Administrative Measures for Outbound Investment

Order of the Ministry of Commerce [2014] No.3

September 6, 2014

The Administrative Measures for Outbound Investment, which have been deliberated and adopted at the 27th executive meeting of the Ministry of Commerce on August 19, 2014, are hereby promulgated for implementation as of October 6, 2014.

Minister Gao Hucheng

Administrative Measures for Outbound Investment

Chapter I General Provisions

Article 1 In order to promote and regulate outbound investment and facilitate the outbound investment, the Administrative Measures for Outbound Investment (hereinafter referred to as the "Measures") are hereby formulated in accordance with the Decision of the State Council on Reforming the Investment System, the Decision of the State Council on Establishing Administrative Licensing for Administrative Examination and Approval Items That must be Retained as well as the relevant laws.

Article 2 For the purpose of the Measures, "outbound investment" refers to the activities of possessing non-financial enterprises or acquiring the ownership of, the control over, the operation and management right of, and other rights of and interests in, the existing non-financial enterprises outbound through consolidation, merger and acquisition, or otherwise conducted by enterprises (hereinafter referred to as the "enterprises") that are established in the People's Republic of China (hereinafter referred to as "China") in accordance with the law.

Article 3 An enterprise which makes outbound investment shall make decisions independently and be responsible for its own profits and losses in accordance with the law.

Article 4 The outbound investment carried out by an enterprise shall not:
1. harm the sovereignty and security of China and public interests, or violate Chinese laws or regulations;
2. damage the relation between China and a relevant country (region);
3. violate the international treaty or convention concluded with other countries by China; or
4. export the products or technologies the export of which is forbidden by China.

Article 5 The Ministry of Commerce as well as the departments in charge of commerce of all provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan and the Xinjiang Production and Construction Corps (hereinafter referred to as the "provincial departments in charge of commerce") shall be responsible for the implementation of administration and supervision over outbound investment.

Chapter II Archive Filing and Verification

Article 6 The Ministry of Commerce and the provincial departments in charge of commerce shall conduct archive filing and verification management according to different circumstances of outbound investment of an enterprise.
Where the outbound investment carried out by an enterprise involves sensitive countries and regions and sensitive industries, verification management shall be implemented.
Archive filing management shall be implemented for other circumstances of outbound investment of an enterprise.

Article 7 Countries for which verification management shall be implemented refer to countries that have not established diplomatic relations with China and countries under the United Nations' sanctions. When necessary, the Ministry of Commerce shall separately announce the list of countries and regions for which verification management shall be implemented.
Industries for which verification management shall be implemented refer to industries exporting products and technologies the export of which is restricted by China, or affecting the interests of a country (region) or more.

Article 8 The Ministry of Commerce and the provincial departments in charge of commerce shall conduct archive filing and verification, improve work efficiency and provide quality services in accordance with the law.
The Ministry of Commerce and the provincial departments in charge of commerce shall manage the outbound investments of enterprises through "outbound investment management system" (hereinafter referred to as the "System"), and issue the Certificate of Outbound Investment by Enterprises for enterprises filed or verified (hereinafter referred to as the "Certificate", see Appendix I for the format). The Certificate shall be printed and sealed by the Ministry of Commerce and the provincial departments in charge of commerce respectively and be subject to unified coding management.
The Certificate is the voucher for enterprises being filed or verified for outbound investments thereof, and is issued according to the ultimate destinations of outbound investments.

Article 9 For outbound investments subject to archive filing, a central enterprise shall report its outbound investments to the Ministry of Commerce for filing and a local enterprise to the provincial department in charge of commerce at its locality.
A central enterprise and a local enterprise shall fill out and print out the Outbound Investment Archival Filing Form (hereinafter referred to as the "Archival Filing Form", see Appendix II for the format) through the System, then report the form bearing its seal along with the copies of business license to the Ministry of Commerce and the provincial department in charge of commerce, respectively, for archive filing.
Where the Archival Filing Form is filled out truthfully and completely and meets the legal form, and an enterprise states in the Archival Filing Form that its outbound investment does not fall under any circumstance specified in Article 4 hereof, the Ministry of Commerce or the provincial department in charge of commerce shall record the same and issue the Certificate within three working days upon receipt thereof. If an enterprise does not fill out the Archival Filing Form truthfully or completely, the Ministry of Commerce or the provincial department in charge of commerce shall not record the same.

