“Haworth & Lexon Law Newsletter” is issued every month, mainly introducing the legal change in the fields of Corporate, Securities, Foreign investment, Intellectual property rights, International trade etc. with necessary comment. All the comments do not mean the legal opinion of our firm and the firm does not have any legal liability for such comment. Should you have any interest in any topics or any questions please feel free to contact the firm. You will be expected to have satisfactory response from the professional attorney of our firm.
Guidelines
★ New Regulations on Verification and Approval for Investment at Home and Abroad Promulgated by NDRC
★ Provisions on the Issues Concerning Approval for Investing and Establishing Enterprises Abroad Promulgated by Ministry of Commerce
★ Latest Laws and Regulations:
1 Decision on Amendment to Provisional Measures on Administration of Bonds of Securities Companies by CSRC
1 Regulations of the PRC on the Implementation of Customs Administration Punishment by the State Council
1 Measures for Administration of Fund Management Company of Securities Investment come into force since Oct. 1
1 Several Regulations on Guarantee of Project Construction Contract in Real Estate Development Projects
1 The Supreme People's Court promulgated Provisions on Relevant Issues of Civil Mediation of the People's Court and Several Regulations on Delivery of Civil Litigation Documentation by Express
New Regulations on Verification and Approval for Investment at Home and Abroad Promulgated by NDRC
Since the State Council issued Decision on Investment System Reform in July 16, 2004, National Development and Reform Commission promulgated Notice on Printing and Issuing the Catalogue of Fixed Asset Investment Projects to Be Verified by National Development and Reform Commission and Reported to the State Council for Verification or Examination and Approval (Trial Implementation) in Sept. 6, and enacted a series of measures on approval of investment projects from middle Sept. to early Oct., which cover the application and approval issues of local or foreign investment at home or abroad.
Provisional Measures on Verification and Approval of Projects Invested by Enterprises, issued in Sept. 15, set out provisions on approval for all kinds of local enterprises’ domestic investment projects. According to Article 2, the enterprises shall make the application for approval of investment projects in accordance with the investment scope and approval authority stipulated in Catalogue of Investment Projects with Government Approval. According to different investment projects and scales, NDRC, local development and reform commission, or the economic and trade commission at local level shall be the approval authority.
On Oct. 9, NDRC promulgated Provisional Measures for Administration of Verification and Approval of Invested Projects Abroad, which applies to the approval for overseas investment projects by all kinds of local legal persons or through their overseas holding companies or institutions. According to this Measure, the resource exploitation projects in which the Chinese party invests more than 30 million USD shall be approved by NDRC, while the projects in which the Chinese party invests more than 200 million USD shall also be approved by the State Council. The projects requiring large foreign exchange shall be approved by NDRC, while the projects in which the Chinese party invests more than 50 million USD shall also be approved by the State Council. The resource exploitation projects in which the Chinese Party’s investment amount is less than 30 million USD and the other projects in which Chinese Party’s foreign exchange amount is less than 10 million USD just need to get the approval of provincial DRC, and the approval authority shall not be transferred to a lower level. The local governments can make regulations on the local approved projects.
Provisional Measures for Administration of Verification and Approval of Foreign Invested Projects was promulgated on the same day, which applies to the approval of foreign investment projects of EJVs, CJVs, WOFEs, local enterprises merged by foreign enterprises, and capital increasing of foreign invested enterprises. According to the Measure, the encouraged category and permitted category whose total investment amount is more than 100 million USD, and the restricted category whose total investment amount is more than 50 million USD shall be approved by NDRC; while the encouraged category and permitted category whose total investment amount is more than 500 million USD, and the restricted category whose total investment amount is more than 100 million USD shall also be approved by the State Council with the application report examined by NDRC. The encouraged category and permitted category whose total investment amount is less than 100 million USD, and the restricted category whose total investment amount is less than 50 million USD shall be approved by local DRC; in which the restricted projects shall be approved by provincial DRC and the approval authorities can’t be transferred to a lower level. The local governments can make regulations on the local approved projects.
Among the above three Measures, Provisional Measures on Verification and Approval of Projects Invested by Enterprises states that the validity of projects approval documents is 2 years, accounting from the day when the documents are issued. If the projects haven’t been started within the validity, the companies shall apply to the approval authority for deferment within 30 days in advance, and the authority shall give the decision before the validity is expired. If the projects haven’t been started without application for deferment, they will become null. The other two Measures didn’t give provisions on the validity or the deferment.
The above Measures came into force on the day they were issued.
Provisions on the Issues Concerning Approval for Investing and Establishing Enterprises Abroad Promulgated by Ministry of Commerce
Ministry of Commerce issued Provisions on the Issues Concerning Approval for Investing and Establishing Enterprises Abroad on Oct. 1, except the above regulations promulgated by NDRC.
