Shanghai Municipal Commission of Commerce is working on the supervision and inspection of foreign investment information reports for the year 2021, details of which are as follows:

The foreign-invested enterprises (institutions) hereinafter include: companies and partnerships set up by foreign investors in China, foreign (regional) enterprises engaged in production and business operations in China, permanent representative offices and branches of foreign (regional) enterprises established in China to engage in production and business operations, foreign-invested investment companies, venture capital enterprises and companies and partnerships established in China with investment as the main business.

• Inspection categories and objects

Inspection of foreign investment information reports is divided into two types as inspection for initial & change reports and inspection for annual reports.

(A) Inspection for initial & change reports: foreign-invested enterprises that have submitted and publicized initial and change report information through the National Enterprise Registration System since January 1^st, 2021.

(B) Inspection for annual reports: foreign-invested enterprises that have submitted and publicized report information through the National Enterprise Credit Information Publicity System since January 1^st, 2021.

• Inspection time

From October 11^th, 2021 to December 15^th, 2021.

• Methods for inspection

Mainly takes non-directional or directional random checks.

(A) Non-directional random checks: according to the unified social credit codes of foreign-invested enterprises (institutions), randomly selected in accordance with a certain percentage of foreign-invested enterprises (institutions) in the region, respectively generate the list of random checks of initial & change reports and annual reports.

(B) Directional random checks: According to the characteristics of foreign-invested enterprises (institutions), such as investment size, scale of operation, industry and region, and determine the appropriate proportion of random checks in accordance with the degree of risk, randomly selected foreign-invested enterprises (institutions) in the region to generate the list of random checks.

(C) proportion of random checks: may adopt non-directional or directional random checks to determine the list of enterprises according to the actual situation in the region, the number of enterprises for initial & change reports should be no less than 3% of the number of enterprises submitting initial & change reports in 2021, and the number of enterprises for annual reports should be no less than 3% of the number of enterprises participating in the annual report in 2021.

• Documents needed for inspection

(A) Inspection for initial & change reports:

1- The Articles of Association filed through the Market Regulation Department;

2- Proof of capital contribution (such as capital verification report, financial report, bank statement, etc.);

3- Equity structure chart (tracing the actual controller);

4- Agreement on capital increase; Equity transfer contract (in case of capital increase and share transfer);

5- Asset evaluation report (for those involving M&A transactions).

(B) Inspection for annual reports:

1- The Articles of Association filed through the Market Regulation Department;

2- Proof of capital contribution (such as capital verification report, financial report, bank statement, etc.);

3- Equity structure chart (tracing the actual controller);

4- Audit report or financial report;

5- Tax completion certificate.

For foreign-invested enterprises (institutions) and their investors who have not reported in accordance with the provisions, or have inaccurately reported within two years, do not cooperate with the supervision and inspection, and refuse to fulfill the administrative penalty decisions made by the inspection authority, the inspection authority may initiate inspections thereof ex officio.

Sampling matters and investigation results shall be publicized through the public platform of the foreign investment information reporting system, except for information involving such information as national secrets, trade secrets and personal privacy, which shall not be disclosed according to law.

If you want to read the complete article, you can refer to the below link (in Chinese only):  http://www.shanghaiinvest.com/cn/viewfile.php?id=16952

If you have any question, please contact me. 

Mr. Mike Chang (Partner)

TEL: 0086-21-68868321

Email: mikechang@shanghaiinvest.com