Article 10 For the outbound investment subject to verification, a central enterprise may apply to the Ministry of Commerce, and a local enterprise may apply to the Ministry of Commerce through the provincial department in charge of commerce at its locality.
An enterprise shall submit the following materials for the application for outbound investment verification:
1. an application form, mainly introducing the investor's general information, the overseas enterprise's name, equity structure, investment amount, business scope, operation term, source of investment fund, and specific contents of the investment;
2. Outbound Investment Application Form (see Appendix III for the format), which shall be filled out, printed out and sealed by the enterprise through the System;
3. any contract or agreement relevant to the outbound investment;
4. for the outbound investment involving any product or technology the export of which is prohibited by China, the materials proving the approval of the export of the product or technology by the relevant departments shall be submitted; and
5. copies of business license.

Article 11 Opinions from (the economic and commercial counselor's offices of) the embassies (consulates) of China in foreign countries to approve outbound investments shall be sought. The opinion on the outbound investment involving a central enterprise shall be sought by the Ministry of Commerce, and that on the outbound investment involving a local enterprise shall be sought by a provincial department in charge of commerce. When soliciting opinions, the Ministry of Commerce and the provincial departments in charge of commerce shall provide the basic information on the investment items and so on. (The economic and commercial counselor's offices of) the embassies (consulates) of China shall make a response within seven working days as of the receipt of requirement for giving opinions.

Article 12 The Ministry of Commerce shall decide whether to verify the application of a central enterprise within 20 working days (including the time for seeking opinions of (the economic and commercial counselor's office of) the embassy (consulate) of China in the country concerned) after accepting the application. If the application materials are incomplete or inconsistent with the statutory form, the Ministry of Commerce shall notify the applicant of all contents needed to be supplemented or corrected at one time within three working days. If the Ministry of Commerce does not notify the applicant within the aforesaid period, it shall be deemed that the application has been accepted when the application materials are received. If a central enterprise submits all supplemented and corrected application materials according to the requirements of the Ministry of Commerce, the Ministry of Commerce shall accept the application.
After accepting the verification application of a local enterprise, the provincial department in charge of commerce shall preliminarily review whether the application falls under any circumstance specified in Article 4 hereof, and submit preliminary review opinions and all application materials to the Ministry of Commerce within 15 working days (including the time for seeking opinions of (the economic and commercial counselor's office of) the embassy (consulate) of China in the country concerned). If the application materials are incomplete or inconsistent with the statutory form, the provincial department in charge of commerce shall notify the applicant of all contents needed to be supplemented or corrected at one time within three working days. If the provincial department in charge of commerce does not notify the applicant within the aforesaid period, it shall be deemed that the application has been accepted when the application materials are received. If a local enterprise submits all supplemented and corrected application materials according to the requirements of the provincial department in charge of commerce, the provincial department in charge of commerce shall accept the application. After receiving the preliminary review opinions from the provincial department in charge of commerce, the Ministry of Commerce shall decide whether to verify the application within 15 working days.

Article 13 For outbound investment that has been verified, the Ministry of Commerce shall issue a written approval and a Certificate; if an outbound investment is not verified for it falls under any circumstance specified in Article 4 hereof, the Ministry of Commerce shall notify the applicant and explain the reasons in writing, and inform the same of the right to apply for administrative reconsideration or file administrative litigation. If an enterprise provides false application materials to apply for verification, the Ministry of Commerce shall not verify the application.