“Investing and Establishing Enterprises Abroad” in the Provision means that the domestic enterprises establish companies abroad or obtain the ownership or management right of existing companies abroad by establishment, purchase, M&A, share, investment, share transfer and etc.
According to the Provision, domestic enterprises’ investing and establishing companies abroad shall be approved by Ministry of Commerce (except financial enterprise). Ministry of Commerce appoints provincial commerce authorities to approve the other enterprises’ investing and establishing companies abroad except the central enterprises. Ministry of Commerce or the provincial commerce authorities shall take the investment environment, security and etc. into account before giving the approval of local enterprises’ investing and establishing companies abroad.
Local enterprises shall handle the issues of foreign exchange, bank, customs, and foreign affairs with the Approval Certificate issued by Ministry of Commerce or the provincial commerce authorities.
The approved domestic enterprises shall submit statistics; take the annual check for foreign investment and the comprehensive evaluation of foreign investment. The approved foreign company shall submit the registration documents to Ministry of Commerce for record after registered and also register at our local economic and commercial counselor.
Foreign invested enterprises’ investing and establishing companies abroad shall be approved by provincial commerce authorities, among which those foreign invested enterprises which were approved by Ministry of Commerce shall get the approval of Ministry of Commerce before investing and establishing companies abroad. Ministry of Commerce will issue detailed regulations.
Local enterprises’ investing and establishing companies in HK and
Decision on Amendment to Provisional Measures on Administration of Bonds of Securities Companies by CSRC
China Securities Regulatory Commission issued Decision on Amendment to Provisional Measures on Administration of Bonds of Securities Companies on Oct. 18, which came into force on the same day. The main amendment is as follows:
The requirement that securities companies shall get surplus in the latest year before issuing bonds and the provision that the term of the bonds shall be no more than 5 years have been deleted. The lowest par value of issuing bond has been lowered to 5000 RMB. The detailed requirement to caution money of bond has been changed that the caution money for issuing bonds publicly shall not be less than the total amount of principal and interest; the caution money for issuing bonds specially shall not be less than 50% of the total amount of principal and interest. If the bonds are issued specially with the caution money amounting less than 50% of the total amount of principal and interest or even without any caution money, a special risk notice is required to be given to the investors for the issuance and transfer of the bonds, and the investors’ signature is needed.
Regulations of the PRC on the Implementation of Customs Administration Punishment by the State Council were promulgated by the State Council on Sept. 19, 2004, and will come into force since Nov. 1, 2004.
The Regulations set out detailed provisions on punishment to smuggling, punishment to behaviors against customs’ supervision, investigation on behavior against Customs Law, and the Decision and enforcement of customs administrative punishment.
Measures for Administration of Fund Management Company of Securities Investment come into force since Oct. 1
China Securities Regulatory Commission issued Measures for Administration of Fund Management Company of Securities Investment on Sept. 16, which has come into force since Oct. 1. The Measures stipulate the procedure and conditions for the establishment, change and liquidation of fund management company and its subsidiaries. It also set out provisions on management and operation of fund management company and the supervision by CSRC.
The Measures also apply to Sino-foreign fund management company. However, CSRC will promulgate other provisions on the issues such as natural person’s participation in fund management company, the fund management company structured as stock company, and the establishment of overseas subsidiaries.
Several Regulations on Guarantee of Project Construction Contract in Real Estate Development Projects
Ministry of Construction promulgated Several Regulations on Guarantee of Project Construction Contract in Real Estate Development Projects on Aug. 6.
This Regulation applies to the real estate development programs whose total price of the construction contract is more than 10 million RMB. However, the Regulation can also be applied to the other construction projects for reference.
According to the regulation, the guarantor for the construction contract shall be the qualified financial institutions or professional guaranty companies registered in
The Supreme People's Court promulgated Provisions on Relevant Issues of Civil Mediation of the People's Court and Several Regulations on Delivery of Civil Litigation Documentation by Express
The Supreme People’s Court promulgated Provisions on Relevant Issues of Civil Mediation of the People's Court and Several Regulations on Delivery of Civil Litigation Documentation by Express on Sept. 16 and 17.
Provisions on Relevant Issues of Civil Mediation of the People's Court make detailed provisions on the conditions and procedures of civil mediation and other relevant issues. For example, according to the Provision, the court can make mediation before the expiration of the period of submission of defense after getting the parties’ consent for the first trial, the second trial and the retrial civil cases. The court may also invite related institutions and professional person who has special experience and is helpful to the mediation to participate in the mediation. This Provision will come into force since Jan. 1, 2005.
Several Regulations on Delivery of Civil Litigation Documentation by Express make definite regulations on all kinds of problems arising from the delivery of civil litigation documentation by express, including the submission, confirmation and change of delivery address, service, and signature for acceptance. This Regulation will be effective since Jan. 1, 2005.
