall be vested in the Ministry of Foreign Trade and
Economic Cooperation.
Article 20
These Regulations shall be implemented
as of the date of their promulgation.
