China: China Finalises Revisions To Inbound Foreign Investment Laws

Last Updated: 17 October 2016
Article by Betty Tam and Gavin W. H. Guo

China's regulatory regime on inbound foreign investment entered a new era on 1 October 2016. According to a decision issued by the National People's Congress of China in September 2016, the foreign investment approval requirement has to a large extent been replaced by a filing system across the nation (please refer to our earlier Legal Update for details). To implement this decision, a number of regulations have been released recently, including:

  • NDRC & MOFCOM Circular 2016 No.22 (中华人民共和国国家发展和改革委员会中华人民共和国商务部公告2016年第22号) ("Circular 22")
  • Interim Administrative Measures on Record-filing of Establishment and Change of Foreign Invested Enterprises (外商投资企业设立及变更备案管理暂行办法) ("MOFCOM Measures")
  • SAIC Notice on Registration of Foreign Invested Enterprises under the Filing System (工商总局关于做好外商投资企业实行备案管理后有关登记注册工作的通知) ("SAIC Notice")

Under the new system, foreign investment no longer requires the approval from the Ministry of Commerce (MOFCOM) or its local branches, as long as the business undertaken is not on a "negative list".

"Negative List"

Contrary to expectations, the Chinese regulators did not issue a nation-wide "negative list" in the form similar to that of the free trade zones (FTZs). Instead, the "negative list" is made by reference to the current Foreign Investment Industrial Catalogue (Catalogue) - the new record-filing regime does not apply to the following types of foreign investment (which will continue to be subject to MOFCOM approval):

  • Any investment in the restricted category or prohibited category under the Catalogue;
  • Any investment in the encouraged category under the Catalogue where there are restrictive requirements on foreign equity ratio or foreign nationals being senior management; and
  • Any acquisition of non-foreign-invested companies in China by foreign investors (regardless of industrial sectors).

Foreign investment other than the above will only need to go through an online record-filing procedure with local MOFCOM (Filing Procedure).

MOFCOM Filing Procedure

Compared with the draft issued in September, the finalised MOFCOM Measures (together with an official interpretation) made additional clarification on a number of issues relating to the Filing Procedure:

  • When reviewing the filing, local MOFCOM will determine whether the subject matter falls outside the "negative list". If so, local MOFCOM will confirm this in the filing receipt.
  • Unless otherwise stated in laws and regulations, for change of matters of foreign invested enterprises (FIEs), if such change requires the approval by the FIE's highest authority (e.g., board of directors of a Sino-foreign joint venture or shareholder(s) of a wholly foreign owned enterprise), the change will enter into effect on the date of such approval.
  • For FIEs making re-investment in China, the existing regime will continue to apply, i.e., (i) for re-investment in a restricted category under the Catalogue, local MOFCOM's approval is required, and (ii) for re-investment in an encouraged or permitted category, record-filing with local MOFCOM is needed after the relevant AIC registration is completed.
  • For foreign-invested listed companies and foreign-invested companies listed on the National Equities Exchange and Quotations (the so called "New Third Board"), record-filing with local MOFCOM is only required when the cumulative foreign equity change reaches 5 percent or if there is a change to the majority shareholder.
  • The Filing Procedure applies across the country and has replaced the filing procedures previously applied in FTZs.
  • For any inconsistency between the MOFCOM Measures and other regulations issued by MOFCOM, the MOFCOM Measures shall prevail. Rules such as those regulating FIEs' equity transfer and FIEs' merger and division are expected to be amended.

AIC Registration

As most foreign investment projects no longer require MOFCOM approval, the Administration for Industry and Commerce (AIC) becomes the main governmental authority responsible for reviewing foreign investment applications. This includes the review of FIEs' constitutional documents.

While it remains to be seen whether and to what extent AIC may conduct substantial review on the applications, the SAIC Notice provides some high-level guidance in this respect:

  • AIC should apply the same standard on FIEs as on domestic Chinese companies when reviewing registration applications. However, it is not entirely clear how this will be implemented in practice.
  • AIC should consult with National Development and Reform Commission (NDRC) and MOFCOM (or their local branches) for complicated issues encountered in reviewing the application, including whether a matter falls within the "negative list". However, the SAIC Notice fails to clarify whether and how such process may affect the timing of AIC's reviewing procedure.


  • While the reform is no doubt a welcome move by Chinese regulators, applying the existing restrictions under the Catalogue as the "negative list" reflects a cautious approach taken by the government. It is expected that this will be a transitional approach and the regulators will likely work out a more detailed and hopefully shortened list.
  • Although MOFCOM record-filing is not a pre-requisite to AIC registration, it is advisable to check the local practice. In some cases, it may be preferable to complete MOFCOM filing first because the filing receipt serves as a confirmation from MOFCOM that the subject matter does not fall within the "negative list", which may facilitate subsequent AIC registration.
  • It is worth noting that a great number of regulations issued by the State Council, MOFCOM, AIC and various industrial regulators are yet to be amended to conform with the new regime. The legislation process may take a considerable amount of time. Local practice of various government authorities may also vary during the initial phase of implementation of the new system. Foreign investors should closely monitor developments in this regard.

Originally published 11 October 2016

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.