Article 1 For the purposes of promoting foreign investors to invest in China, importing advanced foreign technology and management experience, foreign investors are allowed to establish investment companies in China in accordance with related Chinese laws, regulations and the said Rules about foreign investment.

Article 2 The investment company referred to in the said Rules means the company who is engaged in direct investment established in China by foreign investors or joint venture of foreign and Chinese investors. The company is a limited liability company.

Article 3 Applying for establishing an investment company should qualify following requirements:

1. (1) The foreign investor should have fine credit and economic strength that is necessary for establishing an investment company. The total sum of the investor’s property in the year before its application should not be less than 400 million USD and the investor should have established foreign invested enterprise in the territory of China and have paid its invested sum of registered capital more than 10 million USD. Or,
(2) Foreign investor has fine credit and economic strength that is necessary for establishing an investment company. The investor has established more than ten foreign invested enterprises and the invested sum of its registered capital that is actually paid should be more than 30 million USD;

2. As for establishing investment companies by joint venture, Chinese investor should have fine credit and economic strength that is necessary for establishing an investment company and the total sum of its property in the year before it makes an application should not be less than 100 million RMB;

3. The registered capital of the investment company should not be less than 30 million USD.

The foreign investor who applies for establishing an investment company should be a foreign company, enterprise or economic organization. If there are more than two foreign investors, at least one of them who holds big stock ownership meets the provisions of the said Article, Section 1, Item (1).

Article 4 The foreign investor who meets the requirements of Article 3, Section 1, Item (1) may invest in investment company by the name of its wholly-owned subsidiary.

Article 5 If the foreign investor who applies for establishing an investment company meets the requirements of Article 3, Section 1, Item (1), it should write a guarantee to the approval administration, assuring the investment company to pay the registered capital when it invests in China and provide transfer technology that belongs to the investor or affiliated company.

If the parent company establishes investment company in the name of its wholly-owned subsidiary, the parent company must provide the letter of guarantee to the examination and approval authority, guaranteeing its subsidiary to pay the registered capital for the established investment companies in accordance with requirement of the examination and approval authority, and assuring to pay registered capital and transfer technology that belongs to the parent company and its subsidiary while making the investment in the territory of China.

Article 6 Apply for establishing an investment company, the investor should submit following documents to the Ministry of Commerce after the examination and approval of the competent commercial department of local province, autonomous region, municipality directly under the Central Government and city specifically designated in the state plan.

1. The application report, contract, rules signed by all parties of joint venture investment companies;

The application form of foreign invested enterprises, feasibility research report and rules signed by foreign investors of exclusive ownership investment company;

2. The certificate of credit, registration for the record (copy) and legal representative of the investors (copy);

3. The approval certificate (copy), business license (copy) of foreign investor invested enterprises and capital verification report issued by Chinese registered accountant;

4. Statement of asserts and liabilities of the investors in recent 3 years audited in accordance with laws;

5. The letter of guarantee that should be submitted in accordance with Article 5;

6. Other papers required by the Ministry of Commerce.

Above papers should be formal ones except those that are made clear indication of “copy”.

If the representative who signed the document is not the legal representative, the legal representative's authorization letter should be provided.

If any one trusts the intermediary established in accordance with the law to go through the application formalities, the authorization letter signed by investor's legal representative should be provided.

Article 7 The foreign investor should use currency that may be exchanged freely or the interests of RMB they obtained in the territory of China or the legal income from stock transfer and account clearing as its registered capital provided to the investment company. Chinese investor may invest by RMB. If the foreign investor uses its legal income of RMB as registered capital to its investment company, it should submit relevant certificate and tax evidences. It should pay all funds in two years as of the issuing of its business license.

Article 8 There should be at least 30 million USD among the registered capital of the investment company as the funds provided to its newly invested foreign-invested enterprise, or as the funds that it has not paid to the foreign-invested enterprises invested by parent company or affiliated company (have gone through the formalities of stock transfer) or the fund provided as capital increase, or the investment for establishing research and development center, or for buying stock ownership of the shareholder in the territory of China (exclude the stock ownership from the investment that investment parent company or its affiliate have already paid).

Article 9 The registered capital of investment company should not be less than 30 million USD and its loan must not exceed 4 times of the registered capital that it has been paid. The registered capital of the investment company should not be less than 100 million USD and its loan must not exceed 6 times of the registered capital that it has been paid. If the loan of the investment company exceeds above described sum to meet the needs of their business, it should report to the Ministry of Commerce for approval.

Article 10 The investment company may carry out following businesses according to its actual need while doing business in China after the establishment with the approval of the Ministry of Commerce:

1. Invest in the fields that the state allows foreign tradesman to invest in;

2. With the trust deed of its invested enterprises (with the approval of director board), provide its invested enterprise with following services:
(1) Help its invested enterprises or act for them to purchase the machines, office equipment of their own use and raw materials, elements and parts, spare parts required by the production and sale the products its invested enterprises produced at home and abroad, and provide service after sale;
(2) Balance foreign exchange between the enterprises it invested under the approval and supervision of exchange control authorities;
(3) Provide its invested enterprises with technology support, staff training, personnel management of the enterprises during products production, sales and market development;
(4) Help its invested enterprises to seek for loan and provide them with guarantee.