Article 14 Where two or more enterprises jointly make an outbound investment, the relatively major shareholder shall be responsible for going through the archive filing or verification procedures after acquiring the written consent of other investors. If the shareholding ratio of each investor is the same, the investors shall negotiate and decide to entrust one of them to going through the archive filing or verification procedures. If investors are not within the same administrative jurisdiction, the Ministry of Commerce or the department in charge of commerce which is responsible for handling the verification and archive filing shall notify the departments in charge of commerce of the place where other investors are located of the relevant results.

Article 15 If there is any change in the items of outbound investment specified in the original Certificate after the archive filing or verification of the outbound investment of an enterprise, the enterprise shall, according to the procedures under the present chapter, apply to the original filing or verifying Ministry of Commerce or provincial department in charge of commerce for going through the procedure of alteration.

Article 16 Where an enterprise fails to make an outbound investment within two years as of the date of receipt of the Certificate, the Certificate shall become invalid automatically. If it needs to carry out outbound investment again, it shall go through the archive filing procedures or apply for verification according to the procedures under the present chapter.

Article 17 Where an enterprise terminates outbound investment which has been verified or filed, it shall report the case to the original verifying or filing Ministry of Commerce or provincial department in charge of commerce after completing the procedure of cancellation in accordance with the law of the investment destination. The original verifying or filing Ministry of Commerce or provincial department in charge of commerce shall issue a confirmation letter of cancellation according to the report.
Termination refers to the case in which an overseas enterprise, which has formerly been put on records or verified, no longer exists, or an enterprise no longer owns any equities or other rights or interests in an overseas enterprise, which has formerly been put on records or verified.

Article 18 It is forbidden to forge, alter, lease, lend or otherwise transfer the Certificate. A Certificate that has been modified, invalidated or cancelled shall be returned to the original filing or verifying Ministry of Commerce or provincial department in charge of commerce.

Chapter III Rules and Services

Article 19 An enterprise shall objectively evaluate its own conditions and capacity, thoroughly study the investment environment of the investment destination and carry out outbound investment actively and prudently with attention paid to risks prevention. The relevant qualification certification documents shall be acquired by an enterprise if so required by a domestic or foreign law, regulation or rule.

Article 20 An enterprise shall require the overseas enterprise which it invests in to observe the laws and regulations of the investment destination, respect local customs, perform the necessary social responsibility, and better do work in respect of environment protection, labor protection, and enterprise cultural construction so as to promote the integration of the overseas enterprise into the local society.

Article 21 An enterprise shall, when naming the overseas enterprise which it invests in, meet the domestic and overseas provisions of the laws, regulations and policies. An enterprise which is not verified according to the relevant provisions of the State shall not use such words as "China" and "Chinese" in the names of its overseas enterprises.

Article 22 An enterprise shall implement various safety precautions for its personnel and property and establish an emergency alerting mechanism and an emergency scheme. When an emergency occurs overseas, the enterprise concerned shall handle it timely and appropriately under the guidance of the embassy (consulate) of China in the country concerned and the competent departments in China.
An enterprise shall well conduct the selection and training with respect to security and discipline education as well as emergency training for the dispatched personnel before they go abroad, strengthen its management over those dispatched personnel and obtain the local lawful legal residence and work permission in accordance with the law.

Article 23 An enterprise shall require the Chinese person-in-charge of its overseas enterprise which it invests in to check in and register at (the economic and commercial counselor's office of) the embassy (consulate) of China in the country concerned in person or by mail, fax or email in a timely manner.

Article 24 An enterprise shall report the business information and statistic documents of the outbound investment and the difficulties and problems relevant to the outbound investment to the original verifying or filing Ministry of Commerce or provincial department in charge of commerce, and ensure the authenticity and accuracy of the information and data submitted.

Article 25 The overseas reinvestment of an overseas enterprise invested in by an enterprise shall be reported to the relevant department in charge of commerce by the enterprise after the overseas legal procedure is completed. The central enterprise concerned shall fill out with the relevant information through the System, print out the Reinvestment Report Form of Overseas Chinese-funded Enterprises (hereinafter referred to as the "Reinvestment Report Form", see Appendix IV for the format) and affix its seal thereon, and then submit it to the Ministry of Commerce; the local enterprise concerned shall fill out with the relevant information through the System, print out the Reinvestment Report Form, and then submit it bearing the seal of the enterprise to the provincial department in charge of commerce.

