CBL Team’s Introduction

CBL’s translation of this FAQ by the Chinese Commerce ministry provides guidance about the process of registering a foreign direct investment into China. The foreign investment law in China now includes a special reporting procedure for these investments, which the Chinese government provides a helpful overview of below. This guidance is translated to American English using the User Centered Translation approach.

FAQ on Registering FDI

1. Will filing with the Ministry of Commerce still be required after the Foreign Investment Law comes into force?
A: Formation or amendments for business entities with foreign investors formed or filed after January 1, 2020, will only require fulfilling the investment information reporting requirements under the Foreign Investment Information Reporting Procedures.
2. How can inaccuracies submitted during formation be corrected?
A: Foreign investors or business entities with foreign investors must submit corrections or supplemental material to resolve errors or omissions in the initial or change reports using the business entity filing system.
3. We registered our business and submitted the report on the foreign owned entity to the National Administration for Market Regulation (the “Administration”). How can we view the report in the system?
A: You can check any reports submitted via the Ministry of Commerce business system 48 hours after registering the business and submitting the information report for business entities with foreign investors.
4. Do we need to cancel the certificate of approval (i.e., the entity’s filing receipt) obtained from the Ministry of Commerce when winding up the business?
A: No, since the Foreign Investment Act came into force, business entities with foreign investors are only required to complete the Administration’s dissolution procedures.
5. Our company wants to change its permitted business activities or statutory representative with the Administration. Do we need to submit a registration change report for business entities with foreign investors?
A: No, according to the Foreign Investment Information Reporting Procedures, a report does not need to be submitted to change anything not covered by the initial report.
6. Do domestic Chinese foreign owned entities need to submit a report?
A: The Administration will share the initial, change, annual, and termination reports submitted by domestic Chinese businesses invested in by business entities with foreign investors (including intermediate entities) with the Ministry of Commerce. Businesses are not required to re-submit the reports.
7. When should business entities that have foreign investors submit their annual reports?
A: Business entities that have foreign investors need to submit their annual report for the last year through the National Business Credit Lookup System between January 1 and June 30 in the following year.
8. How can we correct any inaccuracies submitted between January 1 and June 30?
A: Foreign investors or business entities with foreign investors can submit corrections or supplements through the National Business Credit Lookup System before June 30 to resolve errors or omissions in their annual reports.
9. What can we do if we forgot to submit the annual report between January 1 and June 30?
A: Foreign investors or business entities with foreign investors who do not submit their reports between January 1 and June 30 can request the Ministry of Commerce to correct or supplement any errors or omissions through the Foreign Investment Information Reporting Management System (URL: wzxxbg.mofcom.gov.cn) after July 1.
10. Does a business that has foreign investors acquiring a business having only domestic investors constitute a takeover as defined by the Rules on the Takeover of Domestic Businesses by Foreign Investors?
A: Section 11 of the Rules on the Takeover of Domestic Businesses by Foreign Investors defines a takeover between related parties as a takeover in which a domestic business is taken over by an affiliated foreign business legally formed or controlled by a domestic business, entity, or individual.
11. A foreign owned entity (non-round-tripping investment) intends to merge with its domestic corporate shareholder. Would it constitute a takeover defined by Section 11 of the Rules on the Takeover of Domestic Businesses by Foreign Investors?
A: The Rules on the Takeover of Domestic Businesses by Foreign Investors would apply. Additionally, under the Foreign Investment Act Administrative Regulations, the Foreign Investment Act and its Administrative Regulations shall control should there be any inconsistency between the Rules on the Takeover of Domestic Businesses by Foreign Investors and the Foreign Investment Act and the Administrative Regulations. Section 11 of the Rules on the Takeover of Domestic Businesses by Foreign Investors defines a takeover between related parties as a takeover in which a domestic business is taken over by an affiliated foreign business legally formed or controlled by a domestic business, entity, or individual.
12. Part of the production process for a certain business entity is included on the Exceptions List, while their primary production process, final product, and permitted business activities are not included on the Exceptions List. Can a foreign investor invest in such a business entity?
A: Under the Foreign Investment Act, foreign investment refers to any direct or indirect investment activities conducted in China by a foreign individual, business entity, or other organization. Foreign investors may not invest in sectors where the Foreign Investment Access Exceptions List prohibits foreign investment. Foreign investors must comply with the requirements restricting foreign investment in certain sectors, as mandated by the Foreign Investment Access Exceptions List.
13. A joint venture between a Chinese and foreign party intends to dissolve. Does the current law require approval from the Ministry of Commerce or its component agencies?
A: No, under the Foreign Investment Act and its Administrative Regulations, the Ministry of Commerce will no longer review or accept filings to register or amend the information for a foreign owned entity. Business entities with foreign investors must fulfill their information report obligations pursuant to the Foreign Investment Act, its Administrative Regulations, and the Foreign Investment Information Reporting Procedures.
14. Do business entities with foreign investors who lose their original certificate of approval need to request a new one?
A: No, under the Foreign Investment Act and its Administrative Regulations, the Ministry of Commerce will no longer review or accept filings to register or amend the information for a foreign owned entity, nor will it issue any certificates of approval for business entities with foreign investors.
15. What are the criteria for business entities with foreign investors or manufacturers requesting approval to use dedicated vehicles to transport goods to Hong Kong and Macau?
A: 1. The requesting entity business is a manufacturer; 2. The requesting business entity’s monthly import and export volume exceeds fifty tons, excluding businesses in the textile and fashion industries that may be offered relaxed criteria on a case-by-case basis; 3. Regulatory agencies have not recorded any violations committed by the business. Business entities that meet all the above criteria may request such approval from the municipal Ministry of Commerce office.