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China Foreign investments (excluding investments in specially controlled industries)
in Shanghai FTZ will not be subject to administrative approval

2 September 2013 

In respect of the widely discussed Shanghai Free Trade Zone (FTZ), on 30 August 2013, the PRC National People's Congress Standing Committee (NPCSC) issued a decision authorizing the PRC State Council to suspend requirement for obtaining approval by investors from the examination and approval authority for setting up within the Shanghai FTZ a foreign investment enterprise (FIE) provided that such a FIE does not fall within the specially controlled industries. This NPCSC decision will be implemented as from 1 October 2013 for a trial run of 3 years.
Currently, in China, to set up a FIE which includes wholly foreign owned enterprise (WOFE), Sino-foreign equity joint venture (EJV) and Sino-foreign contractual joint venture (CJV), the application and other documents have to be prepared and submitted to the examination and approval authority for obtaining approval, which is prerequisite for incorporation registration of the FIE with relevant company registration authority. The NPCSC decision will make the establishment of a FIE within the Shanghai FTZ much simpler and faster.
This move is regarded as the first step for change of laws applicable to the Shanghai FTZ to reduce or suspend various administrative approvals for transactions and business activities to create a freer environment inside the Shanghai FTZ.

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Disclaimer
Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

 

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