Major Institutional Changes underNew
- 發佈時間:2015-04-15 18:29:32 來源:國際商報 責任編輯:羅伯特
byKWMXuPing,MarkSchaubandJenniferYao
On19January2015,theMinistryofCommerceofthePRC(MOFCOM)publishedadiscussiondraftoftheproposednewForeignInvestmentLaw(DraftFIL)onitsofficialwebsiteforpubliccomments.Aspartofatrendoftransformingtheroleofgovernmentintheeconomyandsimplifyingredtape,thisnewlegislationwillrevamphowChinainteractswithforeigninvestmentwhichhasbeenlong-awaited.
ChinaisnotthesamecountrywhentheSino-foreignEquityJointVentureEnterpriseLawwaspromulgatedin1979.Inadditiontoitsrapidgrowthanddevelopingeconomy,therehasbeeninrecentyearsstrongandsustainedgrowthinoutboundinvestmentsbyChineseenterprises.ThishasledtoChinachangingfromanetcapitalinflowcountrytoanetcapitaloutflowcountryin2014.NodoubtChina’sperspectivesandstrategiesonbothinboundandoutboundinvestmentregimehavereshapeddramaticallyreflectingthechangingeconomiclandscape.
TheDraftFIL,onceenacted,willeventuallyreplacethetriooftheSino-foreignEquityJointVentureEnterpriseLaw,theSino-foreignCooperativeJointVentureEnterpriseLawandtheWhollyForeign-investedEnterpriseLawaswellasitsimplementationrulesandancillaryregulations(collectively,“ThreeFIELaws”),andwillhavealong-lastingimpactuponforeigninvestmentbysignificantlyreshapingtheentireChineseforeigninvestmentregulatoryregime.
TheDraftFILcontains11chaptersand170articles,andcovers:(1)definitionsofforeigninvestorsandforeigninvestments;(2)administrationofforeigninvestmentswhicharesubjecttoentryclearance;(3)nationalsecurityreview;(4)comprehensiveforeigninvestmentinformationreportingsystem;(5)promotinginvestment,protectinginvestmentandcoordinatingcomplaints;(6)legalliabilitiesand(7)miscellaneousprovisions.ComparedtothemoreabstractprovisionsintheThreeFIELaws,theDraftFILismoreextensiveandspecificastohowforeigncapitalwillbeadmittedandadministeredwithinChina.
Then,whatarethemajorinstitutionalchangesundertheDraftFILandhowwillitimpactontheforeigninvestmentactivities?
LimitedEntryClearanceReplacingForeignInvestmentApprovals
TheDraftFILspecifiesthatforeigninvestmentswillreceivenationaltreatment,exceptforonesthatfallunderthespecialadministrativemeasurecatalogue(i.e.the“negativelist”).Thenegativelistwillonlycompriseoftwocategories:theprohibitedindustriesandtherestrictedindustries;foreigninvestmentinindustriesnotlistedinthenegativelistwillnotberequiredtoapplyforentryclearanceormakerecordfilingandwillonlyberequiredtosubmitinformationreports.
ThenegativelistisverydifferentfromthecurrentIndustryCataloguefortheGuidanceofForeignInvestments(InvestmentCatalogue),whichisthekeydocumentcomplementarytotheprevailingforeigninvestmentapprovalregime.TheInvestmentCataloguespecifiestheencouraged,restrictedandprohibitedindustriesforforeigninvestment,andtheindustriesnotspecifiedaretreatedaspermittedindustries.Nonetheless,ineffectforeigninvestmentineachcategoryrequiresMOFCOMapproval.
Inthefuture,whentheForeignInvestmentLawcomesintoeffect,anegativelistwillbeneededtoreplacetheInvestmentCatalogue.Thenegativelistisaentryclearanceapproachadoptedbymanydevelopedcountriesandhasbeenwidelyacceptedbyglobalinvestors.AccordingtoMOFCOMstatistics,currentlymorethan70countrieshaveadoptedanegativelistapproach.TheshiftfromcomprehensiveapprovalregimeonforeigninvestmenttoanegativelistapproachisamajorlegislativeandregulatoryimprovementforChina.
