Trial measures to further facilitate FDI in Yangtze River Delta

The Shanghai Market Supervision Administration (“Shanghai MSA”), the Jiangsu MSA, the Zhejiang MSA and the Anhui MSA have recently jointly published three trial measures in relation to foreign-invested enterprises (“FIEs”). These measures are the Administrative Measures on Permitting Domestic Natural Persons to Invest In and Establish FIEs (“Measures on Domestic Natural Persons Establishing FIEs”), the Trial Measures on Simplifying Registration Materials and Implementing Mutual Recognition of Subject Qualification Evidence Documents (“Measures on Simplifying ID Documents”) and the Trial Measures on Foreign Natural Persons Holding Permanent Resident ID Cards Establishing Science and Technology Enterprises (“Measures on Permanent Resident Foreigners Establishing Sci-tech Enterprises”). These three Measures have come into force on 1 January 2020 and will remain valid until 31 December 2021.They will apply within the territorial jurisdictions of Shanghai, Jiangsu, Zhejiang and Anhui. 1. Measures on Domestic Natural Persons Establishing FIEs Within the Validity Period and the Territory, Chinese domestic residents who hold an ID card of the People’s Republic of China will be permitted to invest in and establish foreign-invested enterprises jointly with foreign natural persons, enterprises or other organizations within the Territory. This means that Chinese domestic natural persons will be permitted to directly establish new Sino-foreign equity joint venture enterprises and Sino-foreign contractual joint venture enterprises with foreign investors, or to become direct shareholders of any existing FIEs. This is generally not permitted under the current Chinese laws on national level and administrative practice. 2. Measures on Simplifying ID Documents Within the Validity Period and the Territory, the formality requirements on identity documents of foreign investors, i.e. passports of foreign individuals and incorporation registration certificates of foreign companies (the “ID Documents”) will be simplified. Foreign investors, which have already established any FIEs within the Territory and submitted ID Documents in notarized and legalized form for such establishment, will not be required to submit any new ID documents in notarized and legalized form if they make new investments (i.e. greenfield establishment or acquiring existing companies) in any other provinces or cities within the Territory provided that the old ID Documents are still within their validity period. 3. Measures on Permanent Resident Foreigners Establishing Sci-tech Enterprises Within the Validity Period and the Territory, foreigners holding a Permanent Resident ID Card will be permitted to use their Permanent Resident ID Card as their identity document to establish or invest in “sci-tech enterprises”. Sci-tech enterprises are enterprises engaging in development and transfer of technologies, technical consultancy, service and testing, or R&D, production and distribution of hi-tech products or services. The industrial sectors of the sci-tech enterprises shall not be subject to the “Negative List” administration and the legal forms of such enterprises are limited to limited liability companies, partnerships and sole proprietorship enterprises.

• Type:

  • Promotion and facilitation (Investment facilitation )

• Industry:

  • Not industry specific

• Sources:

  • Lexology, Yangtze River Delta further facilitates Foreign Investment, https://www.lexology.com/library/detail.aspx?g=14d1b4d9-eb6b-40dc-9f4c-a21691aa31b2&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2020-01-07&utm_term=, 03 Jan 2019