MOFCOM Issues Measures on Investigation and Handling of Failure on Declaration of Business Operators' Concentration
On December 30, 2011, the Ministry of Commerce ("MOFCOM") issued the Interim Measures on Investigation and Handling of Failure on Declaration of Business Operators' Concentration, which became effective on February 1, 2012. Under the measures, business operators who fail to comply with MOFCOM business concentration reporting requirements upon meeting the thresholds set out in the Provisions of the State Council on Declaration Threshold for the Concentration of Business Operators will be investigated and punished. Under the measures, MOFCOM has the authority to carry out investigations on its own initiative or in response to reports of violations. MOFCOM may require suspected violators to provide documentary evidence relating to the transactions according to the Measures on Declaration of Business Operators' Concentration. Follow-up investigations (and document requests) may be required at MOFCOM's discretion. Violators are subject to a fine of up to RMB500,000 and may be ordered to take certain actions to eliminate the concentration, such as cessation of implementation of the concentration, disposal of equity interest or assets, or transfer of business units within a prescribed time limit.
The full Chinese text of the measures is available here.
A related Q&A in Chinese is available here.
Implementing Regulations for the PRC Bid Invitation and Submission Law
On December 20, 2011, the State Council issued the Implementing Regulations for the Law of the People's Republic of China on Bid Invitation and Submission, which became effective on February 1, 2012. Under the implementing regulations, government officials are expressly prohibited from using any means to illegally interfere in the tender process for construction projects. Bid inviters must not impose unreasonable conditions to restrict or exclude potential bidders. Collusion between bidders and bid inviters is also expressly prohibited. The subject matter, price, quality and time of performance of the contract awarded under the bidding procedure must be consistent with the terms of the bidding documents. For government-invested construction projects, the public tender invitation procedure must be followed if the government has a controlling or dominating interest in the project. However, the government is not required to open a project for public bidding where (i) only a small number of potential bidders are available due to complexity of technology, special requirements or due to natural environmental restrictions or (ii) the cost of a public bid invitation would account for too large of a proportion of the contract price of the project.
The full Chinese text of the implementing regulations is available here.
A related Q&A in Chinese is available here.
Tax Authorities and SAIC Strengthen Cooperation on Monitoring Equity Transfers
On December 22, 2011, the State Administration of Taxation and the State Administration for Industry and Commerce ("SAIC") jointly issued the Notice on Strengthening Cooperation to Share Equity Transfer Information , which became effective on January 1, 2012. The notice requires local industry and commerce ("AIC") authorities to provide tax authorities with equity transfer related information of a limited liability company, such as registration number, shareholders' name(s) and amount of capital contribution, after completing its AIC registration. At the same time, tax authorities must provide AIC authorities with (i) tax registration information of an enterprise following a change in equity ownership; and (ii) following receipt of equity transfer registration information from the AIC authorities, relevant collection information including the amount of tax collected from the enterprise. The information exchange for a certain month shall be completed within 15 days after the end of such month starting from January 1, 2012. For equity transfers completed between January 1, 2011 and December 31, 2011, the deadline for the information exchange is extended to June 30, 2012. For equity transfers completed between January 1, 2010 and December 31, 2010, the deadline is September 30, 2012.
The full Chinese text of the notice is available here.
China Issues Notice to Clarify Issues Relating to Participation in Social Insurance by Foreigners Employed in China
On December 2, 2011, the Ministry of Human Resources and Social Security ("MOHRSS") issued the Notice on Relevant Issues Concerning Improving the Work on Participation in Social Insurance by Foreigners Employed in China. The notice requires local counterparts of MOHRSS to strictly implement the Social Insurance Law of the People's Republic of China and the Interim Measures for Participation in Social Insurance by Foreigners Employed in China. Foreigners qualifying for social insurance who were employed in China on or before October 15, 2011 must complete the social insurance registration procedures with their employers and pay social insurance premiums starting from October 15, 2011. Overdue penalties apply if obligations accrued from October 15, 2011 are paid after January 1, 2012. Social insurance premiums for all foreigners employed after October 15, 2011 must be paid beginning from the first month of employment in China. Foreigners from countries with bilateral or multilateral social insurance agreements with China are exempt from the social insurance scheme, provided that they provide documentary evidence showing their participation in the social insurance scheme in their home country within three months after obtaining their Chinese employment. Failure to provide the necessary documentation within the deadline will result in overdue penalties.
The full Chinese text of the notice is available here.
MIIT Regulates the Market Order of Internet Information Service
On December 29, 2011, the Ministry of Industry and Information Technology issued Several Provisions on Regulating the Market Order of Internet Information Service, which will take effect on March 15, 2012. The provisions prohibit internet information service providers ("IISPs") from taking actions that infringe upon the lawful rights and interests of other IISPs or users. In addition, the provisions govern the collection and use of users' personal information by IISPs. IISPs cannot collect users' personal information, or disclose it to others, without the users' consent. When collecting personal information, IISPs are required to inform users which information will be collected, how it will be collected and the purpose of collecting it. IISPs may not collect personal information for any purpose other than for rendering services. IISPs must store the personal information of users properly and take remedial measures immediately in the event of inadvertent disclosure (or potential disclosure) of personal information. Where a disclosure of personal information results in (or may result in) serious consequences, IISPs must immediately notify the telecom administrative authority and cooperate with an official investigation. Violations of the new provisions are punishable by warning, rectification order or fines.
The full Chinese text of the provisions is available here.
China Issues Plan for Establishing Shanghai as an International Financial Center
On January 30, 2012, the National Development and Reform Commission and the Shanghai Municipal Government jointly issued the Plan for Establishing Shanghai as an International Financial Center during the 12th Five Year Plan Period. The plan aims to make Shanghai a center for innovation, trading, pricing and clearing of RMB-denominated financial products by 2015. To facilitate these goals, the plan seeks to enhance development of fundamental and derivative financial products, encourage foreign financial institutions to establish regional and global headquarters in Shanghai, and improve the infrastructure of the financial system, especially relating to RMB settlement. According to the plan, Shanghai will accelerate the launch of an international board in Shanghai to support the issuance of RMB-denominated stocks by qualified overseas enterprises. Shanghai will gradually scale back limitations on the issuance of RMB-denominated bonds by overseas institutions and encourage foreign investment in RMB-denominated bonds. In addition, the plan provides for pilot projects in the financial market and further exploration of the possibility of foreign investment in futures or financial derivatives.
The full Chinese text of the plan is available here.
A related Q&A in Chinese is available here.