ComprehensiveInformationReportingSystemforForeignInvestment
Theinformationreportingsystemisdisparatefromtheapprovalorrecordfilingsystem,butmoresimilartoex-postreportingaftercompletionofinvestment.However,thepenaltyforcontraventionunderthereportingsystemissevere.Anycompanyfoundtobenon-compliantwithitsinformationreportingobligationsorconcealingtruth,providingmisleadingorfalseinformationwillnotonlybesubjecttomonetaryfinesarisingfromadministrativeorcriminalliabilities,thepersonsdirectlyresponsiblemayalsobecriminallyliable(Article147and148).
TheInformationreportingsystemincludestheinvestmentimplementationreport,theinvestmentamendmentreport,theannualreportandthequarterlyreport.Itisworthnoting:
◆Investmentimplementationreportmaybesubmittedbeforeorwithinthirtydaysafterthecompletionofaninvestment.However,weunderstand,ifaforeigninvestorsubmitsthereportbeforethecommencementofaninvestment,thereisariskthatsuchreportwillneedtobeamendedorwithdrawnatalaterdateduetopossibleadjustmentintheinvestmentstructure,terminationorabandonmentoftheinvestment.Hence,itmaybemoreefficientifallreportsaresubmittedafterthecompletionoftheinvestment.
◆Sharetransfer,pledge,capitalincreaseandothermattersthatusedtorequirepriorapprovals,cannowbereportedwithinthirtydaysafterthecompletionofsuchevent.
◆Quarterlyreportonlyappliestolargeforeigninvestedenterprisescontrolledbyforeigninvestors,namely,thoseenterpriseswithtotalassets,salesorrevenuesoverRMB10billionorhavemorethan10subsidiariesinChina.
NationalSecurityReview
Since2011,thenationalsecurityreviewrelatedrulesandregulationshavebeenpromulgatedbytheStateCouncilorbywayofannouncementsissuedbyMOFCOM.However,undertheDraftFILforthefirsttimethenationalsecurityreviewwillbeincorporatedasaseparatechapterintheForeignInvestmentLaw(ChapterFour).Thiselevatesthenationalsecurityreviewfromdepartmentalregulationstoofficiallaw.Inadditiontofollowingtheexistingjointministerialmechanismtocarryoutsecurityreviewsonforeigninvestmentandthegeneralandspecialreviewprocedures,thenationalsecurityintheDraftFILhasthefollowingdistinctcharacteristics:
◆Thescopeofnationalsecurityreviewseemstobeexpanded.Accordingtothecurrentnationalsecurityreviewprovisions,thenationalsecurityreviewsarelimitedtoforeigninvestmentincertaindomesticindustriesrelatingtonationaldefensesecurity,andforeigninvestmentinothernationalsecurityareaswhichmayhaveanimpactonnationalsecurityandwhereforeigninvestorsmayacquiredefactocontrolofsuchenterprises.Althoughthelistoftargetedindustrieswasneverpublished,rumorsarethatthenationalsecurityreviewisapplicableto57industries.However,underArticle48oftheDraftFIL,nationalsecurityreviewwilllikelyapplyto“anyforeigninvestmentthatharmsorlikelyendangerthenationalsecurity”andisnotlimitedtoacquisitionofcontrollingstakeofdomesticenterprisesortoanyparticularindustry.
◆Thenationalsecurityreviewandentryclearancearebetterinter-connectedundertheDraftFILandatthesametimemorespecificinapplication.Ifanyrelevantforeigninvestmentdepartmenthasconcernsastoapotentialnationalsecurityrelatedissueduringtheentryclearanceprocess,thenitwillsuspendthereviewandtransferthecasetothejointministerialpaneltoconductnationalsecurityreview.
◆AsthenationalsecurityreviewisnowembeddedintheDraftFILandthushasitsleveloflegaleffectescalated,thenationalsecurityreviewhasajudicialimmunityclausetotheeffectthatthedecisionsofthereviewcannotbeappealedorsubjecttoadministrativereview.