3. Establish technology research and development center or institute in the territory of China. Be engaged in the research and development of new products and advanced technology and transfer its achievements and provide corresponding technical service;

4. Provide consultancy service for its invested enterprises, provide its affiliate company with market information and investment policies that have something to do with its investment;

5. Accept out-contracted service business of its parent company and its affiliate company.

Article 11 If the investment company is engaged in the import and export of commodities or techniques, it should meet the requirements of Registration Measures of Foreign Trade Managers;

The investment company that is engaged in commission agent, wholesale, retail and business activities with special permission should meet related requirements of Management Measures on Foreign Invested Commercial Fields and change its business scope correspondently in accordance with the law.

Article 12 The enterprises invested by investment company referred to in the Rules means the enterprises that meet following requirements:

1. The enterprises that the investment company invests directly or jointly invests with other foreign investors and / or Chinese investors, the rate of its sole investment or joint investment with other foreign investors takes 25 per cent of the registered capital that it invests in enterprises.

2. The enterprises that investment company purchases part of or all the stock ownership of the enterprises established by its investor or its affiliate company, other foreign investor and the investor in the territory of China and the rate of its sole investment or joint investment with other foreign investors takes 25 per cent of the registered capital that it invests in enterprises;

3. The invested sum of the investment company takes no less than 10 percent of the registered capital it invested in enterprises.

Article 13 The investment company may provide financial support for its invested enterprises with the approval of China Bank Regulation Commission.

Article 14 The investment company may, as a initiator, initiate an establishment of foreign invested limited-liability company or holding unlisted corporate shares of foreign invested limited-liability company. The investment company may also hold unlisted corporate shares of other limited-liability companies in the territory of China in accordance with related rules. The investment company should be deemed as the initiator or shareholder abroad of limited liability company.

Article 15 After the establishment of the investment company, if it does the business in accordance with laws, have no record of contrary to the laws, pay registered capital in time in accordance with the provision of the rules and the actual payment of the registered capital by the investor is not less than 30 million USD and uses it in accordance with the provision of Article 8, the investment company may, with the permission of local province, autonomous region, municipal directly under the Central Government or city specifically designated in the state plan, make an application to the Ministry of Commerce and after the approval it may do following business according to its actual needs in accordance with related national rules:

1. Develop following business with the trust deed of investment enterprises (approved by director board):

(1) Sale the product produced by its invested enterprises by selling in domestic market and abroad;
(2) Provide transportation, storage and comprehensive service for its invested enterprises.

2. Export domestic goods as an agent or by sale or establishing export purchasing organs and handle export tax drawback in accordance with related rules;

3. Purchase the products produced by its invested enterprises and sale at home and abroad after system integration. If the products produced by its invested enterprises can not meet the needs of system integration, it is allowed to purchase accessory products of system integration at home and abroad, but the value of them should not exceed 50 percent of the value of all products needed by system integration.

4. Provide related technical trainings for domestic sellers, agents and domestic companies and enterprises who signed the agreement of technique transfer with investment company, its parent company or its affiliate company and deal with the products of its invested enterprises;

5. For the purposes of the development of product market, the investment company is allowed to import the products relating to the products produced by its invested enterprises from its parent company and place them on trial sale in domestic market before its invested enterprises put into production or the new products produced by its invested enterprises are put into production;

6. Provide operational leasing service of machines and office equipment for its invested enterprises or establish operational leasing company in accordance with laws;

7. Provide service after sale for its imported products;

8. Take part in engineer contract abroad of Chinese enterprises that has the rights of operating the contracted project with foreign countries;

9. Sale (exclude retail) at home the products of the parent company imported by investment company;

Article 16 According to the provisions of Article 15, Section 3 and 5, the investment company should go through formalities in accordance with related national rules while importing products. Annual accumulated amount of above import should not exceed the sum of registered capital that has been paid by the company.

Article 17 If the investment company apply for operating the business in terms of Article 15, it should submit following papers to the Ministry of Commerce:

1. The application letter signed by legal representative of the investment company;
2. The resolution made by director board of the investment company;
3. Revised regulations of investment company;
4. The approval certificate (copy), business license of the investment company (copy), and the financial examination report issued by Chinese registered accountant;
5. Financial examination report for the invested enterprises issued by Chinese certified public accountant;
6. Other papers required by the Ministry of Commerce.

Article 18 According to the character of the project that the investment company plans to establish, check and ratify the term of the investment company in accordance with related national rules of business term of foreign invested enterprises.

