Most Read Contributor in Hong Kong, September 2016
To facilitate Chinese enterprises investing overseas, the
National Development and Reform Commission (NDRC) issued a draft
rule to relax the approval regime for outbound investments for
consultation – the Draft NDRC Decision on Revising the
Administrative Measures on Approval and Recordfiling of Outbound
"Consultation Draft"). The consultation period will end
on 13 May 2016.
The current NDRC approval framework for outbound investments is
based on the Administration Measures on Approval and
Record-filing of Outbound Investment
"Measures") promulgated in 2014. The Measures apply to
all outbound investment projects of Chinese enterprises. Compared
with the regulatory guidelines prior to 2014, the Measures already
marked a significant move by the Chinese government to simplify the
approval and filing requirement for outbound investments, making
record-filing the default rule and mandating government approval
only for sensitive projects. The issuance of the Consultation Draft
demonstrates the government's determination and willingness to
further relax the restrictions on outbound investments.
Key changes proposed by the Consultation Draft are summarised in
the table below:
In recent years, outbound investments by Chinese investors have
increased by double digits annually. The Chinese government has
continued to relax the regulatory regime on outbound investments.
Both the NDRC and the Ministry of Commerce, as the major approval
authorities, have gone through several rounds of legislative
amendments to simplify the approval procedures for Chinese
investors. Issuance of the Consultation Draft is the latest
development in this trend. It is a welcomed move by the Chinese
government. In particular, the proposed changes to the
pre-reporting mechanism show the government's willingness to
lower the level of interference that it may have over the market.
This will not only benefit Chinese investors who have been
disadvantaged by the uncertainty and delay caused by the government
approval process compared to their foreign competitors, but also
provide more certainty to foreign sellers. Once finalised, the
revised regime will offer greater flexibility to investors in
structuring and financing their overseas transactions.
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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
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