On 29 September 2013, the Shanghai Municipal Government issued
two regulations governing outbound investment activities for
companies registered in the China (Shanghai) Pilot Free Trade Zone
Measures for the Administration of Overseas Investment
Projects Filing, and
Measures for the Administration of Overseas Establishment
of Enterprises Filing,
Both of which became effective on 1 October 2013 (together,
In order to encourage and facilitate outbound investment from
the FTZ, the Regulations introduce a system which is simpler and
more transparent than that previously in place.
1. Filing System replaces Approval System
Chinese Outbound investment has long required prior approvals
from different government authorities, which often delayed
prospective projects. Instead, the Regulations set forth a
"filing system", under which a company desiring to make
an eligible outbound investment only needs to file the project with
the FTZ Administrative Commission (Commission)
instead of seeking approval from various government
2. Simplified Filing Procedures
Under the new system, the Commission serves as a registrar. For
filing purposes, only a few simple documents are required. In
addition, the Commission must indicate whether to accept the filing
within five working days after the application has been submitted.
Upon obtaining the Commission's acceptance of the filing, the
company will be able to handle foreign exchange, customs and tax
matters with the competent authorities.
3. Eligible Investment
Pursuant to the Regulations, not all outbound investments are
eligible for the filing system: certain investments must still meet
with the prior approval of various government authorities. These
restricted areas include investment in sensitive countries and
regions (e.g., countries without diplomatic relations with
China, and countries in a state of war or civil disorder), or in
sensitive sectors (e.g., basic telecommunication
operation, media, massive land development, energy and
The simplified filing system reflects the government's
determination to facilitate outbound investment from the FTZ.
Supplementing the Regulations, the People's Bank of China
issued an opinion on 2 December 2013 which indicates that, upon
obtaining an affirmative opinion from the Commission, a company
will no longer be required to seek approval from the local SAFE
branch for remitting capital funds abroad. However, the opinion
does not have legal force or effect and only serves as a guideline.
Only time will tell how the simplified procedures will assist with
outbound investment initiatives of entities set up in the FTZ.
PRC Law Newsflash 27 December 2013.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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