Foreign Direct Investment

Sino-foreign Equity and Contractual JV Enterprises
Application for the establishment of Sino-foreign equity JV and contractual JV enterprises normally involves four steps.

Application Procedures for Establishment of Sino-Foreign Equity JV and Contractual JV Enterprises (in the case of Guangdong)

Step 1: Approval of Project Application Reports

Upon reaching agreement by the parties to an equity or contractual JV after negotiation, the Chinese party should submit the project application report to the local foreign trade and economic cooperation department. For projects under the encouraged and permitted categories with an investment exceeding US$100 million and projects under the restricted category with an investment exceeding US$50 million, the report is examined by the provincial development and reform committee before submitting to the National Development and Reform Commission for approval. For projects requiring the opinions of the relevant industry department, the approval organ must send a letter of request for opinions to the industry department concerned together with the necessary documents.

The project application report should include: Basic facts about the project, technology and technical processes, demand on energy and other resources, environmental impact assessment, prices of public goods or services involved, means of capital contribution and financing plans, equipment to be imported and amounts involved.

Documents required: Enterprise registration certificates of the Chinese and foreign investors, credit certificates, letter of investment intent, and environmental impact assessment report issued by the environmental protection administration.

Step 2: Approval of Contract and Articles of Association

The contract, articles of association and other relevant legal documents for establishing the JV signed by the parties are submitted by the Chinese party to the local foreign trade and economic cooperation department for approval.

Documents required: Application documents to the competent Chinese authorities; feasibility study report and approval documents for the project; application for registration of the name of the enterprise approved by the provincial or municipal administration for industry and commerce; written comments on the project by various government departments such as environmental protection, fire services, health and land administration; business licences of the parties concerned and certificates of their legal representatives; contract and articles of association duly signed by the legal representatives of the JV parties; and list of board of directors.

Step 3: Application for Approval Certificate

After the contract and articles of association are approved, the Chinese party should apply to the provincial or municipal foreign trade and economic cooperation department for an approval certificate.

Documents required: The project application, feasibility study report, contract, articles of association and list of directors approved by the respective approving authorities.

Step 4: Registration

Upon collection of the approval certificate, an application for business licence should be filed with the provincial or municipal administration for industry and commerce within 30 days. Subsequently, the JV should complete such procedures as applying for official seal and enterprise code, opening bank account, and registering for tax payment and customs declaration with the local public security, technical supervision, taxation, Customs, finance, foreign exchange administration, banking, insurance and commodity inspection departments.

 

1. The above procedures are applicable to both production enterprises and service providers.

2. Guangdong currently practises a system under which foreign investment project proposals, feasibility study reports, contracts and articles of association are examined and approved together by the provincial foreign trade and economic cooperation departments at various levels.

3. The applicant may decide whether or not to compile a feasibility study report in the light of the actual conditions and needs of the project. The feasibility study report no longer needs to be approved by administrative departments of the government.

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