China Call for Comments on Draft Implementing Regulations of FIL

On 1 November 2019, the Ministry of Justice of China released the Draft Implementing Regulations of the Foreign Investment Law calling for comments from the public by 1 December 2019.


The Draft proposes to replace existing implementing regulations on the three main types of foreign-invested enterprise: Wholly-Foreign Owned Enterprises, Equity Joint Ventures and Cooperative Joint Ventures.


Six key changes of the Draft foreign investors should know are as follows:


I. Foreign investors can directly invest in the development of specific projects in China but do not need to establish foreign-invested enterprises or acquire shares, equities, share of property or other similar interests in enterprises established in China.


II. The State protects the investment, income and other legitimate rights and interests of foreign investors in China pursuant to the laws and regulations and the international treaties and agreements that China concludes or accedes to.


III. Any foreign investor who expands its investment within the territory of China with proceeds from its investment in China may enjoy the corresponding preferential treatment in accordance with the law.


IV. Foreign-invested enterprises may, in accordance with the law, carry out financing activities within or outside the territory of China through public issuance of stocks or corporate bonds, public or non-public issuance of other financing instruments, obtaining loans from financial institutions or otherwise.


V. The specific circumstances of expropriation or requisition of the investment of foreign investors for the needs of public interests shall be clearly provided by law, and the investment of foreign investors shall not be expropriated or requisitioned for reasons other than those provided by law. 


VI. Where foreign investors invest in industry or field for which a licence is required by law, unless otherwise provided by laws or administrative regulations, the relevant competent department in charge of implementation of licensing shall examine the foreign investors' application for licensing under the criteria and procedures which are consistent with those for domestic investors, and shall not add licensing criteria or apply stricter licensing criteria or impose additional examination steps, examination materials and other additional requirements for foreign investors.

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