MOFCOM Delegates Approval Authority for Holding Companies to Provincial Counterparts
The Ministry of Commerce ("MOFCOM") issued a Circular on March 6, 2009, aiming at simplifying and facilitating approval procedures for foreign-invested holding companies, by delegating approval authority for the establishment of these entities to MOFCOM's counterparts at provincial levels, except for foreign-invested holding companies with a registered capital of more than USD100 million, over which MOFCOM retains establishment approval authority. According to the Circular, commercial authorities at the provincial level and vice-provincial level have now been delegated the authority and power to approve the establishment of foreign-invested holding companies with a registered capital of no more than USD100 million. Commercial authorities at the vice-provincial level refer to those in the cities of Haerbin, Changchun, Shenyang, Jinan, Nanjing, Hangzhou, Guangzhou, Wuhan, Chengdu and Xi'an.
Additionally, any subsequent changes to foreign-invested holding companies established upon MOFCOM's approval will also be examined and approved by the aforementioned competent commercial authorities, except for recapitalizations of more than USD100 million and changes to an entity's shareholders, which will still be examined and approved by MOFCOM. The Circular reiterates that foreign investment in holding companies must comply with the Provisions on Foreign Investment in Holding Companies and its supplementary provisions. Investment by holding companies is also disallowed in areas in which foreign investment is prohibited or restricted.
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