(Promulgated on 25 July 2000 and effective as of 1 September 2000.)

　 Article 1　These Regulations have been formulated pursuant to the PRC, Company Law (the "Company Law") and relevant provisions of laws and regulations concerning foreign investment, in order to regulate investment by foreign investment enterprises.

　　Article 2　For the purposes of these Regulations, the phrase "investment within China by foreign investment enterprises" means an act whereby a Sino-foreign equity joint venture, a Sino-foreign cooperative joint venture or a wholly foreign-owned enterprise legally established in China in the form of a limited liability company, or a company limited by shares with foreign investment, invests in and establishes an enterprise in China or purchases the interest of one or more investors in another enterprise ("Investee Company") in China in its own name.

　　Investment within China by investment companies invested in and established by foreign business entities shall be handled in accordance with State laws and regulations on foreign investment and the Establishment of Companies with an Investment Nature by Foreign Investors Tentative Provisions.

　　Joint investment in China by a foreign investor and a foreign investment enterprise shall be handled in accordance with State laws and regulations on foreign investment. The capital contribution of the foreign investor in such a joint investment shall generally account for not less than 25% of the registered capital of the investee enterprise.

　　Article 3　Investment within China by foreign investment enterprises shall comply with State laws and regulations.

　　Investment within China by foreign investment enterprises shall, mutatis mutandis, be handled in accordance with the Directing of Foreign Investment Tentative Provisions and Foreign Investment Industrial Guidance Catalogue. Foreign investment enterprises may not invest in fields in which foreign investment is prohibited.

　　Article 4　Investee Companies shall take the form of limited liability companies or companies limited by shares.

　　Article 5　Foreign investment enterprises may invest only if they meet the following conditions:

　　1. their registered capital has been fully paid in;

　　2. they have become profitable; and

　　3. they are operating legally and have no record of illegal operations.

　　Article 6　The aggregate amount invested domestically by a foreign investment enterprise may not exceed 50% of its net assets; increases in the form of capitalized profits received from the Investee Companies shall not count towards the net assets.

　　Article 7　To invest in and establish a company in the encouraged or permitted category, a foreign investment enterprise shall submit an application and the materials set forth below to the company registration authority of the place where the Investee Company is to be located:

　　1. the unanimously adopted resolution of the foreign investment enterprise's board of directors concerning the investment;

　　2. the foreign investment enterprise's approval certificate and business licence (photocopies);

　　3. the capital contribution verification report issued by a statutory capital contribution verification institution attesting to the fact that the registered capital has been fully paid in;

　　4. the foreign investment enterprise's audited balance sheet;

　　5. documentation proving that the foreign investment enterprise has paid income tax or that it has had its income tax reduced or exempted; and

　　6. other materials specified in laws, regulations or rules.

　　Article 8　The company registration authority shall decide whether to grant registration or not pursuant to the relevant provisions of the Company Law and the PRC, Administration of Company Registration Regulations (the "Company Registration Regulations"). Companies granted registration shall be issued a Legal Person Business Licence with the words "Invested in by a foreign investment enterprise" noted in the row for Type of Enterprise ("(Annotated) Business Licence").

　　Article 9　To invest in and establish a company in the restricted category, a foreign investment enterprise shall submit an application and the materials set forth below to the provincial level authority for foreign trade and economic cooperation ("Provincial Level Examination and Approval Authority") of the place where the Investee Company is to be located:

　　1. the materials to be submitted under Article 7 hereof; and

　　2. the articles of association of the Investee Company.

　　The articles of association of the Investee Company shall specify the following matters:

　　(1) the name and domicile of the company;

　　(2) the company's scope of business and the ratio of domestic sales to exports of its products;

　　(3) the company's registered capital;

　　(4) the names of the investors;

　　(5) the rights and obligations of the investors;

　　(6) the investors' methods of capital contribution and capital contribution amounts;

　　(7) the conditions for the assignment of the investors' contributions;

　　(8) the company's organizations and their method of constitution, their functions and powers and their rules of procedure;

　　(9) the company's legal representative;

　　(10) the grounds for dissolution and method of liquidation of the company; and

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　　(11) other matters that the investors consider necessary to specify.

　　The investors shall sign their names and affix their seals to the company's articles of association.

　　Article 10　After receipt of the aforementioned application, the Provincial Level Examination and Approval Authority shall, in accordance with the scope of business of the Investee Company, seek the opinion of the industry administration authority at the same level or at State level.

　　The Provincial Level Examination and Approval Authority shall issue a written official reply within 10 days of its receipt of the opinion of the industry administration authority at the same level or at State level as to whether or not it agrees.

　　Article 11　If the official reply from the Provincial Level Examination and Approval Authority to the foreign investment enterprise states that it agrees, the foreign investment enterprise shall apply for registration of establishment to the company registration authority of the place where the Investee Company is to be located, on the strength of the written official reply.

　　The company registration authority shall decide whether to grant registration or not pursuant to the relevant provisions of the Company Registration Regulations. Companies granted registration shall be issued an (Annotated) Business Licence.

　　Article 12　Within 30 days of the date of establishment of the Investee Company, the foreign investment enterprise shall report the same to its original examination and approval authority for the record. The documents filed shall include:

　　1. a record-filing form for investment by an foreign investment enterprise;

　　2. the business licence (photocopy) of the Investee Company; and

　　3. if the scope of business of the Investee Company involves a field in the restricted category, the official reply by which the Provincial Level Examination and Approval Authority agreed to the establishment of the Investee Company shall also be submitted.

