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[ESTABLISHING A BUSINESS ENTITY IN CHINA]
from an existing shareholder of the enterprise, it will need to submit additional information regarding the proposed transaction and the parties to the transaction, etc. If the foreign investor is investing in a listed company, it will need to comply with eligibility requirements which may involve additional information being collected.
listed in the Approval Catalogue are subject only to a less burdensome filing. It is worth noting that, although the Approval Catalogue applies to both domestic and foreign investment projects, it specifically prescribes that foreign investment projects involving “restricted categories” in the negative list are subject to the approval by the NDRC, even if not specifically listed in the Approval Catalogue. For approval-required investment projects, a project application report shall be submitted, along with a variety of documents that support the analysis that the project complies with the requirements listed in the Approval Catalogue and/or the negative list, as the case may be. Typically, such requirements may include demonstration of not detrimental to national security, the ecological environment and public interest, etc. For filing-required investment projects, only general information regarding the project and the investors and basic documents will need to be submitted. For either kind of project, the foreign investor should be mindful that the required documents may vary depending on where the foreign- invested project is located and which industry it involves. Confirmation in advance with the local NDRC on the specific requirements may help save time in going through the process.
4 Operational Considerations
1) Post-formation Registration After obtaining the business license, an FIE shall complete various post- registration procedures before formal operation, such as the foreign exchange registration with the relevant banks, the tax registration with the local counterpart of the State Taxation Administration, and the social security registration with the social security authority, etc. 2) Approval by or Filing with the NDRC Where the business of an FIE involves an “investment project” (typically referring to a fixed assets or infrastructure investment project), additional filing with or approval by the NDRC will be required before such investment project may be commenced. NDRC administers a two-level system where the types of investment projects listed in the Catalogue of Investment Projects Subject to Governmental Approval 17 (“ Approval Catalogue ”) are subject to an approval process; and investment projects not
17 Refers to the Catalogue of Investment Projects Subject to Governmental Approval (2016 Edition), promulgated by the State Council on December 12, 2016.
ILN Corporate Group – Establishing a Business Entity Series
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