Super detailed analysis of the domestic approval process for overseas investment!

Overseas direct investment by Chinese enterprises requires approval from the National Development and Reform Commission, the Ministry of Commerce and the State Administration of Foreign Exchange. The National Development and Reform Commission is responsible for project approval, the Ministry of Commerce is responsible for specific approval and issuance of investment certificates, and the State Administration of Foreign Exchange is responsible for foreign exchange registration and filing. The process includes: first obtaining approval from the National Development and Reform Commission, then obtaining an investment certificate from the Ministry of Commerce, and finally completing foreign exchange registration with the State Administration of Foreign Exchange.

one. National Development and Reform Commission project approval

01 Division of approval authority:

a. Resource development projects with an investment of less than US$300 million by local enterprises and non-resource development projects with an investment of less than US$100 million by local enterprises shall be approved by the provincial development and reform department. ‍

b. Resource development projects with an investment amount of US$30 million to US$300 million and non-resource development projects with an investment amount of US$10 million to US$100 million must be reported to the National Development and Reform Commission for registration. ‍

02Project information report and approval document content

For overseas acquisition and bidding projects with a Chinese investment of US$100 million or more, a written report must be submitted to the (National Development and Reform Commission) before starting business activities. The relevant confirmation letter will be issued within 7 working days from the date of receipt of the written report.

(1) Project application report;

(2) Company board of directors resolutions or related investment resolutions;

(3) Documents proving the assets, operations and credit status of the Chinese party and the foreign partner;

(4) Financing letter of intent issued by the bank;

(5) If the investment is made in the form of securities, physical objects, intellectual property or technology, equity, creditor's rights and other asset interests, the amount of investment shall be determined based on the appraised value or fair value of the asset interests. Asset appraisal reports issued by intermediaries such as accountants and asset appraisal agencies with corresponding qualifications, or other third-party documents that can prove the value of relevant asset interests should be submitted;

(6) Bidding, mergers or joint venture cooperation projects, letters of intent or framework agreements and other documents signed by Chinese and foreign parties;

(7) For overseas bidding or acquisition projects, an information report should be submitted, accompanied by a relevant confirmation letter issued by the National Development and Reform Commission.

03National Development and Reform Commission approval time limit

After receiving the project application report, the National Development and Reform Commission must complete the approval within 20 working days or provide review opinions to the State Council. If it cannot be completed within the specified time, the extension can be extended by 10 working days and the applicant will be notified. Provincial development and reform departments may formulate their own approval management measures based on the "Interim Measures for the Approval of Overseas Investment Projects". Therefore, approval procedures and approval timelines may vary from place to place.

2. Approval of enterprise overseas investment certificate from the Ministry of Commerce

After obtaining approval from the National Development and Reform Commission, Chinese investors should also obtain a corporate overseas investment certificate issued by the Ministry of Commerce. Except for the investment jurisdiction over some large and sensitive projects, the approval power for most projects has been delegated to local business departments.

01Approval authority

Category 1: Projects approved by the Ministry of Commerce

1) Overseas investment in countries that have not established diplomatic relations with my country;

2) Overseas investment in specific countries or regions (the specific list is determined by the Ministry of Commerce in conjunction with the Ministry of Foreign Affairs and other relevant departments);

3) Overseas investment with a Chinese investment amount of US$100 million and above;

4) Overseas investments involving the interests of multiple countries (regions);

5) Establish overseas special purpose companies. ‍

Category 2: Projects approved by provincial commerce departments

1) Overseas investment with a Chinese investment amount of US$10 million or more and less than US$100 million;

2) Overseas investment in energy and minerals;

3) Overseas investment that requires domestic investment. ‍

Category 3: Other items that do not belong to Category 1 and Category 2

After obtaining approval from the Ministry of Commerce or provincial commerce authorities, Chinese investors must also register at the Chinese embassy or consulate in the host country or region and report the required overseas investment operations and data information to the original review department. ‍

02Application documents

1) Application form, the main contents include the name of the overseas enterprise, registered capital, investment amount, business scope, business period, description of the source of investment funds, specific content of the investment, equity structure, investment environment analysis and evaluation, and analysis and evaluation of the overseas enterprise that does not involve the "Overseas Enterprise" Explanation of the circumstances listed in Article 9 of the Investment Management Measures, etc.;

2) A copy of the company’s business license;

3) Overseas enterprise articles of association and related agreements or contracts;

4) Approval or filing documents from relevant national departments;

5) Overseas investment in mergers and acquisitions must submit the "Preliminary Report Form on Overseas M&A Matters";‍

6) Other documents required by the competent authority.

03Ministry of Commerce approval time limit

The provincial commerce department shall, in accordance with the authority entrusted by the Ministry of Commerce, make a decision on whether to approve the application within 15 working days from the date of acceptance;

If it needs to be reported to the Ministry of Commerce for approval, it will be subject to preliminary review within 10 working days from the date of acceptance by the provincial commerce department, and then reported to the Ministry of Commerce after approval. The Ministry of Commerce will make a decision on whether to approve the application within 15 working days from the date of acceptance of the application.

3. Foreign exchange registration with the State Administration of Foreign Exchange

The State Administration of Foreign Exchange handles overseas investment matters through a new electronic platform, including approval, approval, registration and filing, etc. Investors will receive an IC card foreign exchange registration certificate, and all relevant records will be stored on the IC card. Investors can make overseas investments through their own foreign exchange funds, domestic foreign exchange loans, and RMB foreign exchange purchases. Profits earned by domestic institutions from overseas investments can be retained overseas for investment.

When handling foreign exchange registration, domestic institutions need to explain the source of funds; overseas investments and related assets and interests need to be registered with the State Administration of Foreign Exchange.

Overseas investment foreign exchange registration

01Jurisdiction

(1) If China’s foreign exchange investment does not exceed US$10 million, it shall be registered by the State Administration of Foreign Exchange;

(2) If the Chinese side’s foreign exchange investment exceeds US$10 million, it will be accepted and initially reviewed by the Foreign Exchange Administration Branch, and then reported to the Foreign Exchange Administration Branch for approval and registration.

02Approval documents

(1) Apply in writing and fill in the "Foreign Exchange Registration Application Form for Overseas Direct Investment";

(2) Explanatory materials on the sources of foreign exchange funds;

(3) Valid business license or registration certificate and organization code certificate of the domestic institution;

(4) The approval document or certificate for the investment from the overseas direct investment authority;

(5) If upfront expenses are remitted, provide relevant documentation and remittance vouchers;

(6) Other materials required by the foreign exchange bureau.

03Approval time limit

The existing regulations do not specify the time limit for approval by the State Administration of Foreign Exchange. According to information published on the websites of local foreign exchange administrations, under normal circumstances, the State Administration of Foreign Exchange will issue a foreign exchange registration certificate within 20-25 working days after accepting the application materials. ‍

Summarize:

China's overseas investment approval process involves three departments: the National Development and Reform Commission, the Ministry of Commerce and the State Administration of Foreign Exchange. The National Development and Reform Commission is responsible for project approval and divides authority according to investment amount and category. The Ministry of Commerce examines and approves investment certificates and divides authority according to project type and amount. The State Administration of Foreign Exchange is responsible for foreign exchange registration and filing and uses an electronic platform to handle matters. Process: First obtain approval from the National Development and Reform Commission, then obtain an investment certificate from the Ministry of Commerce, and finally apply for foreign exchange registration with the State Administration of Foreign Exchange. Each department has clear approval time limits and required materials. The approval process may vary by region and project type. ‍

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Source: Cross-border Finance