26 Feb 2018
China Revises Outbound Investment Regulatory Regime
The reporting and management of outbound investments on the part of mainland businesses is now subject to a series of new regulations jointly introduced by the Ministry of Commerce (MOFCOM) and a number of other government bodies. These new regulations – Interim Measures for the Reporting of Outbound Investments Subject to Record-Filing or Approval – specify the required record-maintenance and approval procedures, as well as outlining the supervisory regime to be adopted once any such investment has been concluded. Overall, the new regulations have been designed as comprehensive guidelines covering the pre-, mid- and post- outbound investment phases.
The Measures also outline the individual responsibilities of separate government departments with regard to any proposed overseas investment, the procedure for creating a unified summary of any such activity and the nature of the jointly-applied sanctions that any business failing to comply with the prevailing regulations may incur. They also reiterate that under the management model of “encouraged development + negative list”, all such investments should be in compliance with state-defined priorities, while also highlighting that certain sectors, as detailed in MOFCOM’s current negative list, have been deemed as unsuitable for investment. Furthermore, they also specify that any information reported in relation to the investment process will be subsequently incorporated into future inspection protocols in order to ensure that truly comprehensive on-going oversight is maintained.
The Measures further clarify that the required record maintenance / approval procedures solely relate to the ultimate target of any overseas investment. In line with this, no record maintenance / approval is required with regard to any shell companies established by any domestic entity in order to facilitate such an investment.
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