Article 19 If the investment company invest in enterprises, it should reported and be approved separately in accordance with the procedures of examination and approval jurisdiction for foreign invested enterprises.

Article 20 If the investment company invests in enterprises, the rate of the investment invested by foreign investor exclusively or invested with other foreign investors takes no less than 25 per cent of the registered capital of its invested enterprise, its invested enterprise enjoys the treatment of foreign invested enterprises, and is issued approval certificate and business license of foreign invested enterprises. If the rate of the provided capital is less than 25 percent, it should go through the formalities of examination, approval and registration in accordance with present procedures of examination, approval and registration of establishing foreign invested enterprises unless there are provisions stipulated by laws and administrative laws and regulations.

Article 21 If the investment company establishes branches, it should report to the Ministry of Commerce for approval. If the investment company applies for establishing sub-companies, it must meet following requirements:

1. The investment company has paid in time the registered capital in accordance with the provisions of the contract and regulations and the paid capital is no less than 30 million USD, or the investment company has invested in or has more than ten foreign invested enterprises;

2. The region where the investment company plans to establish sub-companies should be the investment concentrated region of investment companies or products selling concentrated region.

Article 22 The investment company who meet the requirements may apply for regional general headquarter of transnational corporation (hereinafter referred to as “regional headquarter”), and go through change formalities in accordance with laws.

1. The investment company applies for regional headquarter should meet following requirements:
(1) Have paid no less than 100 million USD registered capital, or have paid no less than 50 million USD registered capital. The total sum of the property of its invested enterprise in the year before it makes the application is no less than 3 billion yuan RMB and total sum of the interests is no less than 100 million yuan RMB (calculated in accordance with related provisions of merged report forms).
(2) Accord with the provisions of Article 8;
(3) Have established research and development institute in accordance with related rules.

2. The investment company who has been approved as a regional headquarter may carry out following business according to its actual needs of its business in China:
(1) The business stipulated in Article 10 and 15;
(2) Import and sale at home (exclude retail) the product of transnational corporations and its holding affiliated company;
(3) Import raw and supplementary materials, spare parts and accessories required by maintenance service for the products of its invested enterprises and transnational corporation;
(4) Accept service contract of internal and external enterprises;
(5) Be engaged in the service of logistics and distribution in accordance with related rules;
(6) Establish financial company with the approval of China Bank Regulation Commission, and provide related financial service for the investment company and its invested enterprises;
(7) Be engaged in engineer contract project abroad and investment abroad, establish financing leasing company and provide related service with the permission of the Ministry of Commerce;
(8) Trust other domestic enterprises to produce or process its products or the products of its parent company and sale both at home and abroad;
(9) Other approved business.

3. Application procedures
(1) The investment company makes an application to local province, autonomous region, municipality under Central Government and city specifically designated in the state plan and the application is submitted to the Ministry of Commerce after preliminary examination;
(2) The Ministry of Commerce makes a reply within 30 days as of the receipt of all the application materials. If any company is approved a regional headquarter, approval certificate of foreign tradesman invested enterprise is issued by adding Regional Headquarter;
(3) The investment company makes an application to industrial and commercial administrations for going through the change formalities within 30 days by the approval certificate.
4. Application files
(1) The application letter signed by legal person of the investment company;
(2) The resolution of director board or shareholders of the investment company and its transnational corporations;
(3) Revised regulations and contracts of the investment company;
(4) The approval certificate (copy) and business license (copy) of the investment company, and the financial examination report issued by Chinese registered accountant;
(5) The approval certificate (copy) and business license (copy) of its invested enterprises;
(6) Financial examination report (copy) of the invested enterprises issued by Chinese registered accountant;
(7) Major financial report form of the investment company audited by Chinese registered accountant;
(8) Other files the Ministry of Commerce required.

All the files should be formal ones except those that are given clear indication of “copy”.

Article 23 The investment company’s investment in the territory of China is not limited by its registration location.

Article 24 The tax revenue of the investment company is handled in accordance with related laws and regulations of China.

Article 25 The investment company should carry out conscientiously the plan of project investment and report the investment and operation situation in the first year to the Ministry of Commerce for record within 3 month before next year in accordance with prescribed content and form. The said materials should be used as one of the necessary materials for the investment company to attend unified annual examination and report.

Article 26 The investment company and its invested enterprise are separate legal person or entity. Their business contacts should be handled as the business contacts between independent enterprises.

Article 27 The investment company and its invested enterprises should abide by Chinese laws. Regulations and rules, must not shun the management and payment of tax by any means.

Article 28 The investment company must not be engaged in production directly.

Article 29 The said rules apply to the investors of Taiwan, Hong Kong and Macau who invest in the mainland of China.

Article 30 The interpretation of the said rules shall be vested in the Ministry of Commerce.

Article 31 The said Rules come into effect after 30 days as of the promulgation.

(All information published in this website is authentic in Chinese. English is provided for reference only. )