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Issue 40-April 2020 Veritas Update
Release date:
2020-04-28

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Issue 39-April 2020 Veritas Update


CATALOG

      

  • Latest Hot Spot

Shanghai Issued 24 Pieces of New Foreign Investment Policies to Encourage More Foreign Investment


  • New Law Express

The State Administration for Market Regulation Solicited Opinions on the Administrative Measures for the Authorization and Registration of Foreign-invested Enterprises


The State Administration for Market Regulation Issued the Notice on Supporting COVID-19 Prevention and Control and Resumption of Working and Manufacturing and Enforcement of Anti-Monopoly Law


Restriction on Foreign Shares Ratio in Securities Companies has been Revoked


  • Our Firm’s Trend

Shanghai Veritas Law Corporation, SBA Stone Forest and Singapore Enterprises Center Jointly Launched a Series of Online Courses for the Public Interest




Latest Hot Spot


Shanghai Issued 24 Pieces of New Foreign Investment Policies to Encourage More Foreign Investment


On April 10, Shanghai promulgated and implemented the 'Several Measures adopted by Shanghai to implement the State Council's Opinions on Further Improving the Utilization of Foreign Investment (the “Several Measures”). The 24 measures were issued in four aspects from the implementation of the further opening policy, strengthening the promotion of foreign investment, enhancing the facilitation of investment, and strengthening the protection of foreign investment.

On October 30, 2019, the State Council promulgated the 'Opinions on Further Improving the Utilization of Foreign Investment ', which put forward 20 pieces of opinion in terms of four aspects including further opening up, investment promotion, investment facilitation, and investment protection, namely the ' State 20 Articles.' The promulgation of Several Measures is not only a practical measure for Shanghai to implement the 'State 20 Articles', but also a detailed and specific policy based upon the 'State 20 Articles .'

On the basis of the 'State 20 Articles', Shanghai’s “24 measures” focuses on bolstering the support for investment promotion activities, foreign investment projects, investment solicitation platforms, talents, etc., and has established an incentive mechanism for investment and business solicitation. The main measures include: holding a city promotion conference in Shanghai, and supporting various districts to provide financial support for domestic and foreign investment promotion activities with the themes of 'investing in Shanghai'. Support various districts to reward foreign-invested projects that conform to the city's industrial development direction in accordance with their contribution to regional economic development. Support various districts to reward professional social organizations and investment solicitation agencies to import foreign-invested projects conform to the city's industrial development direction, in accordance with the contributions to regional economic development. Support the introduction of talents by various districts to the regional headquarters, R & D centers and other foreign-invested projects that conform to the city's industrial development orientation. Support the various districts to arrange overseas travel to carry out investment and business attraction.

The 'State 20 Articles' put forward measures such as reducing the cost of cross-border utilization of funds, improving the convenience of working in China, and optimizing the approval procedures for the land use planning of foreign-invested projects. The main measures include: simplifying the procedures required in banks for the business of foreign direct investment, establishing trials to facilitate the receivables and expenses of capital projects, advancing the facilitation of the management of foreign debt registration, and exploring the implementation of facilitation measures for the purchase of foreign exchange by foreign talents. The measures also include promoting the 'single window' to carry out the approval procedures of foreigners' working and residence in China, and promoting the authorization of the powers to permit foreigners to work in China to various districts, and unifying three certificates, which are 'Construction Land Planning Permit', 'Allocation Decision' and 'Construction Land Approval Letter,' into one license.

The 'State 20 Articles' involves deepening the contents of opening up policy, which has been fully implemented in the '24 Articles' of Shanghai. The main measures include: implementing two negative lists of foreign investment admission both across the country and within the Free Trade Zone, and speeding up the opening of the fields of financial industry, new energy vehicles and other fields to realize and implement projects timely, and supporting Shanghai Free Trade Zone and the Lin-gang Special Area using the “one project, one negotiation” approach to further open up the key areas; and supporting the measures and experience first implemented in Free Trade Zone to be pasted and followed in comprehensive bonded areas and national economy and technology development zone.

The “24 Articles” of Shanghai further emphasized the institutional arrangements most concerned by foreign investors, such as intellectual property protection, equal participation in standard setting and government procurement, and standardization of government supervision as proposed by the 'State 20 Articles.' The “24 Articles” also reaffirms the requirements of equal treatment of domestic and foreign investors and fair competition. At the same time, the “24 Articles” solidifies the experience and practices formed by Shanghai during the course of practice, and further create an international, rule-of-law, and convenient business environment. The main measures include: timely implementing the Foreign Investment Law, and accelerating local legislation on foreign capital; and improving the systems of round tables for government-enterprise cooperation, and contact services for key enterprises, and as well as the systems to deal with the complaints of foreign-invested enterprises, and protection of their legitimate rights and interests; and emphasizing the standardization of the implementation of supervision policy to further regulate and unify administrative punishmentsand improving the timeliness and convenience of judicial remedies for intellectual property rights; and also increasing the degrees of punishments against violations of intellectual property rights and crimes of intellectual property rights; and publishing the typical cases of judicial protection of intellectual property rights; and supporting foreign-invested enterprises to participate equally in the formulation of standards and government procurement according to laws.(消息来源于中国政府网)


