Loosening Current Restrictions, While Implementing New Ones--Notice on Further Improving the Administrative Measures for Foreign-Funded Investment Companies Issued


The Ministry of Commerce and the State Administration of Foreign Exchange jointly released the Notice on Further Improving the Administrative Measures for Foreign-Funded Investment Companies (“the Notice”) on Dec 8, 2011. While amending some of the current regulations on foreign-invested investment companies, the Notice also sets some new restrictions.

1. Foreign-invested investment companies must be designated as “investment company”.

The Notice imposes a heightened requirement on the verification and management of the statistical information required in the review and approval of foreign-invested investment companies. Once a foreign-invested investment company is approved, it must be clearly designated as an "investment company" in the Basic Information Form of the Foreign-Invested Enterprises. Other types of foreign-invested companies shall not be designated as "investment company", "investment holding" or other similar designations.

2. Domestic loans shall not be used for domestic reinvestment purposes.

Article 2 of the Notice prohibits that domestic loans obtained by foreign-invested investment companies be used for domestic reinvestment purposes. However, concepts such as “domestic loans” and “domestic reinvestment” still need to be further defined and clarified...

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Sheppard Mullin Richter & Hampton LLP on:

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