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 15 (“ Approval Catalogue ”) are subject to an approval process; and investment projects not 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 projects, 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. 3) Annual Reporting a) RO An RO shall submit an annual report to the relevant AMR during the period from March 1 to June 30 of each year. The annual report shall include information such as the legally existing status of the foreign parent enterprise, the activities conducted by the RO, the income and expenses of the RO as audited by an accounting firm, etc. b) FIE During the period from January 1 to June 30 of each year, an FIE shall submit its annual report through the National Enterprise Credit

Information Publicity System of the AMR. The annual report shall include information of the FIE such as its basic information, its investors and ultimate controller, its operation status and assets and liabilities, etc. This process is now commonly called the “joint reporting,” as information

submitted in the annual report will be shared among the AMR, MOFCOM and SAFE. 4) Foreign exchange “Renminbi,” the legal currency in China, is not a freely convertible currency; and

15 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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