Administrative measures for Outbound Investment by Enterprises

Global Publication May 2018

On 1 March, 2018, the Administrative Measures for Outbound Investment by Enterprises (NDRC Order No. 11) were formally implemented, which sets out detailed requirements for approval and filing of outbound investment projects by domestically-funded enterprises.

Our foreign clients who are doing or intending to do transactions with Chinese companies outside of China should be aware of the rules as this will significantly affect the timeline for transaction and deal certainty, including specifically CP for closing and break fee arrangement.

Projects subject to approval requirement

Projects in sensitive countries or regions, or those that fall into sensitive industry sectors, are subject to approval by the National NDRC.

Projects subject to filing requirement

Projects that are not in sensitive countries or regions, or those that are not in sensitive industry sectors. Filing responsibility falls into two categories:

  • National NDRC: if the investor is under control of the central government (Central SOE), or if the investor is not a Central SOE but the investment amount is USD300 million or more
  • Provincial NDRC: if the investor is not a Central SOE and the investment amount is less than USD300 million.

Projects subject to neither approval nor filing

Approval or filing is not required by non-sensitive projects implemented by offshore subsidiaries using their own assets/fund and who are not seeking any capital injection / financial support / guarantee from their domestic parents. However, if the investment amount reaches USD300 million, national NDRC shall be notified.

Making an application

Applications for approval, filing or notification must be made prior to the project implementation (i.e. prior to the financial close of the projects), in one of two ways:

  • Online via the NDRC website: suitable for the projects which do not involve any State secrets or for which use of internet for application is not inappropriate.
  • Paper application: suitable for projects which involve State secrets or for which use of internet for application is not appropriate.

Responsibility for making an application depends on the investor type:

  • Single investor – the investor itself
  • Single investor is a Central SOE – the group company or head office
  • More than two investors – the investor whose investment is largest among all investors. If investors include Central SOE, application shall be made to the national NDRC.

Timeframe for approval/filing

Within five working days, the relevant NDRC will decide whether the application is accepted or rejected or additional documents are required. Then:

  • Approval projects: within 20 - 30 working days afterwards, to decide whether the project is approved or not. Where independent appraisal is necessary, 34 more working days will be required;
  • Filing projects: within seven working days, a notice of filing or a notice of rejection will be issued. Rejection will be supported by a reason (limited to breach of any law, regulation, policy, international treaty or agreement or potential threat or damage to national interests or national security).

The approval or the notice of filing is valid for two years. The project must be completed within that period.

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