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People's Daily Online>>China Business

China issues new standards for foreign investment

By Wang Xi, Cheng Qun (The Economic Daily)

15:42, December 14, 2011

Edited and translated by People's Daily Online

China’s Ministry of Commerce and State Administration of Foreign Exchange jointly released the Notice on Further Improving the Regulatory Measures on Foreign Institutional investors on Dec. 12 in a bid to standardize the qualifications examination and approval procedures as well as foreign exchange management related to foreign investment companies.

According to the notice, foreign investment companies should be labeled as “Investment Company” in a registration form, and their information should be typed into the Ministry of Commerce’s approval management system. Other types of companies should not be labeled as “Investment Company” or “Investment Holding Company.”

The noticed stressed foreign-invested companies can directly use legitimate RMB income in China including RMB profits, advance return on investments, liquidation, equity transfers, capital reduction for domestic investments after approval from local foreign exchange bureaus. Foreign investors can also use legal income to register capital to Investment Companies for domestic investments, but their domestic loans cannot be reinvested in the domestic market.

According to Article 2 of the Provisions of Foreign-Invested Companies released by Ministry of Commerce in 2004, an investment company means a foreign investor establishing a company engaged in direct investments that is wholly owned or a joint venture with Chinese investors. Its form is a limited liability company.

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