Circular of the State Administration for Industry and Commerce on Properly Conducting Registration of Foreign-Invested Enterprises subject to Filing

　　Gong Shang Qi Zhu Zi [2016] No.189

　　September 30, 2016

　　The administrations for industry and commerce and the market supervision and administration departments of all provinces, autonomous regions, municipalities directly under the Central Government, cities specially designated in the state plan, and sub-provincial cities,

　　The Decision on Revising Four Laws Including the Law of the People's Republic of China on Wholly Foreign-Owned Enterprises (Order of the President of the People's Republic of China No.51) (the "Decision on Revising Laws"), adopted by the Standing Committee of the 12th National People's Congress at its 22nd Session on September 3, 2016, is effective as of October 1, 2016. The Decision on Revising Laws requires to revise the provisions in respect of administrative approval in the Law of the People's Republic of China on Wholly Foreign-Owned Enterprises, the Law of the People's Republic of China on Sino-Foreign Equity Joint Ventures and the Law of the People's Republic of China on Sino-Foreign Cooperative Joint Ventures (collectively the "Three Laws on Foreign Investment"), and the Law of the People's Republic of China on the Protection of the Investments of Taiwan Compatriots (the "Law on Taiwan Compatriots Investments"), where the establishment and change to the registration of foreign-invested enterprises beyond the scope of the special administrative measures for market access prescribed by the state are subject to filing instead of approval. With a view to ensuring smooth implementation of the Decision on Revising Laws, and successfully shifting registration of foreign-invested enterprises towards a filing process instead of an approval process, relevant issues are hereby given as follows:

　　I. Reaching consensus in thinking and fully understanding the significance of the revision to the laws on foreign investment
　　1. Revision to the laws on foreign investment is an objective requirement for establishing new systems for an open economy.
　　Since the 18th National Party Congress, the CPC Central Committee and the State Council have launched a series of important strategic initiatives on reforming the foreign investment approval system, exploring introduction of the pre-establishment national treatment plus negative list system for foreign investments, and developing new systems for an open economy. Following adoption of the Decision on Revising Laws by the Standing Committee of the National People's Congress, the negative list system for foreign investments which has been proven in Shanghai, Guangdong, Tianjin and Fujian pilot free trade zones, is incorporated into laws for replication nationwide. This is a dramatic change to China's foreign investment system and is meaningful for further facilitating and regulating the foreign investment system and making it more transparent.
　　2. Revision to the laws on foreign investment is an integral aspect of deepening the reform of the business system.
　　Further streamlining the preliminary review for business registration is a major task for vigorously transforming government functions and deepening the reform of the business system. The Standing Committee of the National People's Congress adopts the Decision on Revising Laws, revising the approval system for items beyond the scope of the special administrative measures for market access prescribed by the state to the filing system, which fully embodies the reform initiative of streamlining administration, delegating powers, improving regulation and optimizing services, allows to further lower the threshold for foreign capital access to Chinese market and reduce the administrative cost for foreign capital access, and is an integral aspect of deepening the reform of the business system and continuously improving the business environment.
　　3. Revision to the laws on foreign investment is a new task for the industry and commerce administration in China.
　　According to the Decision on Revising Laws, where foreign investors invests in the sectors beyond the scope of the special administrative measures for market access prescribed by the state (the "Negative List"), the filing document issued by the competent commercial authorities is not the precondition for business registration. The industry and commerce administration authorities may accept the registration applications for the establishment and change to the registration of foreign-invested enterprises beyond the Negative List. It is a new task and challenge for the industry and commerce administration authorities in the crucial stage of deepening the reform of the business system. The industry and commerce administration authorities at all levels shall hold a strategic perspective of the important initiatives on comprehensively deepening reform and further opening up since the 18th National Party Congress, fully understand the significance of the Decision on Revising Laws, actively adapt to the new situation, new task and new requirement, effectively heighten the sense of responsibility, and conscientiously implement the Decision on Revising Laws.

