Asia & Australia

April 10, 2019

New Foreign Investment Law of China


pudong

China’s new Foreign Investment Law establishes basic legal systems for foreign investment including:

Pre-establishment national treatment and negative list system under which foreign investors and investments will be treated no less favorable than Chinese domestic investors and investments at the initial stageForeign investment information reporting system under which

• foreign investors or foreign invested enterprises will be required to submit investment information to the competent department of commerce through the enterprise registration system and the enterprise social credit information publicity system. and foreign investment national security review system under which a national security review system will be established to ascertain whether a foreign investment would affect national security.

The organizational structure and activities of foreign-invested enterprises will be governed by the Company Law of the People’s Republic of China or the Law of the Partnership Enterprise of the People’s Republic of China (Partnership Law), as applicable according to Article 31 of the Foreign Investment Law.

Foreign investors my freely remit into or out of China their capital contributions, profits, capital gains, income from asset disposal, intellectual property royalties, lawfully acquired compensation, and indemnity or liquidation income in renminbi or any foreign currency within the territory of China according to Article 21 of the Foreign Investment Law.

Administrative agencies and their staff members may not use administrative means to force the transfer of technology, according to Article 22 of the Foreign Investment Law.

While basic macro principles and systems are established by the Foreign Investment Law, there are still issues to be clarified with respect to the specific system design and requirements, including:

Definition of Foreign Investment in Specific Situations Review and Approval of Affiliated Mergers and Acquisitions and A Few Additional Special Concepts.

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