Changes to Foreign Investment Administration
12-02-2011

On February 25, 2011, the Ministry of Commerce ("MOC")  issued the Circular on Issues concerning Foreign Investment Administration ("CIFIA").
The CIFIA includes the following significant issues:
 

1. Any foreign mergers and acquisitions with transaction amounts lower than the limit of 300 million RMB shall be subject to examination and approval by local commercial departments, except for transactions specified in the Provisions on Merger and Acquisition of Domestic Enterprises by Foreign Investors (No.6 MOFCOM Decree, 2009), which shall be examined and approved by the MOC, regardless of the transaction amount.
 

2.  Any foreign investor that wishes to make an investment in China (including establishment of a new company, increase of investment in an existing company, M&A of a Chinese company, and provisions of loans) with using RMB that was obtained through cross-border trading settlement or otherwise duly obtained abroad, shall be filed with the MOC by the commercial departments at provincial level. The relevant formalities will be handled by provincial commercial departments and then the application will be submitted to the MOC for approval. After MOC's approval of an application, provincial commercial departments will notify the investor about the approval and specify the form and the amount of currency that may be used in the relevant investment.
 

3. Commercial departments at all levels must conduct reviews and administration of foreign investments in  service industries that are subject to special provisions, including financing and leasing services, international express delivery services, advertisement and auction services, as well as value-added telecommunications services within a province, a municipality or an autonomous region; sensitive industries, including small-loan granting services, market survey services, credit rating and security services; and industries with large fund inflows, including entrepreneurship investment and equity investment and management. The commercial departments must also cooperate closely and enhance communication with other departments.
(March 2011)