　　II. Regulating registration to provide convenient and efficient services for foreign-invested enterprises accessing to Chinese market
　　1. Clarifying the jurisdiction for registration and improving the registration system for foreign-invested enterprises.
　　The administration for registration of foreign-invested enterprises is subject to authorization. The registration administration authorities for foreign-invested enterprises (the "registration authorities") are the State Administration for Industry and Commerce and the local authorities for industry and commerce and market supervision and administration which are authorized with the power of approval for registration of foreign-invested enterprises by the State Administration for Industry and Commerce (the "authorized authorities for foreign capital"). The establishment, change to the registration and deregistration of foreign-invested enterprises beyond the Negative List shall, subject to territorial jurisdiction in principle, be handled by the authorized authorities for foreign capital at the lowest level of the place where the foreign-invested enterprises are located. The establishment, change to the registration and deregistration of the foreign-invested enterprises under the Negative List shall continue be subject to hierarchical jurisdiction.
　　Where the registration change of an existing foreign-invested enterprise is beyond the Negative List, the enterprise may choose to apply for registration with the original registration authority or the authorized authority for foreign capital at the lowest level of the place where the enterprise is located. Where the registration change of an existing foreign-invested enterprise is under the Negative List, or the approval power of the competent authority involved in the registration change is changed, the enterprise may choose to apply for registration with the original registration authority or the authorized authority for foreign capital at the same level; if there is no authorized authority for foreign capital at the same level, the enterprise may apply for registration with the authorized authority for foreign capital at the higher level.
　　The registration authorities at the provincial level may, in light of the local actualities, reset the power scope of the authorized authorities for foreign capital at different levels within their jurisdictions. In the event of any specific provisions on business registration stipulated in laws, administrative regulations and rules, such provisions shall prevail.
　　2. Setting out clear registration rules for fulfillment of the duties regarding registration of foreign-invested enterprises by law.
　　In the case of investments in the sectors beyond the Negative List, foreign investors may apply for establishment, change to the registration and deregistration with the competent registration authorities without submitting the filing documents issued by the competent commercial authorities. In the case of investments in the sectors under the Negative List, when applying for the establishment, change to the registration and deregistration with the competent registration authorities, foreign investors shall file the official approval reply and certificate issued by the competent commercial authorities. "Approval documents issued by the competent authorities (including a copy of the approval reply and certificate)" in the Specifications of Materials to be Submitted for Registration of Foreign-invested Enterprises is revised as "Approval documents issued by the competent authorities (including a copy of the approval reply and certificate) (only applicable to the enterprises within the scope of the special administrative measures for market access prescribed by the state)".
　　Registration authorities at all levels shall rigidly enforce the procedural provisions on business registration, review the registration following the principle of equal treatment for domestic- and foreign-funded enterprises, and ensure standard registration procedures and unified review criteria.
　　3. Regulating registration activities by law and properly applying the provisions on registration of foreign-invested enterprises.
　　The Decision on Revising Laws only involves revision to the provisions on administrative approval of foreign-invested enterprises. The registration authorities at all levels shall, in light of the forms of foreign investments, properly apply the relevant laws, administrative regulations, decisions of the State Council and other provisions on foreign investments by the state.
　　Where an applicant has obtained the approval reply and certificate from the competent commercial authority, yet not applied and registered with the competent registration authority prior to October 1, 2016, the registration authority shall handle business registration under the original provisions of the Three Laws on Foreign Investment and the Law on Taiwan Compatriots Investments.
　　The competent registration authorities shall handle business registration in compliance with the original provisions of the Three Laws on Foreign investment and the Law on Taiwan Compatriots Investments until the Negative List is promulgated or approved to be promulgated by the State Council.

　　III. Strengthening the organization and leadership to make sure the implementation of the Decision on Revising Laws
　　1. Implementing the Decision on Revising Laws in a coordinated way by strengthening education, training, dissemination and navigation.
　　Competent authorities in all localities shall attach great importance to ensure the smooth transition of registration of foreign-invested enterprises from the approval system to the filing system through coordination and planning, monitoring and supervision, and effective enforcement; organize education and training, in various forms, on the provisions of the Decision on Revision Laws and the Negative List through different methods to effectively improve the registration services for foreign-invested enterprises; take advantage of various media to disseminate and interpret the relevant policies and to answer and respond to concerns of enterprises and the general public, navigate foreign investors and foreign-invested enterprises through the administration requirements and registration procedures for foreign capital accessing to Chinese market, securing a smooth implementation of the new system for administration of foreign-invested enterprises.
　　2. Applying information technologies to improve the efficiency of registration.
　　To improve the efficiency of registration, the competent authorities in all localities shall, by applying information technologies, upgrade the business registration system and add the Negative List to the system to enable automatic reminder of the items in the Negative List during handling of registration of foreign-invested enterprises. The competent authorities in all localities shall upload the Decision on Revising Laws and the Negative List to the entrance page of the extranet registration platform to guide enterprises to freely choose the business scope and submit the application materials required by law.
　　The competent authorities in all localities shall strengthen communication with the related authorities. In the event of whether the application items of foreign-invested enterprises being under the Negative List or any other issues relating to registration, the competent authorities shall seek opinions from the development and reform and commercial authorities at the same level, so as to safeguard national industrial security.
　　3. Proactively building an information sharing and collaboration mechanism across various departments.
　　According to the general requirements for the development of the national enterprise credit information publicity platform, efforts shall be made to strengthen communication and collaboration with the relevant authorities to establish and improve the information sharing mechanism. The registration information of foreign-invested enterprises shall be published promptly through the national enterprise credit information publicity system or the enterprise information sharing platform to facilitate other administrative authorities for inquiry and follow-up supervision, and promote the nationwide implementation of the pre-establishment national treatment plus negative list system for foreign investments.

　　The requirements provided herein apply to enterprises invested by Taiwan Compatriots and by compatriots from Hong Kong and Macao.

　　The administrations for the industry and commerce and the market supervision and administration departments of all provinces, autonomous regions, municipalities directly under the Central Government and cities specially designated in the state plan and sub-provincial cities shall report the implementation of the Decision on Revising Laws and the problems discovered to the Enterprise Registration Bureau (or the Foreign-Invested Enterprise Registration Bureau) of the State Administration for Industry and Commerce in a timely manner.