ActualControlerandPotentialImpact
onVIEStructure
TheDraftFILintroducesforthefirsttimetheconceptofactualcontrollerfromtheforeigninvestmentperspective,i.e.whetheracompanyisconsideredasaforeigninvestedordomesticcompanyisnotsolelybasedontheplaceofregistrationbutfocusingon“actualcontrol”.Accordingtothedefinitionof“ChineseInvestor”,ChinesenationalsandthecompaniesundertheircontrolwillbeclassifiedasChineseInvestors.Atthesametime,thedefinitionof“control”alsoreferencesfrominternationallyaccepteddefinition,includingcontrolofshares,votingrightsorotherequityinterestsofacompany,controlofthedecision-makingbodiesofthecompany,orpossessionofdecisivepowertoinfluencethemanagement,finance,personnelortechnologyofthecompanythroughcontractual,trustorotherarrangements.Accordingtotheabovedefinitions,thelegalvalidityandtheassociatedrisksofvariableinterestentities(VIE)structuremayneedtobereassessed.
ThelegalityofVIEstructuresandfundstransferundertheVIEstructurehavebeenthefocusofforeigninvestorsforalongtime.Allmajoroverseascapitalmarketregulatorsarealsoassessingthelegalandregulatoryrisksunderthestructure.AccordingtotheDraftFIL,undertheVIEstructure,iftheactualcontrollerisofChinesenationality,thentherelevantdomesticcompanyshallbetreatedasaChineseinvestorand,therefore,theentryclearanceandtheinformationreportingsystemsapplicabletoforeigninvestedenterpriseswillnotapply.Accordingly,underthissituation,theVIEstructuremaybeconsideredaslegitimate.Conversely,iftheactualcontrollerisaforeignentityornational,thenthedomesticcompanieswillbetreatedasforeign-investedcompanies,andanyoperationwithoutentryclearancemaybeconsideredasillegal.
However,forcompaniesthataresuccessfullylistedoverseasorcompaniescontrolledbyforeigninvestorswithoperationsinChinausingVIEstructurespriortothepromulgationoftheForeignInvestmentLaw,theDraftFILdoesnotprovideaclearanswerastohowtheywillbeperceivedifdomesticcompaniesfallintotheNegativeListandsuchdecisionislikelytobeinfluencedbythefeedbackreceivedfromthecommentssolicationprocess.Basedonourspeculation,becauseoftheinfluentialpowerofmanycompaniesusingVIEstructuresinvariousindustries,therisksthattheexistingVIEstructureisconsideredasillegalafterthepromulgationofForeignInvestmentLawarerelativelylow.Inthefuture,theregulatorswilllikelytakeaverycautiousapproachandmakedecisionsonacase-by-casebasisdependingontheactualsituation.
TheForeignInvestmentLaw,ifpromulgatedinitscurrentdraftform,willfundamentallychangethecurrentforeigninvestmentregulatorylandscape.Assuchitsimplementationwillrelyontheformulationofrelevantimplementationrulesaswellasothercomplementaryguidance,suchastheNegativeList,thenationalsecurityreviewguidanceandinformationreportingrules.WhilethecirculationoftheDraftFILisanimportantfirststepinthecontextofthelandmarkreform,thereisstillaverylongwaytogointheestablishmentofanewforeigninvestmentregimeandthefullimplementationoftheForeignInvestmentLaw.AccordingtotheLegislativeWorkPlanfortheStateCouncilin2014,theamendmentoftheThreeFIELawsfallswithinthe‘researchprojects’of2014.MOFCOM,asthedepartmentresponsiblefordraftingtheForeignInvestmentLaw,hasstartedtocirculatetheDraftFILforpubliccommentsattheverystartof2015.ThisdemonstratesthedeterminationoftheChinesegovernmenttocarryoutreform.Uponexpirationoftheperiodsolicitingpubliccomments(approximately1month),MOFCOMwillrevisetheDraftFILonthebasisofcommentsgatheredfromthepublic,andsubmitthereviseddrafttothestandingmeetingoftheStateCouncilfordeliberationandthencirculateanupdateddraftfortheStandingCommitteeoftheNationalPeople’sCongresstoreview.Withtheobjectiveofestablishinga“newopeneconomysystem”andalongwiththenegotiationofSino-USandSino-EUbilateralinvestmentagreements,webelivewearenowatthedawnoftheeraofthenewForeignInvestmentLaw.