Article 26 The Ministry of Commerce shall be responsible for the inspection and instruction on the outbound investment administration conducted by the provincial departments in charge of commerce. The provincial departments in charge of commerce shall report the relevant information about the outbound investment within their respective administrative jurisdiction to the Ministry of Commerce on a semiannual basis.

Article 27 The Ministry of Commerce shall, in concert with the relevant departments, provide services such as guarantee of rights and interests, investment promotion and risk pre-warning for the outbound investments of enterprises.
The Ministry of Commerce shall promulgate the Guidance on Foreign Countries (Regions) for Outbound Investments and Cooperation, industry guidelines of countries and other documents to help enterprises to understand the investment environment of investment destinations; strengthen the guidance and regulation over outbound investments of enterprises, and, in concert with the relevant departments, promulgate environmental protection guidelines to urge enterprises to operate overseas in accordance with laws and regulations; set up an outbound investment and cooperation information service system to provide information services including statistics, investment opportunities, investment barriers and risk pre-warning for enterprises to carry out outbound investments.

Chapter IV Legal Liabilities

Article 28 If an enterprise goes through filing procedures and obtains the Certificate by providing false materials or by any improper means, the Ministry of Commerce or the provincial department in charge of commerce shall revoke the filing of the outbound investment of the said enterprise, give it a warning, and announce the penalty decision in accordance with the law.

Article 29 If an enterprise provides false materials to apply for verification, the Ministry of Commerce shall give it a warning, and announce the penalty decision in accordance with the law. The said enterprise shall not apply for verification again within one year.
If an enterprise is verified for its outbound investment by improper means such as fraud and bribery, the Ministry of Commerce shall revoke the verification of the outbound investment of the said enterprise, give it a warning, and announce the penalty decision in accordance with the law. The enterprise shall not apply for the verification again within three years; if a crime is constituted, the enterprise shall be prosecuted for criminal liabilities in accordance with the law.

Article 30 If any circumstance specified in Article 4 hereof occurs in the process of outbound investment of an enterprise, the said enterprise shall bear corresponding legal liabilities.

Article 31 If an enterprise forges, alters, leases, lends or otherwise transfers the Certificate, the Ministry of Commerce or the provincial department in charge of commerce shall give it a warning; if a crime is constituted, the enterprise shall be prosecuted for criminal liabilities in accordance with the law.

Article 32 If outbound investment falls under any circumstance specified in Articles 28 to 31 hereof and violates any other provision hereof, the enterprise concerned shall not enjoy the support of the relevant State policies within three years.

Article 33 Where any officer of the Ministry of Commerce or departments in charge of commerce fails to perform his duty in accordance with the provisions of the Measures, abuses his power, claims or receives property from others or seek other interests, which constitutes a crime, he shall be prosecuted for criminal liabilities in accordance with the law; if a crime is not constituted, he shall be imposed on administrative sanction in accordance with the law.

Chapter V Supplementary Provisions

Article 34 Any provincial department in charge of commerce may formulate corresponding working rules according to the provisions of the Measures.

Article 35 For the purpose of the Measures, the term "central enterprise" refers to the enterprise funded by State-owned Assets Supervision and Administration Commission of the State Council, enterprises owned by it and other entities under the management of the Central Government.

Article 36 Where an institution legal person carries out outbound investment or an enterprise establishes a branch overseas, the Measures apply mutatis mutandis.

Article 37 The Measures apply mutatis mutandis to the investments made by enterprises in Hong Kong, Macao and Taiwan regions.

Article 38 The power of interpretation of the Measures shall remain with the Ministry of Commerce.

Article 39 The Measures shall come into force as of October 6, 2014. The Administrative Measures for Outbound Investment (Order of the Ministry of Commerce [2009] No.5) issued by the Ministry of Commerce in 2009 shall be repealed simultaneously.