The State Administration for Industry and Commerce (the "SAIC") issued Circular 31 on 10 February 2010, as a further step in the development of foreign-invested partnerships ("FIPs") following its issuance of Circular 47, the Administrative Measures for the Registration of Foreign-invested Partnership Enterprises (the "Registration Measures"), in January 2010.
Circular 31 provides guidance to various SAIC offices and market supervision and administration offices at the province, autonomous region, certain municipality and sub-provincial levels (the "Authorities") in understanding and interpreting the Measures for the Administration on the Establishment of Partnership Business by Foreign Enterprises or Individuals in China (the "Measures"), issued by the State Council in November 2009, and in implementing the Measures and the Registration Measures. Circular 31 highlights the work priorities of the Authorities and requires the Authorities to understand and observe the following in implementing the Measures and the Registration Measures:
- Understanding the importance of the Measures and FIPs, as a new model of foreign investments, in promoting China's continuous reform and opening up polices, stabilising and expanding foreign investments and increasing and improving the modes of foreign investments in China. Circular 31 emphasizes the new task of the Authorities in administrating the registration of FIPs under the Measures and the Registration Measures, which permit private equity funds, in the form of FIPs, to be registered with a SAIC office at the province or sub-provincial level without approval from the Ministry of Commerce.
- Undertaking steps to improve training for their personnel in understanding and implementing the Measures.
- Standardising the FIP registration process to provide convenient and efficient registration services for FIPs. Circular 31 reiterates certain key registration requirements for FIPs with investments as the main purpose, i.e., private equity funds, specified in the Registration Measures and requires the Authorities to focus their work on the registration and administration of private equity funds.
- Establishing a sophisticated regulatory and supervisory framework for FIPs, in particular, on the compliance of FIPs with foreign investment policies and foreign investment industry restrictions in the Catalogue for the Guidance of Foreign Investment Industries. The Authorities are further required to review applicable approvals during the course of registering FIPs’ re-investments in China.
- Strengthening interdepartmental coordination and cooperation to ensure the smooth implementation of the Measures.
Circular 31, together with Circular 47, provides the basis for the local SAIC offices in registering FIPs, including private equity funds.
For inquiries related to this Client Alert, please contact:
Phill Smith (firstname.lastname@example.org)
Yong Ren (email@example.com)