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(Promulgated
by the Ministry of Foreign Trade and Economic Cooperation on April
4, 1995, and effective upon promulgation)
With
a view to promoting foreign investors to make investment in China
and introducing foreign advanced technologies and managerial experience,
foreign investors are permitted to establish investment companies
in China in accordance with relevant Chinese laws and regulations
concerning foreign investment as well as these regulations.
Article
1 For purposes of these Regulations, investment company refers to
a company either solely established by a foreign investor/foreign
investors (hereinafter referred to as the foreign investor) or co-funded
with a Chinese investor/Chinese investors (hereinafter referred
to as the Chinese investor) in China which is engaged in direct
investment. The form of an investment company shall be a limited
liability company.
Article
2 The following conditions shall be satisfied when applying for
the establishment of an investment company:
I.
1. The foreign investor shall have good financial credit and shall
possess the economic capability required by the establishment of
an investment company. The total assets of the investor one year
before the application is submitted shall be no less than US $ 400
million. And the investor has already established, within the territory
of China, enterprises with foreign investment, with the actually
paid-in contribution of registered capital exceeding US $ 10 million
and with the project proposals for more than three projects approved,
or: 2. The foreign investor shall have good financial credit and
shall possess the economic capability required by the establishment
of an investment company. And the investor has already established,
within the territory of China, more than ten enterprises with foreign
investment which are engaged in production and infrastructure construction,
with the actually paid-in contribution of registered capital exceeding
US $ 30 million;
II.
Where an investment company is established in the form of an equity
joint venture, the Chinese investor shall have good financial credit
and shall possess the economic capability required by the establishment
of an investment company, with the total assets of no less than
RMB100 million Yuan;
III.
The registered capital of an investment company shall be no less
than US $ 30 million.
Article
3 Investors shall, in applying for the establishment of an investment
company, submit the following documents for examination and approval
to the Ministry of Foreign Trade and Economic Cooperation (hereinafter
referred to as MOFTEC) after these documents have been examined
and approved by foreign economic relations and trade authorities
in provinces, autonomous regions, municipalities directly under
the central government and special cities with independent plan
where the investment company will be established.
I.
Project proposal of the establishment of the co-funded investment
company, feasibility study report, contract and articles of association
signed by all investors; project proposal, application form of establishing
a wholly foreign-owned enterprise, feasibility study report and
articles of association signed by the foreign investor of the solely
owned investment company;
II.
Financial credit documents of all investors, copies of the registration
documents and certificates and documents of the legal representative
(copies);
III.
( Copies of ) the approval certificates of the enterprises already
invested by the foreign investor, ( copies of ) business licenses
and ( copies of ) the capital verification reports issued by accountants
registered in China;
IV.
Balance sheets of all investors in the recent three years;
V.
Other documents required by MOFTEC.
The
afore-mentioned documents shall be the original documents, unless
otherwise noted as copies.
Documents
not signed by the legal representative shall be accompanied by the
Power of Attorney signed by the legal representative.
Where
an intermediary organization established according to law has been
entrusted to go through the application procedures, a Power of Attorney
issued by the legal person of the investor shall be presented.
Article
4 Investment contributed by the foreign investor as the registered
capital of the company shall be provided in freely convertible currency
and investment contributed by the Chinese investor may be provided
in RMB Yuan. The investment shall be paid within two years from
the date of the issuance of the business license.
Article
5 An investment company may engage in part of all of the following
business activities upon approval:
I.
To make investment in areas of industry, agriculture, infrastructure
and energy, etc. which are encouraged and permitted by the state
for foreign investment;
II.
To provide the following services to the enterprises in which an
investment company has made investment ( hereinafter referred to
as the enterprises ), as entrusted in written form by the enterprises
( with the unanimous consent of the board of directors):
1.
To assist the enterprises in purchasing or purchasing by proxy,
either from domestic market or from the international market, machinery,
equipments and office articles for the enterprises' own use and
raw materials, parts and components required by production, and
selling or selling by proxy the products made by the enterprises
either on domestic or on international market and provide after-sale
services;
2.
To balance foreign exchanges between/among the enterprises with
the consent and under the supervision of the foreign exchange control
authorities;
3.
To assist the enterprises in recruiting employees and to provide
technical training, market development and consulting service;
4.
To assist the enterprises in seeking for loans and to provide guarantee.
III.
To provide consulting service for the investors of the investment
company.
Article
6 For the purposes of Article 5. II of these Regulations, the enterprises
in which an investment company has made investment refer to:
I.
Enterprises directly invested by the investment company or jointly
invested with other foreign investors and/or Chinese investors,
with the investment contributed by the investment company or jointly
contributed with other foreign investors accounting for more than
25% of the registered capital of the invested enterprises;
II.
Enterprises in which the investment contributed by the investment
company and other foreign investors accounts for more than 25% of
the registered capital of the enterprises when the investment company
has acquired part or all of the equities of its investors or its
related companies and part or all of the equities of the enterprises
already established by other foreign investors within the territory
of the People's Republic of China.
An
investment company may only provide the services stipulated in Article
5.II to the enterprises, unless otherwise specially approved by
MOFTEC.
An
investment company shall not be allowed to engage, on behalf of
its investors, in trade intermediary services in China.
Article
7 An investment company may provide the enterprises with financial
support as approved by the People' Bank of China.
Article
8 The duration of an investment company shall be verified in light
of the nature of the projects to be established by the investment
company and in accordance with the state regulations concerning
the term of operation of the enterprises with foreign investment.
Article
9 An investment company, in establishing enterprises, shall go through
separate application procedures in light of relevant regulations
pertaining to the authorization for approval and approval procedures
for enterprises with foreign investment.
Article
10 The enterprises invested by an investment company, with the investment
in foreign currency contributed by the investment company or contributed
jointly with other foreign investors accounting for no less than
25% of the registered capital of the enterprises may enjoy the treatment
granted to enterprises with foreign investment. and may be issued
with certificate of approval and business license for enterprises
with foreign investment.
Article
11 Foreign investors satisfying the provisions stipulated in Article
2. I. 1. of these Regulations may make investment contribution to
establish investment companies in the name of their wholly-owned
Subsidiaries.
Article
12 The investor, in applying for the establishment of an investment
company, shall present a letter of guarantee to the examination
and approval authority to ensure the contribution to the registered
capital and technology transfer when the investment company makes
investment within the territory of China.
Where
an investment company is established in the name of a wholly-owned
subsidiary, the parent company shall present a letter of guarantee
to the examination and approval authority to ensure the finalization
of contribution to the registered capital of the investment company
by its subsidiary based on the conditions approved by the examination
and approval authority and to ensure the contribution to the registered
capital and technology transfer when the investment company makes
investment within the territory of China.
Article
13 Investment activities of an investment company within the territory
of China shall not be restricted to the place of registration of
the company.
Article
14 An investment company shall pay taxes according to relevant Chinese
laws and regulations.
Article
15 An investment company shall implement its programs of project
investment in an earnest manner and report the investment of each
year to MOFTEC for recordation within two months of the following
year.
Article
16 An investment company and the enterprises invested by the investment
company are legal persons or entities independent to each other
and their business contacts shall be handled as those between independent
enterprises.
Article
17 An investment company and the enterprise invested by the investment
company shall abide by Chinese laws and regulations and shall not
take any measures to evade tax and administration.
Article
18 These Regulations shall also apply when investors from Taiwan,
Hong Kong and Macao regions make investment on the Mainland of China
to establish investment companies.
Article
19 MOFTEC shall be responsible for the interpretation of these Regulations.
Article
20 These Regulations shall enter into force upon promulgation.
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