New Law Express


The State Administration for Market Regulation Solicited Opinions on the Administrative Measures for the Authorization and Registration of Foreign-invested Enterprises


In order to implement the laws and regulations such as the Foreign Investment Law of the People's Republic of China and the Regulations on the Implementation of the Foreign Investment Law of the People's Republic of China, the State Administration for Market Regulation has drafted 'Administrative Measures for the Authorization and Registration of Foreign-invested Enterprises (Draft for Comments) (the “Measures”), based upon the older version of the Measures, is now open to the public for comments.


The draft for the Measures clearly indicates that it will take effect on July 1, 2020. The older version of the Measures implemented on February 1, 2003 by the former State Administration for Industry and Commerce was simultaneously abolished. The authorization obtained pursuant to the older version of the Measures is retained until June 30, 2020. If the conditions required for authorization specified in the Measures are not met until June 30, 2020 and the State Administration for Market Regulation would not confirm to confer the authorization, the authorized bureaus shall no longer exercise the right to register and manage foreign-invested enterprises from July 1, 2020.

The Measures mentioned that the registration of foreign-invested enterprises shall be administered and processed by the State Administration for Market Regulation or the local market supervision and administration department of the local governments authorized by the State Administration for Market Regulation pursuant to laws. Without the authorization of the State Administration for Market Regulation, the registration and management of foreign-invested enterprises shall not be carried out or conducted in any disguised forms.

The Measures also mentioned that if, during the course of the registration and management of foreign-invested enterprises, the authorized bureaus violate the laws and regulations, or exceed the scope of authorization, or transfer authorizations without approval, or entrust other administrative departments to exercise the power which do not meet the requirements, or refuse to accept the guidance of the authorized bureaus or implement the regulations of the authorized bureaus, commit deceptions, do not perform its obligations as required by authorizations, or lack the conditions required for authorization, or violate other provisions of the Measures, the State Administration for Market Regulation would adopt the following sanctions: order the authorized bureaus to revoke or correct its illegal or inappropriate administrative conducts; directly revoke the illegal or inappropriate administrative actions conducted by the authorized bureaus; report the criticism towards the public; suggest relevant authorities to impose administrative punishments on the directly responsible personnel according to the regulations; or sanction the criminal punishments if the behaviors constitute a crime according to laws; or revoke part or all of the authorization.


The State Administration for Market Regulation Issued the Notice on Supporting COVID-19 Prevention and Control and Resumption of Working and Manufacturing and Enforcement of Anti-Monopoly Law 


On April 5, 2020, State Administration for Market Regulation issued the Announcement of the State Administration for Market Regulation on Supporting COVID-19 Prevention and Control and Resumption of Working and Manufacturing and Enforcement of Anti-monopoly Law (the “Announcement”), stating that it will better exercise the function of anti-monopoly supervision, and make every effort to create a market with fair competition environment, and support COVID-19 prevention and control and recovery of Working and Manufacturing.

The Announcement stated that entrepreneurs and consumers can consult about anti-monopoly related to COVID-19 prevention and control and recovery with the State Administration for Market Regulation by telephone, e-mail, fax, mail, and public messages left on the website. The governments would maintain high-frequency interaction with enterprises, and promptly communicate and solve related issues arising from the approvals procedures of combination of enterprises through teleconferences, emails, etc. Therefore, a special handling method for the special period has been formed. This flexible method not only improves the efficiency of the cases receipt and reviewing to the extent, but also ensures that the case reviewing is not affected by COVID-19 prevention and control. Furthermore, the institutional costs of M & A transactions engaged by enterprises would also be reduced. 

The Announcement requires that the local Administration for Market Regulation of all provinces, autonomous regions and municipalities shall strictly investigate and sanction monopolistic behaviors that hinder COVID0-19 prevention and control and recovery and damage consumers' interests in accordance with the laws. The investigation and sanction shall focus on the monopoly agreements entered into by and among enterprises engaged in the business relevant to masks, drugs, medical devices, and disinfection supplies and other prevention and control materials, and utilities such as water supply, power supply, gas supply and other enterprises engaged in industries and fields closely related to individuals livelihoods. The investigation and sanctions should also emphasize the abusive behavior of market dominance such as the unfair high prices, refusal to trade, restricted transactions, tying or attaching unreasonable transaction conditions, and differential treatment, etc. In this way, the market environment of fair competition would be created for COVID-19 prevention and control and recovery, and the interests of consumers would be effectively protected.

