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What are the four features of China's new Foreign Investment Law?

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The draft of China’s new Foreign Investment Law of China was published by China's Ministry of Commerce (Ministry of Commerce of the People's Republic of China-MOFCOM) on 19 January, 2015. It was open for public comments until 17 February 2015.

On March 15, 2019, the Law of China on Foreign Investments came into force.

This Law introduced changes in the regulation of foreign investment in China.
  1. The new Law eliminates the effect of a separate regime of regulation of foreign investment in China. Thus, foreign investors will no longer be subject to a separate regulatory regime from Chinese investors.  Prior to the entry into force of this Law, China had separate legislation to regulate its activities.

  2. The new reporting system will replace the prior system of individual approvals of foreign investments by Ministry of Commerce of the People's Republic of China. 

  3. Control over foreign investments. The Foreign Investment Law will expand the list of circumstances under which national security can be monitored to cover any foreign investment that is or may be detrimental to China's national security.

  4. "Grandfather clause" (Grandfathering)1 is valid, but foreign or sino-foreign companies need to provide evidence that their activities comply with the Law of China "On Companies", the Partnership law or the Law on Individual Proprietorship Enterprises within 3 years.

 

1"Grandfather clause" (Grandfathering Clause) is the principle of investor protection against changes in the legislation of the host country.
 
 

PRACTICE

  • Company registration in China
  • Representative office registration in China
  • Foreign investment in the banking sphere in China
  • Employment of foreigners in China

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