- Professional News
- 28 May 2014
China eases control of overseas investments
On 8 May 2014, China’s National Development and Reform Commission (NDRC) launched new measures to ease control of Chinese companies' overseas investments.
On 8 May 2014, China’s National Development and Reform Commission (NDRC) launched the new “Overseas Investment Project Approval and Registration Measures” (“New Measures”) which will ease control of Chinese companies' overseas investments.
The New Measures contains the following important changes to notice:
Registration with local NDRC branches
1. Chinese companies planning overseas investments of less than USD 1bn will now only need to register with NDRC’s provincial branches rather than obtaining approval from the NDRC.
Previously, Chinese companies were obliged to obtain approval from the NDRC when planning investments in natural resource exploitation exceeding USD 300m or investments in other sectors exceeding USD 100m.
Registration must be filed with the provincial NDRC branch situated where the company is located. Companies may now download a registration package, which includes a standard registration form and relevant documents, from NDRC’s official website.
The registration process will take seven working days at a maximum. However, if an application has been filed incompletely, the NDRC will notify the applicant within five working days. The registration process will then begin from the date of acceptance of the complete application.
If the application complies with the requirements, the NDRC will issue a registration notice to the applicant. The NDRC may however refuse to grant a registration notice. In that case, the applicant has the right to initiate an administrative reconsideration or administrative litigation against the NDRC.
Sensitive countries, regions or sectors require NDRC approval
2. Overseas investments exceeding USD 1bn still require approval by the NDRC. All investment projects in "sensitive countries, regions or sectors" also require approval by the NDRC regardless of the investment value.
“Sensitive countries and regions” comprise countries and regions which have not established diplomatic relations with China and/or are under international sanctions, at war or experience civil commotion.
“Sensitive sectors” comprise telecom operations, the news and media industry, cross-border water resource development and utilisation, large-scale land development, electric mains and grid.
Simplified approval procedure
3. The approval procedure has been simplified. Companies planning overseas investments may submit applications directly to a provincial-level economic planning body rather than going through county- and city-level authorities.
The time required to process an application is approx. 20 working days from the date of acceptance of the application. For applications requiring third-party evaluation the evaluation processing time will be 40 working days at a maximum.
Would you like to know more?
In Bech-Bruun’s opinion, the Chinese Government has taken a big step in terms of easing material as well as a procedural control of overseas investments resulting in less discretion flexibility with regard to the approval and/or the registration process.
If you would like to know more about the New Measures, please do not hesitate to contact us.