On 2nd Sep 2016, the “Interim Measures for Recording-Filing for the Establishment and Change formalities of Wholly Owned Foreign Enterprises (hereinafter referred as “WOFEs”)” was issued by Ministry of Commerce. It brings the great reformation on registration formalities for WOFEs and the approval from the MOC will no longer be the premise step before the AIC registrations since 1st Oct 2016.
Under the current approval system for WOFEs, it takes around 20 working days or even longer for the local ministry of commerce to make the approval on the setting up of the WOFEs or its change formalities. As the important advantage for Free Trade Zone (“FTZ”), if the company is set up in FTZ and under the “negative list” system, the recording-filing policy was applicable and it provided the great convenience on both the documents and time requirement. On 3rd Sep 2016, the Committee of National People’s Congress was also passed the agreement on the amendment of relevant laws and regulations for the purpose to expanding this recording-filing policy to the national wide. In the very near future, for the establishment and changing formalities of WOFEs which are not included in the negative list, it is no longer need to be approved and the recording-filing policy is applicable.
Under the new recording-filing system, the company only needs to make the recording-filing online and within three working days, the company will obtain the filing result. Further, the documents requirements will be easier. For example, the bank reference letter, the audit report from the investor, the import and export list will be no longer provided.
We concluded the following as the main point for this regulation.
- “Negative List” will be applicable for this recording-filing policy.
- Applicable companies: (1) WOFE, JV and CJV, (2) company was set up by HK, Macau and Taiwan Investor, (3) Foreign invested companies limited by equity, (4) foreign investment company and venture capital and equity investment companies.
- Matters to be recorded: newly establishment, equity transfer, equity pledge, merger, division and early termination, mortgage or transfer of the assets in the WOFEs, foreign partner of CJV’s return on the investment in advance, and CJV entrusted management.
- Recording-filing process can be taken before the newly establishment OR 30 days after issuance the business license or the date when the shareholder making the decision;
- Recording-filing is made through the online system and if the information is full and accurate, the authority will complete the recording-filing procedure within three working days;
- The government will pay more attention on the post administration;
- It brings the legal liability to the companies if the company does not conduct properly, the company may be put on the blacklist.
Further, as the most important file to this recording-filing policy, we believe that the national wide “negative list” is to be issued in October.
Shanghai Dongjin will keep a close eye on this issue and may share more opinions in practice when the regulation is formally issued in October.
If you have any questions, please send the email to me.
Ms. Jojo Hu
TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021