The Announcement also proposes that for the cooperation agreement of the enterprises involved in the prevention and control of epidemic situations and the recovery of production, the State Administration for Market Regulation may exempt such agreements if they are conducive to technological progress, efficiency improvement, social and public interest protection, and consumer protection. The exemption is accordance with PRC Anti-Monopoly Law and also meets current public policy requirements. The exemption also safeguards the interests of small and medium-sized enterprises, supports and promotes the recovery of working and manufacturing.


Restriction on Foreign Shares Ratio of Securities Companies has been Revoked


Starting from April 1, 2020, China will lift the restrictions imposed on the percentage of foreign shares in securities companies, which is an important measure to further deepen reforms in domestic capital market.

From April, the CSRC will abolish restrictions imposed on the foreign share ratio of securities companies and fund management companies. Qualified foreign investors may submit application for the establishment or change of actual controllers of companies according to the requirements of laws, regulations, relevant provisions of the CSRC and relevant service guidelines. Prior to this, the restrictions imposed on the percentage of foreign shares in futures companies have been revoked.

Previously, the proportion of foreign equity held by joint venture brokers shall no more than 49%. The inability of foreign capital to obtain a controlling percentage also caused many joint venture brokers to experience multiple internal and external discomforts, and few outstanding joint venture brokers emerged. The breaking point occurred in 2018, when the CSRC promulgated the Administrative Measures on Foreign-Invested Securities Companies, in which the proportion of foreign investment in joint venture securities companies was relaxed to 51%. Subsequently, the domestic capital market has been more and more open towards foreign investment. The CSRC's decision to remove the restrictions on the proportion of foreign shares has provided greater convenience for foreign investors to enter domestic capital market.


Our Firm’s Trend


Shanghai Veritas Law Corporation, SBA Stone Forest and Singapore Enterprises Center Jointly Launched a Series of Online Courses for the Public Interest


Our law firm, SBA Stone Forest and Singapore Enterprises Center jointly launched a series of live courses for the public interest to help Singapore companies get through the pandemic situation. On April 23, 2020, the first live course will be carried out online. Our managing partner Ms. He Lijuan, and Jam Yang, who is the senior consultant and department manager of SBA Stone Forest’s Corporate Advisory and Consulting Department, jointly provided relevant explanations and comprehensive policy guidance from professional perspectives for corporate executives, finance, personnel, etc. regarding the new Foreign Investment Law implemented since January 1, 2020.

Ms. He Lijuan mainly introduced that how to use the new law to adjust the company structure and protect shareholders' rights. The course is divided into five major contents. First, Mr. He introduced the promulgation of the Foreign Investment Law and its important changes. Relevant major changes include: introduction of pre-entry national treatment and negative list system; uniform application of company law, partnership law and antitrust law when establishing and operating the foreign-invested enterprises; remodeling of foreign investment supervision system; introduction of foreign investment information reporting system; the intensive promotion and protection of foreign investment. Later, Ms. He introduced five special administrative measures designed to regulate foreign investment admission, including the negative list system, pre-entry national treatment, anti-monopoly review for enterprises combination, and national security review. Later, she mentioned that after the implementation of the Foreign Investment Law, the supervision system regulating foreign investment has also changed. Among them, the local commercial bureaus with different level of powers have no longer accepted and processed approval application for the establishment and change of foreign-invested enterprises. Next, Ms. He focused on the transitional provisions and adjustment methods of the corporate governance of foreign-invested enterprises and the protection of shareholders' rights and interests provided in the Foreign Investment Law. Finally, she provided professional legal advice on corporate governance during the COVID-19 period, and expressed that Shanghai Veritas Law Corporation is dedicated to providing various legal services for foreign-invested enterprises funded by Singapore to overcome the difficult situations.




About Veritas

Shanghai Veritas Law Corporation is a comprehensive law corporation in China that provides perfect and comprehensive legal services to clients. With our professional skills and in-depth understanding of business, we provide a complete set of value-added legal service solutions for clients at home and abroad to help them achieve business goals.

We boast an excellent legal team paying close attention to client needs continuously, providing clients with practical solutions and pioneering professional advice. We strive to provide excellent services and take pride in establishing friendly and long-term partnership with our clients.

Through our international partners' offices in more than 20 cities including New York, Los Angeles, Singapore, Taiwan, Myanmar, Vietnam, Malaysia, India, Indonesia, Sri Lanka, Mexico, London and Oman, we are committed to providing professional services for Chinese enterprises to develop business in Asia, the United States, the Middle East, Latin America, the United Kingdom and other countries.