On November 3, 2017, National Development and Reform Commission(“the Commission”) issued the Administrative Measures for Outbound Investment of Enterprises (Draft for comments) (“the Draft “) , with the aim to “provide better macro guidance to outbound investment, optimize comprehensive services for outbound investment, improve regulation throughout outbound investment, promote the constant and healthy development of outbound investment”. In 2014, the Commission issued the Administrative Measures on Approval and Filing for Outbound Investment Projects (“the 2014 Measures”). In comparison with the 2014 Measures, some major changes are set out below:
The 2014 Measures
|Provide further clarification over its application|
|“investor”||Article 2, outbound investment activities conducted by an enterprise located within the People’s Republic of China……For the purpose of these Measures, enterprises include financial enterprises and non-financial enterprises in diverse forms.
Article 61, where public institutions, social groups and other non-enterprise organizations make investments abroad, these Measures shall apply mutatis mutandis.
Article 62, Where natural persons within the territory of China directly make investments abroad or in Hong Kong, Macao and Taiwan regions, these Measures shall not apply.
|Article 2, These Measures shall apply to outbound investment projects of all types of legal persons in the People’s Republic of China
Article 31, These Measures shall apply to outbound investment and equity participation or establishment of overseas equity investment funds by investment entities.
Detailed administrative measures for outbound investment projects carried out by natural persons and other organizations shall be formulated separately with reference to these Measures
|“outbound investment”||Article 62, where investors make investments in Hong Kong, Macao and Taiwan regions either directly or through enterprises under their control, these Measures shall apply mutatis mutandis.
Where investors make investments abroad through enterprises that are located in Hong Kong, Macao and Taiwan regions and under their control, there Measures shall apply mutatis mutandis.
|Article 32, Investment projects implemented by investment entities in Hong Kong Special Administrative Region and Macau Special Administrative Region shall refer to these Measures.
Detailed administrative measures for investment projects implemented by investment entities in Taiwan shall be formulated separately with reference to these Measures.
|“through an overseas enterprise”||Article 2, For the purpose of these Measures, outbound investment refers to the investment activities conducted by an enterprise located within the People’s Republic of China (hereinafter referred to as “investor”) either directly or via an overseas enterprise under its control.||Article 2, These Measures shall apply to outbound investment projects of all types of legal persons in the People’s Republic of China (hereinafter referred to as the “investment entities”) carried out in the form of new establishment, merger and acquisition, equity participation, capital increase and capital injection etc., and outbound investment projects implemented by the investment entities through their overseas enterprises or organizations via financing, guarantee etc.|
|“investment activities”||Article 2, The investment activities as mentioned in the preceding paragraph mainly include but are not limited to:
1. The acquisition of the ownership of, right to use or other equities of land abroad;
2. The acquisition of the exclusive right or other equities to prospect and exploit overseas natural resources;
3. The acquisition of the ownership, business management right or other equities of overseas infrastructure;
4. The acquisition of the ownership, business management right or other equities of overseas enterprises or assets;
5. The new establishment, renovation or expansion of overseas fixed assets;
6. The incorporation of a new enterprise or the additional investment in an existing enterprise;
7. The new establishment of or participation in overseas equity investment funds; and
8. The control of overseas enterprises or assets by means of an agreement, trust or otherwise
|Article 3, Outbound investment projects referred to in these Measures shall mean obtaining of overseas ownership, business management rights and other relevant interests by the investment entities through contribution of assets and interests such as cash, securities, in-kind, intellectual property or technology, equity, creditor’s rights etc., or through provision of guarantee|
|Investment activities subject to approval|
“sensitive countries and regions”
|Article 13, For the purpose of these Measures, sensitive countries and regions shall include:
1. Any countries and regions that have not yet formed diplomatic relations with China;
2. Any countries and regions where there are wars or civil disorder;
3. Any countries and regions in which investment made by enterprises shall be limited under international treaties and agreements signed or entered into by China; and
4. Any other sensitive countries and regions.
|Article 7, Sensitive countries and regions referred to in these Measures shall include: countries which have not established diplomatic relations with China, countries subject to international sanctions, and countries and regions which are having an outbreak of war or civil strife.|
|“sensitive industries”||Article 13, For the purpose of these Measures, sensitive industries shall include:
1. Research, development, manufacturing and repair of weaponry;
2. Exploitation and utilization of water resources across borders;
3. News media; and
4. Industries for which outbound investment made by enterprises shall be restricted according to the macro-control policies of the country.
The catalogue of sensitive industries shall be issued by the NDRC.
|Article 7, Sensitive industries referred to in these Measures shall include: basic telecommunication operation, development and utilization of cross-border water resources, large-scale land development, electric main, power grid, news media etc.|
|Investment activities subject to record-filing|
|Article 14, Projects subject to record-filing shall be non-sensitive projects directly carried out by investors, in other words, non-sensitive projects carried out by investors to make direct investment with assets and equities or provide financing or a guarantee.
Article 42, [Notification of information about large-amount non-sensitive projects that are not subject to administration by approval or record-filing] Where an investor carries out a large-amount non-sensitive project through the overseas enterprise under its control, the investor shall, before the implementation of the project, submit a report describing the details about such large-amount non-sensitive project through the Online Platform, in order to inform the NDRC of relevant information.
|Article 8, Outbound investment projects other than those stipulated in Article 7 of these Measures shall be subject to administration filing|
Time point requirement
|Article 32, For projects subject to administration by approval and record-filing, investors shall obtain approval documents or record-filing notices for such projects before the implementation thereof.
“Before the implementation thereof” as mentioned in the preceding paragraph means the time before the investor or the overseas enterprise under its control invests assets or equities (excluding upfront expenses of a project, for which approval or record-filing has been handled according to Article 17 herein) in the project or provides financing or a guarantee for such project.
|Article 25, Prior to entering into legally binding documents with an overseas party for an outbound investment project which is required to be approved by or filed with the NDRC, the investment entity shall obtain the approval document or the notice of filing issued by the NDRC; or state in the documents to be executed that the obtaining of the approval document or the notice of filing issued by the NDRC is the criterion for the document to take effect.|
|Repealed||Article 10, For outbound acquisition or bidding projects with Chinese party investment amount of US$300 million and above, the investment entity shall, prior to carrying out substantial work overseas, submit a project information report to the NDRC. Upon receipt of the project information report, the NDRC shall issue a confirmation letter within seven working days if the project complies with the outbound investment policies of the State. The template of the project information report shall be announced by the NDRC|