New Methods Of Supervision On Outbound Investment
New Methods Of Supervision On Outbound Investme
Published on February 6, 2018
The National Development and Reform Commission (“NDRC”) issued the Administrative Measures for Enterprise Outbound Investment (“Regulation No. 11”) which will come into force on March 1st, 2018, to replace the Administrative Measures for the Verification and Record-filing on Outbound Investment Projects (“Regulation No. 9”). One of the most distinguished differences in comparison to Regulation No. 9 is that, in addition to “Verification” and “Record-filing”, Regulation No. 11 has added two methods to deregulate the pre-supervision on outbound investment projects, which are “Report” and “No need to verify, record-filing or report”. We hereby summarize the above-mentioned supervision methods as follows:
The projects which verification applies to shall be supervised by the National Development and Reform Commission (NDRC); these mainly include sensitive projects invested directly by investors (including domestic individuals), or indirectly through the overseas enterprises which control them. A project can be defined “sensitive” if realized in a certain area (sensitive Country or Region) or implemented in a specific sector (sensitive industry).
· What a sensitive Country or Region is? It is an area which has not established a diplomatic relationship with PRC, which is experiencing war or internal strife, or where investment by enterprise is restricted by international treaties, or agreements China concluded or acceded to, etc.
· Which are the “sensitive industries”? Research, manufacture and repair of weaponry, cross-border water resources development and utilization; news media; industries to be restricted from outbound investments according to laws, regulations and relevant macro-control policies.
Non-sensitive projects directly invested by the enterprise under the administration of the Central Government, or non-sensitive projects directly invested by the local enterprise, with an amount of investment made by the Chinese investor equal to USD300 million or above, shall be record-filed by NDRC. Non-sensitive projects invested by local enterprise with an amount of investment made by the Chinese investor is less than USD300 million, instead, shall be record-filed by the Provincial Development and Reform Commission (PDRC).
A report describing the details of non-sensitive projects of a large-amount (investment made by Chinese investor is more than USD300 million), which is indirectly invested by an investor (including domestic individuals) through the overseas enterprise under its control, shall be submitted through the Network System before the implementation of the project, in order to give the NDRC the relevant information.
4. No need to verify, record-filing or report
Non-sensitive projects with a Chinese investment lower than USD 300 million, indirectly invested by an investor (including domestic individuals) through the overseas enterprise under its control, will not be required to verify, record-filing or report.