　　Article 13　If the foreign investment enterprise invests its fixed assets, thereby changing the original scale of its operations or the content of its business, it shall apply to, and obtain the consent of, its original examination and approval authority before making the investment.

　　The original examination and approval authority shall give its reply within 15 days of the date of receipt of the application; failure to issue the reply within the time limit shall be construed as consent.

　　If its original examination and approval authority does not give its consent, the foreign investment enterprise may appeal to its higher level examination and approval authority or the Ministry of Foreign Trade and Economic Cooperation (MOFTEC). The examination and approval authority at the higher level or MOFTEC shall issue a written reply to the foreign investment enterprise within 30 days of the date of receiving the appeal.

　　Article 14　If a company established pursuant to Articles 7 and 8 hereof modifies its scope of business and such modification involves a field in the restricted category, the matter shall be handled in accordance with the procedure set forth in Articles 9 and 10 hereof and the company shall apply to its original company registration authority for amendment of registration.

　　Article 15　If a foreign investment enterprise purchases equity of another investor in the Investee Company and the scope of business of the Investee Company falls within the encouraged or permitted category, the Investee Company shall submit the materials stipulated in Article 7 hereof to the original company registration authority and apply for amendment of registration in accordance with relevant regulations such as the Company Registration Regulations.

　　If the scope of business of the Investee Company involves a field in the restricted category, the foreign investment enterprise shall, after carrying out the procedures set forth in Articles 9 and 10 hereof, apply to the original company registration authority for amendment of registration in accordance with relevant regulations such as the Company Registration Regulations, etc., on the strength of the official reply in which the Provincial Level Examination and Approval Authority stated its agreement.

　　The company registration authority shall decide whether to grant registration or not pursuant to the relevant provisions of the Company Registration Regulations. Companies granted registration shall be issued an (Annotated) Business Licence.

　　If the Investee Company is a foreign investment enterprise, matters shall be handled in accordance with the Changes in Equity Interest of Investors in Foreign Investment Enterprises Several Provisions.

　　Article 16　If a foreign investment enterprise invests in a company in Central or Western China and foreign investment accounts for not less than 25% of the registered capital of the Investee Company, the Investee Company shall be eligible for treatment as a foreign investment enterprise.

　　Article 17　If the Investee Company is eligible for treatment as a foreign investment enterprise, an application therefor shall be made to the Provincial Level Examination and Approval Authority of the place where the Investee Company is to be located, in accordance with the procedures for the establishment of foreign investment enterprises. The applicant shall submit the following materials:

　　1. the materials to be submitted under Article 7 hereof;

　　2. the name and domicile of the Investee Company;

　　3. the contract for investment in, and the articles of association of, the Investee Company; and

　　4. if the scope of business of the Investee Company involves a field in the restricted category, the project proposal and feasibility study for the establishment of the Investee Company shall also be submitted.

　　If the Investee Company is treated as a foreign investment enterprise and an investor assigns its equity therein, the applicant shall submit the relevant agreement for the assignment of the investor's equity, in addition to the materials enumerated in the preceding paragraph, to the Provincial Level Examination and Approval Authority of the place where the Investee Company is located.

　　Article 18　If the Provincial Level Examination and Approval Authority confirms that the investment of the foreign investment enterprise complies with relevant State laws and regulations and that foreign investment accounts for not less than 25% of the registered capital of the Investee Company, it shall issue the applicant an approval document and an Approval Certificate for a Foreign Investment Enterprise with the words "Invested in by a foreign investment enterprise" noted thereon.

　　If the scope of business of the Investee Company involves a field in the restricted category, the Provincial Level Examination and Approval Authority shall seek the opinion of the relevant industry administration authority in accordance with Article 10 hereof before giving its approval.

　　Article 19　The applicant shall apply for registration to the company registration authority of the place where the Investee Company is to be located on the strength of the Approval Certificate for a Foreign Investment Enterprise.

　　The company registration authority shall decide whether to grant registration or not pursuant to the relevant provisions of the Company Registration Regulations. Companies granted registration shall be issued an (Annotated) Business Licence.

　　If the scope of business of the Investee Company does not involve a field in the restricted category, matters shall be handled in accordance with Article 7 hereof.

　Article 20　Investee Companies that are located in Central or Western China shall be eligible for the treatment accorded to foreign investment enterprises as provided for in State laws and regulations on the strength of their Approval Certificates for a Foreign Investment Enterprise and (Annotated) Business Licences.

　　Article 21　If the total amount of investment of a Investee Company that is located in Central or Western China exceeds the examination and approval limit of the examination and approval authority of the province, autonomous region or municipality directly under the central government in which it is to be located, the application shall be submitted to MOFTEC for its examination and approval.

　　Article 22　If a Investee Company is a foreign investment enterprise that falls into a special category or industry and, as such, is expressly required by laws, regulations or government department rules to be examined and approved by MOFTEC, the Provincial Level Examination and Approval Authority shall forward the relevant application materials to MOFTEC for its examination and approval. MOFTEC shall decide whether to grant its approval or not pursuant to the relevant laws, regulations or government department rules.

　　Article 23　Enterprises in which foreign investment enterprises have an equity participation and which were established pursuant to the relevant regulations before the promulgation hereof shall be eligible for treatment as foreign investment enterprises upon carrying out the relevant procedures with reference to these Provisions, provided that they satisfy the requirements hereof.

　　Article 24　MOFTEC and the State Administration for Industry and Commerce shall be in charge of interpreting these Provisions.

　　Article 25　These Provisions shall be implemented as of 1 September 2000.

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