Circular on Issues regarding Delegation of Approval Authority for Foreign Investment (MOFCOM Circular 209) - 商务部关于下放外商投资审批权限有关问题的通知
Released and effective on June 10, 2010
Following the State Council's Circular of Several Opinions on Further Improving the Work of Utilizing Foreign Investment ("State Council Circular 9") (please refer to our China New Law Bulletin – Issue Three), on June 10, 2010, the Ministry of Commerce (“MOFCOM”) published a Circular Regarding The Delegation of Approval Authority for Foreign Investment (“MOFCOM Circular 209). This circular also follows the recent corresponding delegation of the National Development and Reform Commission (please refer to our China New Law Bulletin – Issue Four).
According to this circular, the establishment and change of an “encouraged” or “permitted” foreign invested enterprise (“FIE”) that has a total investment less than US$300 million or a “restricted” FIE that has a total investment less than US$50 million is now subject to the approval from the provincial counterparts of the MOFCOM (including counterparts in ten "deputy-provincial-level cities" such as Nanjing, Guangzhou, and Xi’an). The previous thresholds were US$100 million for an “encouraged” or “permitted” FIE and US$50 million for a “restricted” FIE.
MOFCOM Circular 209 further provides that following applications will be subject to the approval at the provincial level:
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application for capital increase where the amount to be increased is less than the relevant threshold as mentioned above;
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application for establishment and change of "encouraged" FIEs that are not subject to comprehensive state balancing;
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application for establishment of foreign-invested China holding companies with a registered capital of up to US$300 million and foreign-invested venture capital investment enterprises and venture capital investment management enterprises with total capital of up to US$300 million; and
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subject to the relevant administrative pre-approval, application for the establishment and change of FIEs engaging in service-sector business (excluding finance and telecommunications service).